$8,500,0000 property; $3million down, 65% leverage (so $5.5 million loan). CBRE is my broker, they receive 2.5% buyers agent commission. I was told that they would help me through the loan process. So, today when speaking with that department, I discovered that they would like an additional 1% (of loan) to help with obtaining loan, providing advice on financing, and helping me through the process of getting necessary things to the banks (title reports, documents, ALTA, environmental report, etc). I had naively thought this service was part of the broker commission. So, is this 1% typical? If not, where else can I look. Or, is paying a premium for CBRE going to be worth the upfront fees?
@Jeffrey Kovnick First of all welcome to BP and congrats on your deal!!!
1% is pretty standard for a mortgage origination fee. Every mortgage brokerage I know charges that. It certainly makes sense for CBRE to want to keep that in house, but you are allowed to shop around for better rates. Depending on what type of property and the loan product you are looking for, you might qualify for agency debt. There are several direct lenders that may be able to negotiate a reduced fee with adjusted pricing. Feel free to DM me if you want any contacts for those.
@Jeffrey Kovnick ...As Yonah specified, you are able to shop around for better rates and different programs depending on what CBRE is going to offer, but that is pretty usual. It also could depend on the type of deal and what type of financing they are bringing forward. Where are you located and where is the deal? What property type? Didn't want to assume it's multifamily. You could possibly talk them down on the loan fee or find a CRE mortgage broker who will potentially do for less.
Thanks. Jared, i'm in Salt Lake City, UT, but this property is in Jacksonville and we are looking at additional property in TX. We are NOT looking at multifamily. This is a retail center and we are also considering industrial. More of a buy and hold, rather than value add.
@Jeffrey Kovnick Yes, 1% is pretty pretty standard. However, it doesn’t (or shouldn’t) cost anything to shop it with a broker.
I am not sure I was clear in my initial post. I know that 1% is standard for "closing costs", but the CBRE "debt and structured finance" division wants to charge me 1% to help me find the best loans and take me through the process of doing everything for the sale. Is that appropriate?
There will be an origination fee. Is 1% too much? On a 5.5M loan, I would say yes. Bulls and bears get rich, but pigs get slaughtered. I'd say shop it.
So, I am not speaking of loan origination that goes to banks. I am speaking about the fee to a division of CBRE that is getting paid to get me a loan. This is distinct from bank fees for the loan.
I am dealing with a smaller bank on a personal deal much smaller than yours and they are HUNGRY for deals like that. I work for a large Grocery anchored shopping center REIT and the VP of commercial banking is begging me to somehow get her some of those deals.
You should give her a call. Very friendly lady and would prob just walk you through the process for much less or nothing at all since you would get the loan from them.
@Jeffrey Kovnick 1% is pretty standard fee for Commercial mortgage brokers. As mentioned above, you should make sure that your agreement is non-exclusive and do some shopping around of your own, outside of CBRE's lenders.
Don't be afraid to negotiate that 1%. I have done deals as Commercial mortgage broker for as low as 1/2 a point. I would offer them 70-75bps and see if they gawk. In addition, I think the broker should always attempt to negotiate the lender's origination fee down to accommodate for their fee.
@Jeffrey Kovnick it does seem that everyone is missing your point. I would check to see what they are really labeling that charge. Are they requesting you to pay it upfront? It is added to the origination charge of doing the actual loan? I don't charge people to "shop" loans as I am paid when I close on the loan and that is my "origination fee." Not sure what kind of fee they are charging just to locate funding.
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