Hi all commercial investor out there,
This is my first trial to purchase commercial property and looking for a loan . I am asked by a loan broker to sign a brokerage fee agreement before he commences my application . It is quite different from my preious experience with residential loan and never see this agreement before. A common practice for commercial loan broker ? Can anyone make a comment on this ?
See below Brokerage fee agreement :
“Advise that I have requested you to obtain finance on my/our behalf.
I/We further acknowledge that you are to receive a brokerage fee of 0.50% or min. AUD $1200, whichever is higher for the work done for this commercial loan application.
I/We agree to pay xxxx of the abovementioned fee if the finance is approved (conditionally or otherwise) and I/We do not proceed.
This form is valid for approvals only (conditional or otherwise and whether we proceed to settlement or not) and considered irrevocable by ourselves.
To ……………………………………………………(Lender and/or their Solicitors),
I/We hereby authorize you to deduct the above fee at settlement to pay xxxxx and this authority is to be considered irrevocable and not subject to alteration without the consent of xxxxxx.……………………………………………..
APPLICANT……………………………………………..
APPLICANTDATED / / 20 “
Waiting for response, Nickel
as name
Yes is quite standard in the commercial world.
A lot of work goes into this type of lending and sounds like this broker prefers to deal with people who are serious. Not just tyre kickers.
It would be the same in the residential industry if it wasn’t so competitive. Many residential clients insist on an upfront payment refunded if the loan is refused or the client settles. Just covers them for the work they do when the clients get cold feet.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Simon .
It seems fair enough for such a practice in commercial sector as you explained. In my preious loan application for my RIPs, no one ask or even mention to me such a thing.
But there is a clause which is uneasy for me to accept comfortably. I have no idea how other applicant feels :
“We agree to pay xxxx of the abovementioned fee if the finance is approved (conditionally or otherwise) and I/We do not proceed.”
Are every client happy to pay the fee even the bank approved conditinally ,may be quite different from his application and he decide not to eat this bitter egg ?
Cheers,
Nickelbenas name
What the yare trying to avoid is doing al lthe work and then having the client get cold feet and them not being recompensed for this.
Ask them to reword it or even delete it.
A contract is something both parties need to be happy with. If they wont negotiate it then get your finance elsewhere. It is a free and open market.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Exactly, that is what I am doing ! I walked away and find another one who is willing and has the confident to do it without any agreement signed. I am sure he done a bit of research and check which bank & which product is most likely to be approved before submittion. As he know he will NOT get compensated if he done a lousy job or simply drop my application to any bank . I am sure this broker is very serious with each application to make his living and I have confidence in him too.
But back to the point, I am sure NOT everybody will walk away otherwise we would Not be able to see him around. If he didn’t match a proper product for the client or unwillng/too busy to spend more time to hunt around , knowing the bank will approve but conditionally, he will still submit it to the bank as he know at the end of the day he can get a min. AUS1200-00. SO, he submit 8 of them per month, he get his handsome pay AUS9600 without sweat by pushing bitter eggs down the clients’ throat. Ya, it may not be true and I am just guessing wildy of how he make a living but is possible to happen, right ? This is another important reason that I do not proceed with him. Ha,I got “cold feet” even before application.
Do you have any comment or anyone else ? Or you think I have crazy thought or too sensitive over this matter ?
Cheers,
Nickel.As one who transacts a reasonable number of commercial applications i agree with Simon that many Commericla Brokers find that they do a lot of work only to find that the client decides not to proceed for some reason or another.
The other reason is often the client has approached his own Banker who tells him that he is unable to assist. When the Broker arranges a Letter of Offer from an alternative lender the client uses the Letter of Offer as leverage to his original Bank who 9/10 times change their policy to accomadate the loan.
The Broker looses out.
For some bigger JV deals involving many millions of dollars the time spent can be vast.
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
Of course you aren’t crazy. As a first timer, if you feel uncomfortable then you did the right thing finding a professional who suits you.
However, generally it is the confident capable broker who charges the fee knowing he is not hungry for business. A potential might exist for your new broker to be keen as mustard but green as grass in the commercial field. Make sure you check his experience.
All the best,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Cool , Is there anybody in my same boat ? Please come out to response !
Cheers,
Nickelbenas name
I finally got a loan broker from the internet who do not require me to sign a brokerage fee agreement. He is young but great job he had done to get my low doc commercial loan approved !!!
Thanks everbody ,
Nickelben
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