Seller's broker requesting to interact with my bank?

searcher profile

July 02, 2024

by a searcher from New York University - Leonard N. Stern School of Business in Grand Rapids, MI, USA

Currently under LOI. Is it odd that the seller's broker is asking to communicate directly with my banker?

I'm potentially open to it, but this is my first deal, so I don't know what the norms are.

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commentor profile
Reply by a lender
in Stuart, FL, USA
If you are dealing directly with the bank and you want to allow the seller’s broker to contact the lender you're dealing with, that's on you.

But you need to understand they have ZERO right to know the details of your loan. It is your loan, not theirs. That said, to help things along, and give the seller a comfort level you can certainly pass along a term sheet, and if you feel comfortable with it, your commitment letter.

As a loan broker, I deal directly with the lender and my company orchestrates everything. This way I know the loan gets closed. We communicate with the brokers constantly, but I do not allow the buying broker or selling broker to contact the bank. In most cases all they do is try to show everybody how smart they're not and screw things up.

Obviously, this is not every single broker. There are some amazing brokers out there and I’m sure on this forum. That said it's probably pretty important for this forum to understand that most brokers have no idea how SBA financing actually works.

It's a very simple equation, you can't have four chiefs and no Indians. If you're working with a good loan broker, he should be steering the ship. If you're working directly with the lender, then it would probably be a smart idea to share the checklists on items that you need to get for the bank with the buying and selling broker. It's probably not a good idea to have the brokers contacting the lender.

You might be amazed to find out at how they can spin your deal to benefit the selling side or themselves. I know this is probably going to **** some people off and honestly, I don't care. With the volume of business my company does, and that is hundreds upon hundreds of deals, I would say I know what I'm talking about. If everyone stayed in their lane, these deals would go more smoothly.
commentor profile
Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA
In addition to ^redacted‌'s point, I like to connect with the Buyer's lender so that I can help facilitate the data/information/financials gathering process and coordinate whatever the bank may need from the seller. If I can be a go-to source for the lender, it can save a lot of time and frustration, and make the banker/underwriter/appraiser/closer's job easier. Unless asked by the buyer, I do not get involved in the buyer's loan term discussions with the bank (interest rate, buyer's personal collateral issues, etc.) but can be a good resource to the buyer as to structure and terms and what is SBA policy vs. bank policy. A good broker is trying to produce a win-win-win-win outcome for the seller, buyer, banker, and broker.
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