At closing, by the transaction. Depending on the program, the fee comes from the lender, a fee at closing, or a combination, disclosed in writing before you commit to anything. What that means for you, and the questions worth asking any broker.
Most commercial brokerage compensation follows one of three patterns. On many bank, agency, and SBA placements, the lender pays the broker directly, the way lenders pay their own origination staff. On bridge and private placements, the fee is usually a point or a fraction of a point paid at closing out of proceeds. Some deals combine the two. In every version, the number appears in writing before you commit to anything, and nothing is owed if the loan does not close.
Upfront application fees to a broker are the mark of the wrong shop. There are legitimate third-party costs in every commercial loan, such as the appraisal and other reports, but those go to the appraiser and the title company, not to the broker, and they come later in the process with a term sheet in hand. A broker who wants money just to look at your deal is charging you for a review that honest shops do for free.
Often it costs less. A single bank can only offer its own programs at its own pricing. A broker prices the deal across a network, and on placements where the lender pays the fee, the borrower pricing is frequently the same either way. The honest answer is that it depends on the deal, which is why the number is disclosed up front: you can always compare it against a direct quote.
Ask how they are paid on your specific deal, and get it in writing. Ask whether anything is owed if the loan does not close. Ask which lenders they actually work with, because a thin network means you are paying for a rolodex you could have called yourself. And ask what happens when a better program appears mid-process. The answers tell you whether the broker works for you or for the fee.
Our compensation is disclosed before you commit, there are no upfront application fees, and if we cannot help, we tell you in one call. If you want to test that, the Deal Brief Builder takes three minutes and a review costs nothing.
Most commercial lenders want a minimum of 1.20 to 1.25, meaning the property produces 20 to 25 percent more income than its annual debt payments. Stronger ratios earn better terms; below 1.0 the property does not cover its own payment.
Divide net operating income by annual debt service. A property with $200,000 of NOI and $127,220 of annual loan payments has a DSCR of 1.57.
Usually not from a bank, because the property does not cover its payment. Interest-only bridge financing can carry a transitional property while income is built to a level conventional lenders will finance.
Yes, substantially. Removing principal from the payment lowers annual debt service, which is why bridge lenders quote interest-only and why the same NOI supports a much larger interest-only loan.
Send the property, the loan amount, and your timeline. We will tell you whether it looks like something we can help with, usually within one business day.
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