Pre-underwriting gives you the opportunity to identify, address and eliminate any weaknesses in your proposal before submitting it to the lender. Lenders rarely receive pre-underwritten proposals and give limited to no attention to incomplete and in-comprehensive submissions. A professionally pre-underwritten loan request will move your loan to the top of the lenders pile of requests. It illustrates your attention to detail and that you have given great thought and consideration about your project. This makes it easier to negotiate with the lender and to enter into a constructive dialog based on actual numbers rather than speculations. A pre underwritten proposal makes it easier to negotiate and to enter into a constructive dialog with the lender.
Underwriting is modeled using the Commercial Mortgage Securities Association’s (CMSA) Investor Reporting Package (IRP) and not the conventional conforming underwriting guidelines. The IRP breaks down the financial reporting guidelines by property type, so that regardless of where a property is located, the manner in which operating performance is analyzed is the same across the board. This gives you several advantages over all the other applicants in the lender’s financing pool. The lender will take you serious and see you as a professional. Each commercial loan is approved based on the property’s own strengths and ability to service the debt.
Pre-underwriting isn’t just for investors and commercial buyers but for commercial real estate brokers as well. It adds such a valuable part to the transaction that the brokers’ time involvement is minimal. A primary benefit is that it tells prospective buyers how much financing potentially is available for a property. Also, the pre-underwriting process validates the asking price. It can be a great advantage for brokers negotiating listing prices with owners who think their properties are worth significantly more than the actual value. Whether it’s commercial property for sale or construction project it’s worth having.
Lenders prefer, even require, that packages be organized in very specific ways so they know in an instant exactly where to go to find each and every detail regarding your proposal. It is what funders understand and allows borrowers to obtain Funding Commitments and LOI’s from lenders in much faster time frames. This saves you critical days in getting your proposals accepted by the lenders and moves you ahead of your competition.