What do Commercial Loan Brokers charge in fees for their services? Here are 6 levels.

1. Less than $100,000.00 ______


2. More than $100,000.00 ______


3. Less than $500,00.00 ______


4. Greater than $500,000.00 ______


5. Less than $1,000,000.00 ______


6. Greater than $1,000,000.00 ______

In a nutshell, how do they determine how much to charge a client? -

Being a direct commercial lender, I have seen brokers charge anywhere from .25% to 5%. There really doesn't seem to be any rhyme or reason to it. I would have to say it all depends on what you feel your time is worth.

Our minimum loan amount is $1 million, so I can not comment on the lower loan amounts you have listed, but I will say that for the larger loans that we do, many brokers only charge 1 point. If I had to break it down I would say that on average loans from $1 million to $5 million can see broker fees as high as 3 to 5 points, from $5 million to $10 million, 2 to 3 points, and anything higher than that 1 point.

This year alone we had a $40 million and a $50 million loan close and on both deals the brokers charged 1 point. Last year I saw a $20+ million deal close with the broker charging 2.5 points.

Mind you this is just what I have experienced and I am a Hard Money Lender so we are on the pricey side to begin with and broker points are added on top of our fees, for all I know things maybe different in the conventional world.

One thing I will say regardless of what you charge is always have your borrower sign a fee agreement. Most lenders will protect you for your commission but the lender is not the one paying you your commission, ultimately it is the borrower who is paying you. If the borrower decides they are not going to pay your fee and you don't have a signed fee agreement/contract, there is nothing any lender can do. My company will not close the loan if this happens, but as soon as it goes to court, the borrower will win and we will have to close. A simple signed fee agreement will ensure this does not happen.