To Brokers and Lenders: Is Negotiating Broker Fees Acceptable?
Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes
To Brokers and Lenders: Is Negotiating Broker Fees Acceptable?
Most Popular Reply
Doug SmithPro Member
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votesMy wife and I had dinner just last night with a fund rep and we discussed this very thing. Brokers with no background charging 4% - 6% for an introduction. It's my philosophy to build long-term relationships and actually provide value. We actually work the deal and stack the file. We also only charge 1% to 1.5% and try to be the first and only call an investor makes. If we screw them on the first deal there won't be a second. If they know we have their best interests at heart, we become a trusted advisor. It's ethical and it's good business.
29 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
We have heart to heart with them that they could be killing the deal. On average we pay 25-50bps to a broker as anything above that is probably a deal killer.
7e investments53 Reviews- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Quote from @Chris Seveney:
We have heart to heart with them that they could be killing the deal. On average we pay 25-50bps to a broker as anything above that is probably a deal killer.
I agree with Chris. And remember: everything is negotiable...
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Chris Seveney:
We have heart to heart with them that they could be killing the deal. On average we pay 25-50bps to a broker as anything above that is probably a deal killer.
Thanks for sharing your perspective on this Chris. It's really helpful to get your point of view.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Mike Grudzien:
Quote from @Chris Seveney:
We have heart to heart with them that they could be killing the deal. On average we pay 25-50bps to a broker as anything above that is probably a deal killer.
I agree with Chris. And remember: everything is negotiable...
love it Mike!
- 1yDevin PetersonBusiness MemberLender · Sarasota, FL · Member since 2022 · 2k+ posts · 679 votes
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
depends on their overhead and the the size of a deal. I will tell you flat out my LOs will not originate a loan for anything less than $3500. There is no point. When you start to think in units of time spent and measure your resources inputting valuable hours of herding cats for a 120k loan amount for 1.5% its a 90 degree and diminishing return sum game as a broker. Doesnt make sense. Borrowers and lenders have to understand the true value of brokerages - mastering guidelines of every lender they shop to make a perfect fit for their loan request and execute with percision. For single man shops maybe 1.5% or 1% makes sense but they too will fio - theyre losing money purely on the principle of time spent processing a 120k loan to make 1200 vs 500k to make the equivalent of 1%. When you put that into perspective, it makes more sense. hope that helps
ProAlpha Capital55 Reviews- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Devin Peterson:
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
depends on their overhead and the the size of a deal. I will tell you flat out my LOs will not originate a loan for anything less than $3500. There is no point. When you start to think in units of time spent and measure your resources inputting valuable hours of herding cats for a 120k loan amount for 1.5% its a 90 degree and diminishing return sum game as a broker. Doesnt make sense. Borrowers and lenders have to understand the true value of brokerages - mastering guidelines of every lender they shop to make a perfect fit for their loan request and execute with percision. For single man shops maybe 1.5% or 1% makes sense but they too will fio - theyre losing money purely on the principle of time spent processing a 120k loan to make 1200 vs 500k to make the equivalent of 1%. When you put that into perspective, it makes more sense. hope that helps
Thanks for the input, Devin. I couldn't agree more about the need to charge more for smaller deals. It makes total sense when you consider the time and effort involved.
The average loan amount we handle is around $500k, with many in the $1-2 million range, so that's the battle we're used to fighting. I also completely agree that borrowers and lenders have to understand the true value of a brokerage, which is mastering the guidelines of every lender to find the perfect fit and executing with precision.
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
On clean, fast hard money deals with a decent size (like $500k), maybe 50bps might fly. 100 bps is more realistic, especially at lower loan amounts or if there is a lot of hair on it that soaks up time and bandwidth. If you're paying any less than that to brokers, then youre probably scraping the bottom of the barrel because the good deals are getting sent somewhere else and youre only seeing the not so good deals.
DSCR loans are a different story. 185-200bps is likely the floor for those for small to midrange loans, with that tapering back as loan size grows.
Im not currently a broker, but like Devin mentioned, I probably wouldnt bother with a loan where I'm making less than a certain amount per unit of time/work. There's just too much involved and too much time opportunity cost, not to the mention the liability, overhead, EPO risk, etc. It's not just about the one loan that funds, it's also about the 3-8 others I had to find, scrub, and decline prior to funding the one decent deal.
In my experience, the lender should be charging enough on the front end to cover the lender's margin and well as the cost of the in-house originator/LO commission on the deal, which is typically at least a point to the originator/LO. When the loan comes in from outside via a broker, that originator comp should be going to the broker, as the loan should come in the door ready to go to processing/underwriting with the broker managing the borrower relationship all the way through. If we're only talking about a broker just making a text/email intro and then passing the deal off to the lender to do all of the work, then yeah, I can see that warranting less comp, as thats more like a referral than an origination.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Patrick Roberts:
On clean, fast hard money deals with a decent size (like $500k), maybe 50bps might fly. 100 bps is more realistic, especially at lower loan amounts or if there is a lot of hair on it that soaks up time and bandwidth. If you're paying any less than that to brokers, then youre probably scraping the bottom of the barrel because the good deals are getting sent somewhere else and youre only seeing the not so good deals.
DSCR loans are a different story. 185-200bps is likely the floor for those for small to midrange loans, with that tapering back as loan size grows.
Im not currently a broker, but like Devin mentioned, I probably wouldnt bother with a loan where I'm making less than a certain amount per unit of time/work. There's just too much involved and too much time opportunity cost, not to the mention the liability, overhead, EPO risk, etc. It's not just about the one loan that funds, it's also about the 3-8 others I had to find, scrub, and decline prior to funding the one decent deal.
In my experience, the lender should be charging enough on the front end to cover the lender's margin and well as the cost of the in-house originator/LO commission on the deal, which is typically at least a point to the originator/LO. When the loan comes in from outside via a broker, that originator comp should be going to the broker, as the loan should come in the door ready to go to processing/underwriting with the broker managing the borrower relationship all the way through. If we're only talking about a broker just making a text/email intro and then passing the deal off to the lender to do all of the work, then yeah, I can see that warranting less comp, as thats more like a referral than an origination.
I appreciate your input, Patrick. I should have specified that our typical deal size is in the $500k to $1 million range, which is why I completely agree with your and Kevin's point about not bothering with loans where the compensation doesn't justify the time and effort.
From my experience on the lending side, a full point to the LO from a direct lender seems a bit high, though I can see how that might be the case in smaller markets.
What I'm really looking for are brokers who deliver a complete file from day one. I'm spending a lot of time hand-holding both brokers and borrowers just to get to the closing table, and that's not a tough model for the deals to get killed because of a 40k broker commission.
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
Quote from @Dante Craig:
Quote from @Patrick Roberts:
On clean, fast hard money deals with a decent size (like $500k), maybe 50bps might fly. 100 bps is more realistic, especially at lower loan amounts or if there is a lot of hair on it that soaks up time and bandwidth. If you're paying any less than that to brokers, then youre probably scraping the bottom of the barrel because the good deals are getting sent somewhere else and youre only seeing the not so good deals.
DSCR loans are a different story. 185-200bps is likely the floor for those for small to midrange loans, with that tapering back as loan size grows.
Im not currently a broker, but like Devin mentioned, I probably wouldnt bother with a loan where I'm making less than a certain amount per unit of time/work. There's just too much involved and too much time opportunity cost, not to the mention the liability, overhead, EPO risk, etc. It's not just about the one loan that funds, it's also about the 3-8 others I had to find, scrub, and decline prior to funding the one decent deal.
In my experience, the lender should be charging enough on the front end to cover the lender's margin and well as the cost of the in-house originator/LO commission on the deal, which is typically at least a point to the originator/LO. When the loan comes in from outside via a broker, that originator comp should be going to the broker, as the loan should come in the door ready to go to processing/underwriting with the broker managing the borrower relationship all the way through. If we're only talking about a broker just making a text/email intro and then passing the deal off to the lender to do all of the work, then yeah, I can see that warranting less comp, as thats more like a referral than an origination.
I appreciate your input, Patrick. I should have specified that our typical deal size is in the $500k to $1 million range, which is why I completely agree with your and Kevin's point about not bothering with loans where the compensation doesn't justify the time and effort.
From my experience on the lending side, a full point to the LO from a direct lender seems a bit high, though I can see how that might be the case in smaller markets.
What I'm really looking for are brokers who deliver a complete file from day one. I'm spending a lot of time hand-holding both brokers and borrowers just to get to the closing table, and that's not a tough model for the deals to get killed because of a 40k broker commission.
4 points is egregious. That sounds like an ISO from the business loan broker/MCA world.
If the broker is getting full comp, they should be handling the borrower relationship, collecting any conditions/docs, etc. In other words, the heavy lifting. The underwriting should be the only thing the lender has to do. That being said, if the broker is doing all the work, the I would expect 75-100 bps in comp for midsize loans and MAYBE 50-75bps on large loans like $800k+.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Patrick Roberts:
Quote from @Dante Craig:
Quote from @Patrick Roberts:
On clean, fast hard money deals with a decent size (like $500k), maybe 50bps might fly. 100 bps is more realistic, especially at lower loan amounts or if there is a lot of hair on it that soaks up time and bandwidth. If you're paying any less than that to brokers, then youre probably scraping the bottom of the barrel because the good deals are getting sent somewhere else and youre only seeing the not so good deals.
DSCR loans are a different story. 185-200bps is likely the floor for those for small to midrange loans, with that tapering back as loan size grows.
Im not currently a broker, but like Devin mentioned, I probably wouldnt bother with a loan where I'm making less than a certain amount per unit of time/work. There's just too much involved and too much time opportunity cost, not to the mention the liability, overhead, EPO risk, etc. It's not just about the one loan that funds, it's also about the 3-8 others I had to find, scrub, and decline prior to funding the one decent deal.
In my experience, the lender should be charging enough on the front end to cover the lender's margin and well as the cost of the in-house originator/LO commission on the deal, which is typically at least a point to the originator/LO. When the loan comes in from outside via a broker, that originator comp should be going to the broker, as the loan should come in the door ready to go to processing/underwriting with the broker managing the borrower relationship all the way through. If we're only talking about a broker just making a text/email intro and then passing the deal off to the lender to do all of the work, then yeah, I can see that warranting less comp, as thats more like a referral than an origination.
I appreciate your input, Patrick. I should have specified that our typical deal size is in the $500k to $1 million range, which is why I completely agree with your and Kevin's point about not bothering with loans where the compensation doesn't justify the time and effort.
From my experience on the lending side, a full point to the LO from a direct lender seems a bit high, though I can see how that might be the case in smaller markets.
What I'm really looking for are brokers who deliver a complete file from day one. I'm spending a lot of time hand-holding both brokers and borrowers just to get to the closing table, and that's not a tough model for the deals to get killed because of a 40k broker commission.
4 points is egregious. That sounds like an ISO from the business loan broker/MCA world.
If the broker is getting full comp, they should be handling the borrower relationship, collecting any conditions/docs, etc. In other words, the heavy lifting. The underwriting should be the only thing the lender has to do. That being said, if the broker is doing all the work, the I would expect 75-100 bps in comp for midsize loans and MAYBE 50-75bps on large loans like $800k+.
I couldn't agree more. That's the appropriate pricing. I just issued an LOI on a $2 million loan with a $40,000 broker fee; let's see how it holds up. LOI
- Lender · Member since 2021 · 500 posts · 131 votes1y
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
As someone who has been on both sides of the fence, I would think it would depend on how excessive their fees were. Nothing wrong with having a cap on total origination as well, if that is what you wanted to do. Just keep in mind it could affect relationships. As long as you are charging reasonable points direct, I would not see a problem with expecting the broker to do the same.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Andrew Zamboroski:
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
As someone who has been on both sides of the fence, I would think it would depend on how excessive their fees were. Nothing wrong with having a cap on total origination as well, if that is what you wanted to do. Just keep in mind it could affect relationships. As long as you are charging reasonable points direct, I would not see a problem with expecting the broker to do the same.
That's a great suggestion, Andrew. I'll definitely look into it as a potential option.
- Lender · Los Angeles, CA · Member since 2025 · 40 posts · 17 votes1y
As some of my colleagues have already pointed out, the size and structure of the deal really do matter here. The way my team approaches these situations is by keeping the bigger picture in mind. We’re focused on building long-term, mutually beneficial relationships — and sometimes that means negotiating down… or even up, depending on what makes sense for all parties. At the end of the day, it’s always a case-by-case decision rooted in partnership and perspective. Out of curiosity, how do you define your mission when it comes to balancing relationships and transactions?
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Account Closed:
As some of my colleagues have already pointed out, the size and structure of the deal really do matter here. The way my team approaches these situations is by keeping the bigger picture in mind. We’re focused on building long-term, mutually beneficial relationships — and sometimes that means negotiating down… or even up, depending on what makes sense for all parties. At the end of the day, it’s always a case-by-case decision rooted in partnership and perspective. Out of curiosity, how do you define your mission when it comes to balancing relationships and transactions?
I couldn't agree more, Leo. You've hit the nail on the head that everything in our industry is ultimately case-by-case. If you're ever in the LA area, I'd love to grab a beer sometime. - Lender · Los Angeles, CA · Member since 2025 · 40 posts · 17 votes1y
Quote from @Dante Craig:
Quote from @Account Closed:
As some of my colleagues have already pointed out, the size and structure of the deal really do matter here. The way my team approaches these situations is by keeping the bigger picture in mind. We’re focused on building long-term, mutually beneficial relationships — and sometimes that means negotiating down… or even up, depending on what makes sense for all parties. At the end of the day, it’s always a case-by-case decision rooted in partnership and perspective. Out of curiosity, how do you define your mission when it comes to balancing relationships and transactions?
I couldn't agree more, Leo. You've hit the nail on the head that everything in our industry is ultimately case-by-case. If you're ever in the LA area, I'd love to grab a beer sometime.
Buddy, if you golf, we JUST became best friends... lol.. but I'll keep you posted about that beer! - Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Account Closed:
Quote from @Dante Craig:
Quote from @Account Closed:
As some of my colleagues have already pointed out, the size and structure of the deal really do matter here. The way my team approaches these situations is by keeping the bigger picture in mind. We’re focused on building long-term, mutually beneficial relationships — and sometimes that means negotiating down… or even up, depending on what makes sense for all parties. At the end of the day, it’s always a case-by-case decision rooted in partnership and perspective. Out of curiosity, how do you define your mission when it comes to balancing relationships and transactions?
I couldn't agree more, Leo. You've hit the nail on the head that everything in our industry is ultimately case-by-case. If you're ever in the LA area, I'd love to grab a beer sometime.
Buddy, if you golf, we JUST became best friends... lol.. but I'll keep you posted about that beer!I thought playing golf is the reason everyone gets into real estate in the first place...
- 1yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
This depends on a lot of factors.
How much do you charge in fees? If it's already over 1 point, And we match 1 point, some clients on larger deals will be turned off by this. If you are also able to cut your points, I do not see this being an issue.
Is this a super hairy deal? This tends to involve a whole bunch of upfront due diligence to make sure the loan is structured correctly. If it's a hairy deal that involves a lot of my effort calling lenders, presenting and getting LOEs, exceptions, etc.. then I will charge more compared to a loan that is cookie cutter.
Will you be handling the conditions as well? If I have to process the loan file myself, talk to 3rd party, the client, etc.. and you are charging more than me, then this won't be a beneficial relationship. I don't have a issue working the deal, but at the end of the day if I am only going to get paid in peanuts to work a file for 30-45 days, while you sit back and relax and collect, I don't see this working out.
Like everyone said. Everything is negotiable, and clients are free to shop. I will rarely cut my commission, unless it is a client that sends me a lot of business or referrals or I am doing it as a courtesy to make the deal work. I don't think it's greedy to make a living and provide for your family.
LuxePrivate Investments LLC 570 Reviews - 1yDoug SmithPro MemberLender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
My wife and I had dinner just last night with a fund rep and we discussed this very thing. Brokers with no background charging 4% - 6% for an introduction. It's my philosophy to build long-term relationships and actually provide value. We actually work the deal and stack the file. We also only charge 1% to 1.5% and try to be the first and only call an investor makes. If we screw them on the first deal there won't be a second. If they know we have their best interests at heart, we become a trusted advisor. It's ethical and it's good business.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1yHey Doug, I really appreciate your response! What you said about everyone acting this way was spot on. If you ever need another lender in your toolbox, I'd love to work with you—you sound like my dream broker
Quote from @Doug Smith:
My wife and I had dinner just last night with a fund rep and we discussed this very thing. Brokers with no background charging 4% - 6% for an introduction. It's my philosophy to build long-term relationships and actually provide value. We actually work the deal and stack the file. We also only charge 1% to 1.5% and try to be the first and only call an investor makes. If we screw them on the first deal there won't be a second. If they know we have their best interests at heart, we become a trusted advisor. It's ethical and it's good business.
- 1yJason WrayPro MemberBanker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
Broker's if residential lending are still regulated by RESPA and Dodd Frank which means you have to follow the updated laws. DO NOT follow bad advice from other people because you will at some point be audited and every lender/broker has to have a compliance officer or department. Reason you cannot negotiate fee's is because if you do it for one person or borrower and not everyone it fall under Discrimination.
Fines can start at $25,000.00 per day if it violates certain rules and laws under Dodd/Frank. Here is a quick snaphot of a few:
Prohibited acts related to reducing fees- Reducing compensation to offset changes in terms: Dodd-Frank generally prohibits loan originators from reducing their compensation to offset the cost of changes in transaction terms (often called "pricing concessions"). This is designed to prevent originators from manipulating the fees to make a loan appear more attractive initially, only to increase other costs later. However, originators are permitted to reduce their compensation to defray certain unexpected increases in estimated settlement costs.
- Varying compensation based on loan terms (excluding principal): Loan originators are prohibited from receiving compensation that varies based on the terms of a mortgage loan (other than the principal amount). This prevents incentives to steer borrowers towards loans with disadvantageous terms, such as higher interest rates, in order to maximize their own compensation.
- Charging certain fees in high-cost mortgages: Under Dodd-Frank, it's prohibited to charge a fee to modify, defer, renew, extend, or amend a high-cost mortgage.
- Charging excessive late fees: Late fees on high-cost mortgages cannot exceed 4 percent of the overdue payment and cannot be imposed more than once for a single late payment.
- Charging fees for payoff statements: Creditors or servicers generally cannot charge fees for a payoff statement.
New lender, New Loan officers, brokers, are the ones who need to pay more attention because audits are required. Your closed loan are kept for 5 year or more in some cases and it’s not worth losing your license permanently.
Hope this helps I have opened and owned several Broker branch offices, Satellite office for lenders and it's crucial to do it correct and legal to avoid fine and lost careers! Feel free to reach out if you have question.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Jason Wray:
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
Broker's if residential lending are still regulated by RESPA and Dodd Frank which means you have to follow the updated laws. DO NOT follow bad advice from other people because you will at some point be audited and every lender/broker has to have a compliance officer or department. Reason you cannot negotiate fee's is because if you do it for one person or borrower and not everyone it fall under Discrimination.
Fines can start at $25,000.00 per day if it violates certain rules and laws under Dodd/Frank. Here is a quick snaphot of a few:
Prohibited acts related to reducing fees- Reducing compensation to offset changes in terms: Dodd-Frank generally prohibits loan originators from reducing their compensation to offset the cost of changes in transaction terms (often called "pricing concessions"). This is designed to prevent originators from manipulating the fees to make a loan appear more attractive initially, only to increase other costs later. However, originators are permitted to reduce their compensation to defray certain unexpected increases in estimated settlement costs.
- Varying compensation based on loan terms (excluding principal): Loan originators are prohibited from receiving compensation that varies based on the terms of a mortgage loan (other than the principal amount). This prevents incentives to steer borrowers towards loans with disadvantageous terms, such as higher interest rates, in order to maximize their own compensation.
- Charging certain fees in high-cost mortgages: Under Dodd-Frank, it's prohibited to charge a fee to modify, defer, renew, extend, or amend a high-cost mortgage.
- Charging excessive late fees: Late fees on high-cost mortgages cannot exceed 4 percent of the overdue payment and cannot be imposed more than once for a single late payment.
- Charging fees for payoff statements: Creditors or servicers generally cannot charge fees for a payoff statement.
New lender, New Loan officers, brokers, are the ones who need to pay more attention because audits are required. Your closed loan are kept for 5 year or more in some cases and it’s not worth losing your license permanently.
Hope this helps I have opened and owned several Broker branch offices, Satellite office for lenders and it's crucial to do it correct and legal to avoid fine and lost careers! Feel free to reach out if you have question.
I appreciate the heads up Jason! Always need a compliance reminder form time to time.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesWhat I LOVE about bigger pockets is the quality of answers to most questions - I learn A LOT by reading these posts. My experience is the quality of the loan - as in ease of placement - often dictates what the broker thinks they could charge or how they arrive at a fee.
Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
For example, for a $1 million residential loan, a broker friend of mine is at 1/2 - 1 point. For the same size commercial loan he’s at 1 - 1 1/2 points. For hard money commercial he’s at 2 or more.
The real crazy situations occur in commercial hard money where there’s a broker who represents the borrow, a broker who “ lender and sometimes an “introductory”broker in between, and they all want 3 points EACH, LOL. I point out to the two brokers that they’re doing HALF the job each, so they should receive HALF the normal fee. Further, if they needed an “introduction” the borrower shouldn’t have to pay for that. It should come out of there end.
In 80% of these situations I’ve convinced the brokers involved to settle for 3 points (or less) IN TOTAL. The other 20% we just passed on the loan- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1y
Quote from @Don Konipol:
What I LOVE about bigger pockets is the quality of answers to most questions - I learn A LOT by reading these posts. My experience is the quality of the loan - as in ease of placement - often dictates what the broker thinks they could charge or how they arrive at a fee.Quote from @Dante Craig:
I'm a direct hard money lender, and my company is relatively new. We work primarily with brokers as we continue to expand our outreach. Most of our broker relationships are strong, and they bring us a good amount of business.
However, a common issue we encounter is brokers adding excessive fees, which can kill a deal and just take advantage of a borrower. When this happens, I sometimes try to get the broker to lower their fees, as our lending price is fairly set due to investor commitments and capital costs. Sometimes this works, other times it doesn't, and it can occasionally strain our relationships.
I'd love to get some input from current hard money brokers. As a lender who wants to close a deal, is it appropriate to negotiate with a broker to shave off 0.5 to 1 point when they are already making at least 1 point on the deal?
What are your thoughts on this from a broker's/lenders perspective?
For example, for a $1 million residential loan, a broker friend of mine is at 1/2 - 1 point. For the same size commercial loan he’s at 1 - 1 1/2 points. For hard money commercial he’s at 2 or more.
The real crazy situations occur in commercial hard money where there’s a broker who represents the borrow, a broker who “ lender and sometimes an “introductory”broker in between, and they all want 3 points EACH, LOL. I point out to the two brokers that they’re doing HALF the job each, so they should receive HALF the normal fee. Further, if they needed an “introduction” the borrower shouldn’t have to pay for that. It should come out of there end.
In 80% of these situations I’ve convinced the brokers involved to settle for 3 points (or less) IN TOTAL. The other 20% we just passed on the loan
I couldn't agree more. I love hearing everyone's input based on their personal experiences in the industry. I think anything above a 3% fee is madness.
- Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes1y
Agreed. One can glean a ton of perspective and grounding from the input from others in the field. Extremely valuable.
- Lender · Santa Monica · Member since 2025 · 28 posts · 12 votes1yWell said. The real skill is in the approach and timing—getting the broker to see that a small adjustment is in the team's best interest to save the deal.
Quote from @Syed Ahmed:
From a lender’s perspective, it’s absolutely fair to open up that conversation when the broker fee starts putting the deal at risk. After all, if the deal doesn’t close, nobody gets paid.
Bottom line: negotiating is acceptable, but the approach and timing make all the difference. - Lender · Irvine CA · Member since 2019 · 71 posts · 22 votes1y
Hello Dante,
I am an Account Executive with the Lender (wholesale lender) and work with Brokers all the time.
When it comes to hard money it really depends.
I see my brokers make an average of 2 points on a loan. Now imagine that loan falls apart and they have to go hard money. the borrower tired multiple places so the logical place to go is hardmoney. Some hardmoney Lender will do matching points. Like if they charge two points the broker can charge 2 points. I think that if the commission is to low for the broker he or she will go somewhere else.
What do you charge as a hard money broker? and what is your average rate?
I agree that a broker should be flexible not to kill a loan.
I work with hundreds of brokers and I don't mind sharing feed back. Lets connect. I am also a good referral source for deal that go south if you are competitive.
- Lender · Sanford, NC · Member since 2024 · 359 posts · 121 votes1y
As a broker, I’m always open to negotiating my fees if it helps get the deal across the finish line, I get it, sometimes that little flexibility can make the difference. But at the same time, I think it’s also important to recognize the value of the work that goes in behind the scenes. Finding lenders, handling the back and forth, keeping the deal moving, it’s not just about plugging in numbers, it’s real effort. So while I’m happy to work with people, I also believe in standing by the value of the service I provide.
It's not uncommon on hard money deals for brokers to get 2 points when the hard money lender is charging 3 points, exorbitant fees on environmental, application and internal processing fees. They charge more junk fees than the conventional and non-QM brokers.
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