Developers get dumped by funders and brokers for being pushy, demanding and rude...No Funding!....please read on:
As many of you know, Walker Commercial Funding works exclusively within the private funding world. All of our projects are funded by private sources and have been since 2006. Unfortunately, some developers still believe they live in the financial world of 2006. To get results, they could put some heat on their funders and threaten to stop banking with them or any other sorts of threats. Obviously it was effective, otherwise they wouldn't have developed that behavior

In present times, the private and evasive sleeping giant is meeting old school "this is how my bank did it for 30 years" developers.

I regret to inform our readers that several projects that had been approved by our private funders were kicked to the curb with no funding and a bad reputation to follow because they were pushy, demanding, insulting and rude. Worse yet, these developers had no "NBA" or "next best alternative". We placed them with performing funders that, for their particular project, there were no other alternative to getting their projects funded. So, basically, they worked with the funder we have placed them with or they simply have no other doors to knock on to get funded.

First, in the old days, developers received their funding from banks who had the liquidity to fund the loan. This is no longer true. Everyone from the Rothchilds to the average Joe have pulled their funds from banks, where they have a measley FDIC coverage of $250,0000. Anything above that amount is not insured. The result is that they gave and continue to give their funds to the private sector, asset managers. These asset managers are the individuals or groups that are funding the loans. They take the assets in from investors and invest it in solid real estate projects. The investment can be debt or joint venture.....or even joint venture without any debt! That's how the capital enters the private funding universe and projects are eventually funded. Most of our funders are even comfortable with 100% financing.

What went wrong? The answer is simple: the developers committed some of the cardinal sins of dealing with private capital. Here they are:

* Your funder doesn't have anything to prove to you because he's not asking for upfront money. He doesn't want to be interview or vetted....yet the developers insisted on a list of closed deals, which would violate the NCND the funder signed with the client. Witch hunts are simply not advisable, if someone asks for a fee they cannot justify, simply walk from the table.

* The developer made a list of a "demands" that must be met to "win" his business (that no one else will fund). As the old adage says, "the tail will not wag the dog".

* The developer established his own funding date, when he was giving a range of 60-90 days. The clock doesn't start ticking until you have signed the contract with the funder. Don't blame the funder when your attorney took 2 two weeks to review and made significant changes that were ridiculous and unreasonable. On that note, the clock doesn't start the day you gave the deal to the broker. Your funder doesn't care when you submitted it to your broker or that you had to wait 2 months before your transaction was submitted. Presently, projects submitted today won't be submitted for two months. There is a lot of deal congestion and we don't see it letting up anytime soon.

* They developers call and call and call. Maybe your deal funds late. Moving money is difficult internationally and there are delays. There's nothing your broker or funder can do about this.

* When calling the developers start making demands and demanding a funding date with the funder truly doesn't know....and they aren't going to give you a date for the sake of giving you a date.
* The calls continue....the developers wants to play 20 questions and discuss matters the funder and broker don't have firm answers on. Neither your broker nor your funder have time to spend 30 minutes on the phone with talking about "what if's" and matters of pure conjecture. No offense, it's just business.

* Finally, the developer gives a deadline or else he pull out. I have to be funded by XYZ or else........

* This is the point (or sooner) where either the funder or broker decline the project based on (lack of) professional conduct.

Ultimately, the funder will see the project as weak and not worth funding if two weeks is going to kill the deal. Or he'll just dismiss you and your project on the grounds of poor planning. At Walker Commercial Funding, we keep it simple: always tell the truth; which includes good news, bad news or even no news. We also inform the client it is not necessary to "check in" everyday. We immediately call them with news concerning their project. To sum it up, I recommend patience, grace and respect to both your broker and funder.