When you talk to a bank loan officer these days, don’t be surprised if you get two different business cards: the banker’s normal card and one identifying the bank’s realty services company.
“Specialized realty services are a natural progression for the financial institution that already has highly developed competencies in real estate-based financing,” says Vince Cassano, assistant vice president, business development, residential/commercial mortgage, Brentwood Bank.
“Many banks that came out of the savings and loan tradition have a long history of providing mortgage loans, and many of those institutions now offer more complex construction loan financing, as well. Some have also developed advanced commercial lending capabilities, and a few have evolved into multimillion dollar commercial real estate lenders. Creating an entity that offers realty services fills in a missing piece, facilitates real estate-based financing transactions and benefits a customer that the bank is already serving, which is what originally led bank customers to request them.”
Smart Business spoke to Cassano about what banks can provide in the way of specialized realty services through a separate realty company, and what these services may say about the institution offering them.
How many banks also have a realty service?
There aren’t too many institutions that have ventured into it, and there may be several reasons. The process to get up and running is a little complex and involved. For instance, to sell real estate in Pennsylvania, a state-chartered bank must be approved by the Department of Banking and licensed by the Department of State. Initially, there may also have been some reluctance because it was perceived or portrayed as a potential threat to traditional real estate agents, as if banks were looking to go into direct competition with them. That really hasn’t proven to be the case, however.
Instead, realty services may be positioned both to complement existing real estate-based loan services and as a convenience to the bank’s existing customers, especially business customers with commercial loans and other specialized requirements.
What advantages can a realty service offer?
For the smaller, more specialized bank, realty services make the organization that much more proficient, capable and versatile. Likewise, a senior loan officer who also maintains real estate sales agent credentials is going to be more knowledgeable in transactional issues, back-office servicing, closing and documentation requirements, etc. A hands-on understanding of the process translates into the ability to turnkey a deal faster, without sacrificing transactional integrity.
More importantly, that kind of lender is going to be more valuable to the business customer, both in the short term (where the immediate transaction is concerned) and down the road, as a future resource. So there’s a potential upside to seeking out a bank that has an entity to provide realty services that go beyond any one transaction.
How does the bank integrate realty services into its offering?
It really depends on the size and type of organization. If the bank is relatively small and you work directly with a hands-on lender, that individual may also maintain his or her own real estate license, giving you both a lender and a licensed real estate agent in one person. In that case, the integration will be about as seamless as it gets, at least from the standpoint of whom you will be dealing with. You don’t have to get handed off to someone in another department.
The benefit of this really becomes evident when changes come up that weren’t originally anticipated. There are going to be things that are out of your control, and the more flexibility you have, the better. A combination lender and realtor gives you one person who can help you keep your project moving.
What type of bank customer is most likely to utilize these realty services?
Local builder-developers are probably the customers who will get the most use from realty services being offered via a separate entity like this, simply because those services apply to every phase of the developer’s activity. The bank can facilitate the entire process.
On the front end, the realty service can perform property searches on behalf of the developer, and the bank can provide initial financing of the property and infrastructure. Then, the bank can help builders finance spec construction, while its realty service provides property listings on the MLS (multiple listing service) and facilitates the sale of lots. On the back end, the realty service can provide market analysis and perform a listings search, and the bank can finance the purchaser’s construction loan and permanent mortgage.
What does creating a realty services entity say about a bank?
It says the institution is looking for more ways to serve its customer and create value. For those looking to purchase new property, it means the bank can not only finance your house or commercial building, but also, through its realty service, can help you find it and help you sell your current property. It says the bank has a niche and a core competency in real estate-based lending and transactional issues, and it’s a reflection of the institution’s depth of capability.
VINCE CASSANO is the assistant vice president, business development, residential/commercial mortgage with Brentwood Bank. Reach him at (412) 409-9000, x285 or via e-mail at firstname.lastname@example.org.