Commercial Loans and Fun Blog

Commercial Mortgage Fee Agreements

Posted by George Blackburne on Tue, May 11, 2010

I've Figured Out How to Make Commercial Borrowers Comfortable Enough to Sign Loan Broker Contracts

There is an old saying among horsemen, "If you haven't been thrown, you haven't ridden very much."

The same is true for commercial mortgage brokers. If you haven't been cheated out of a $20,000 loan brokerage commission, you haven't been brokering commercial mortgage loans for very long.

Obviously a commercial loan broker needs to get his principals to sign a mortgage broker fee agreement. The problem is that the borrowers are too scared to sign one. They think they are going to be forced to pay a fee that the commercial mortgage broker didn't earn.

This week I accidentally stumbled into a technique that helps to make the borrower feel comfortable enough to sign a loan broker fee agreement. Here is the technique:

Commercial borrowers will feel comfortable enough to sign a fee agreement ... if they are allowed to exclude five lenders from your non-circumvention clause.

Here's why it work: Borrowers will seldom come straight to a commercial mortgage broker. They will first submit their loans to a handful of banks. There is always the chance that one of these original banks will finally come through for the borrower, so the borrower is loathe to sign any agreement that seems to interfere with this possibility.

Now when I send my fee agreement to a borrower, I always tell the borrower, "Feel free to attach an addendum that excludes up to five lenders."

Are you a commercial mortgage broker who is having trouble collecting your fee? Order our 90-minute video training course, Fee Collection for Mortgage Brokers.

Topics: fee agreement, loan broker contract, loan broker fee agreement, mortgage broker contract, mortgage broker fee agreement