IS/Mortgage Banking Fees
Anyone have insight on the range of % for investment sales and mortgage banking fees? I know it depends on the size of the deal but some more details would be appreciated.
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Mortgage banking fees depend on the loan type. Lender originations fees for conventional bank debt is 0.25%-1.00%, Life Companies are usually 0%, Credit Unions 0%-1%, Debt Funds 1%-3%. The higher the loan amount, the lower origination fees are on this range. Mortgage Brokers typically charge 1% on deals up to ~$10MM, then lower as the loan amount increases.
Investment sales is 50 bps or slightly higher once you hit the $50M mark. The higher you go the more likely it’s going to be 45-50 bps. For $40M-$50M range 60 bps is achievable.
You think on say a $40mm sale, the IS broker is grossing $400k? That seems low, but I'm not too familiar with sales commissions
$40M is just an awkward number from what I’ve seen. I’d say it’s likely to be 60-65 bps, but not higher. 2021 you saw ridiculous commissions because the incentives were still being included (e.g 60 bps + 5%+ of anything over $XXM). Then, unexpectedly, 2021 exploded and those incentives in some cases exceeded the base commissions. Not seeing those anymore as sellers learned their lesson.
So, in the last couple years, it seems like $25M-$35M you’ll have a wider variety of commission %s. $40M is kind of awkward. $50M-$90M will range 50-65 bps. $100M+ and up you’ll get to about 40 bps.
FWIW, I look at every listing agreement for our deals and work in multifamily.
definitely makes sense that fees have compressed in the post-COVID era, appreciate you sharing your insight
This is super helpful, thanks for sharing. What sort of commissions do you see for $5m to $10m listings? $10m to $25m?
Unfortunately we solely focus on the size of deals I shared. I could give you a guess but don’t think that’s very helpful.
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