For those who use a mortgage broker, what % of the loan do you pay in fees? Or do you have a separate type of fee structure?
They do a lot for us, but I feel like 75-100bps of the loan size is steep. Especially on the larger deals. Any room to negotiate this down based off market?
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Tons of room to negotiate, including outright fee caps (like fee not to exceed X thousands). Really large deals (like in the $100s of millions) aren't likely to pay more than 15-30 bps and that is to groups like Eastdil, etc.
I would offer a data point to contradict with your final point. I was an analyst at a debt brokerage in NYC where even $300m+ deals routinely paid 50 bps and over. Anything under $50M was a full point if not a relationship / repeat client / a potential client the firm had been hounding. This was for a well known team run by a well known person (think of 10 NYC debt brokers and he's on that list), to be fair, but most of our true competitors (the other 9 guys on that list lmao) charged in similar ranges.
In general, its like any brokerage. Yes, there is always room to flex, especially large deals giving more room to negotiate. But guys who are really good can charge their price, stick to their guns, and get away with it. There are IS brokers who will charge their full 200bps - 250bps no matter how large the deal is and still get hired at that level.
All of that, however, is just data points. You should always seek to find some relief on fees if you can. It never hurts to ask! Worst thing that happens is the guy says no.
I think it hinges on "who" the client is... meaning the bigger/more institutionally strong the client... the more power lower fees (like the sub 30 bps deal).
If it is complex, complicated, and the borrower really NEEDs the help..... yeah the broker can easily get 50+ bps on debt and more on equity even for large deals (and frankly they earn it in those cases).
You get what you pay for. Beware the budget shops (Meridian, Marcus, etc). There’s “inside” and “outside” fees (other terminology is used sometimes too). There’s profit sharing incentives for CMBS securitizations. Private lenders can build whatever the broker wants into the spread. And that’s all before you get into white table deals. Where a broker charges no fee upfront but can build up to 3% in the spread.
I’ve seen HUD deals where 6% was made on the inside but only “charged” the client .25%.
And that’s all before we even start talking about servicing strips.
Personally if I was on the borrower side. I’d happily pay the full 1% upfront if I knew there weren’t any games being played on the inside. And the broker would actually be independent of the (many) incentives lenders offer to get something steered their way.
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We solicited a few proposals for a large ($600M+) refinancing recently and all brokers quoted c.25 bps. We were able to negotiate the final base fee lower with some incentive component.
Hi folks. In short, I'd like to take out a mortgage, so I need to know how to calculate it right. What would you recommend?
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