Commercial Finance Broker - Etiquette?
Discussion
I'm wondering if any of you have some thoughts on this situation.
Got in touch with a commercial finance broker directly to arrange some commercial property loans for a family member. Broker said that as I had gone to him directly; he would charge me 0.75% of the loan amount as a completion fee (rather than the 1% he would have charged.) Fair enough we thought; he would do the work etc... as the structure was a little complicated. It ended up being placed with a normal high street bank (commercial division.)
I then decided to raise some funding on my own properties (much more straightforward case) and wanted to go with the same high street lender. I also became a "client" of the mortgage broker based on a 0.75% fee again, but I done all of the work myself - contacting/meeting with the bank commercial manager (contact details whom I got from a different developmental manager who was sorting out family members loan), negotiating rates and supplying the bank with all the info I had already supplied the mortgage broker. I got an email from commercial mortgage broker saying that he would expect 0.6% of the loan amount as a fee.
In addition, my brother is also going to go through the same guy I am in negotiations with to re-finance my portfolio - but the mortgage broker is also wanting to charge my brother 0.6% fee also.
I don't mind paying the 0.6% fee for myself; after all I came to an agreement with him - even if I did end up doing most of the work. However it's a bit cheeky him looking for 0.6% off my brother too?
How do things like this work in practice; what would happen if family member/I/brother want to approach the same bank again directly for further lending - would the broker still ask for a cut from us in the future? I've looked over the agreement and it makes no mention of this/future lending.
Opinions welcome.
Got in touch with a commercial finance broker directly to arrange some commercial property loans for a family member. Broker said that as I had gone to him directly; he would charge me 0.75% of the loan amount as a completion fee (rather than the 1% he would have charged.) Fair enough we thought; he would do the work etc... as the structure was a little complicated. It ended up being placed with a normal high street bank (commercial division.)
I then decided to raise some funding on my own properties (much more straightforward case) and wanted to go with the same high street lender. I also became a "client" of the mortgage broker based on a 0.75% fee again, but I done all of the work myself - contacting/meeting with the bank commercial manager (contact details whom I got from a different developmental manager who was sorting out family members loan), negotiating rates and supplying the bank with all the info I had already supplied the mortgage broker. I got an email from commercial mortgage broker saying that he would expect 0.6% of the loan amount as a fee.
In addition, my brother is also going to go through the same guy I am in negotiations with to re-finance my portfolio - but the mortgage broker is also wanting to charge my brother 0.6% fee also.
I don't mind paying the 0.6% fee for myself; after all I came to an agreement with him - even if I did end up doing most of the work. However it's a bit cheeky him looking for 0.6% off my brother too?
How do things like this work in practice; what would happen if family member/I/brother want to approach the same bank again directly for further lending - would the broker still ask for a cut from us in the future? I've looked over the agreement and it makes no mention of this/future lending.
Opinions welcome.
So you did a deal via the broker with a lender.
You then did another deal with the same lender.
Did the second deal you do go via the broker as well? Or is he claiming 0.6% as kind of 'introduction to that lender charge'?
Is your brother using the broker or going direct to the lender? If he's using the broker then why wouldn't the broker charge your brother?
Feel like I'm missing something here....
You then did another deal with the same lender.
Did the second deal you do go via the broker as well? Or is he claiming 0.6% as kind of 'introduction to that lender charge'?
Is your brother using the broker or going direct to the lender? If he's using the broker then why wouldn't the broker charge your brother?
Feel like I'm missing something here....
Yes, it's all a bit complicated.
3 borrowers (Dad, Myself and Brother respectively)
1 Commercial Mortgage Broker
1 Bank/lender with 2 contacts - contact A and contact B (both at same bank but different geographic areas)
I am kind of acting as a "facilitator" for my dad and brother.
Deal 1/Borrower = "Dad" - Mortgage broker arranged through contact A and I also spoke to contact A over phone. Deal has completed.
Deal 2/Borrower = "myself" - Instructed mortgage broker to secure funding for myself, however I then spoke to contact A (whom had been introduced to me via Deal 1 by the broker) who asked me to get in touch with contact B. I have liaised with contact B ever since directly rather than going through mortgage broker.
Deal 3/Borrower = "brother" - I have asked contact B for lending for my brother. No mortgage broker has been instructed by my brother.
Issues I see it:
Deal 1 - Mortgage broker entitled to full fee
Deal 2 - Unsure if mortgage broker entitled to any fee if I have done the work/negotiation myself? I think morally - I will pay the 0.6% fee
Deal 3 - I don't understand why my brother would have to pay mortgage broker a fee.
Now what happens if myself, dad or brother want to get more funding from this bank - will we have to pay a fee to the mortgage broker for any future deals because they served as initial "introducer"?
3 borrowers (Dad, Myself and Brother respectively)
1 Commercial Mortgage Broker
1 Bank/lender with 2 contacts - contact A and contact B (both at same bank but different geographic areas)
I am kind of acting as a "facilitator" for my dad and brother.
Deal 1/Borrower = "Dad" - Mortgage broker arranged through contact A and I also spoke to contact A over phone. Deal has completed.
Deal 2/Borrower = "myself" - Instructed mortgage broker to secure funding for myself, however I then spoke to contact A (whom had been introduced to me via Deal 1 by the broker) who asked me to get in touch with contact B. I have liaised with contact B ever since directly rather than going through mortgage broker.
Deal 3/Borrower = "brother" - I have asked contact B for lending for my brother. No mortgage broker has been instructed by my brother.
Issues I see it:
Deal 1 - Mortgage broker entitled to full fee
Deal 2 - Unsure if mortgage broker entitled to any fee if I have done the work/negotiation myself? I think morally - I will pay the 0.6% fee
Deal 3 - I don't understand why my brother would have to pay mortgage broker a fee.
Now what happens if myself, dad or brother want to get more funding from this bank - will we have to pay a fee to the mortgage broker for any future deals because they served as initial "introducer"?
osmononame said:
Yes, it's all a bit complicated.
3 borrowers (Dad, Myself and Brother respectively)
1 Commercial Mortgage Broker
1 Bank/lender with 2 contacts - contact A and contact B (both at same bank but different geographic areas)
I am kind of acting as a "facilitator" for my dad and brother.
Deal 1/Borrower = "Dad" - Mortgage broker arranged through contact A and I also spoke to contact A over phone. Deal has completed.
Deal 2/Borrower = "myself" - Instructed mortgage broker to secure funding for myself, however I then spoke to contact A (whom had been introduced to me via Deal 1 by the broker) who asked me to get in touch with contact B. I have liaised with contact B ever since directly rather than going through mortgage broker.
Deal 3/Borrower = "brother" - I have asked contact B for lending for my brother. No mortgage broker has been instructed by my brother.
Issues I see it:
Deal 1 - Mortgage broker entitled to full fee
Deal 2 - Unsure if mortgage broker entitled to any fee if I have done the work/negotiation myself? I think morally - I will pay the 0.6% fee
Deal 3 - I don't understand why my brother would have to pay mortgage broker a fee.
Now what happens if myself, dad or brother want to get more funding from this bank - will we have to pay a fee to the mortgage broker for any future deals because they served as initial "introducer"?
What have you signed?3 borrowers (Dad, Myself and Brother respectively)
1 Commercial Mortgage Broker
1 Bank/lender with 2 contacts - contact A and contact B (both at same bank but different geographic areas)
I am kind of acting as a "facilitator" for my dad and brother.
Deal 1/Borrower = "Dad" - Mortgage broker arranged through contact A and I also spoke to contact A over phone. Deal has completed.
Deal 2/Borrower = "myself" - Instructed mortgage broker to secure funding for myself, however I then spoke to contact A (whom had been introduced to me via Deal 1 by the broker) who asked me to get in touch with contact B. I have liaised with contact B ever since directly rather than going through mortgage broker.
Deal 3/Borrower = "brother" - I have asked contact B for lending for my brother. No mortgage broker has been instructed by my brother.
Issues I see it:
Deal 1 - Mortgage broker entitled to full fee
Deal 2 - Unsure if mortgage broker entitled to any fee if I have done the work/negotiation myself? I think morally - I will pay the 0.6% fee
Deal 3 - I don't understand why my brother would have to pay mortgage broker a fee.
Now what happens if myself, dad or brother want to get more funding from this bank - will we have to pay a fee to the mortgage broker for any future deals because they served as initial "introducer"?
So basically he's wanting 0.6%, not for work he has done, but because he did a deal for your Dad with a Bank, you've then spoken to the same bank and did a deal and so is your brother? Therefore I assume he's classing it as some kind of introducer fee.
Unless you have signed something to that effect then how is he going to enforce it? I can't imagine you personally have signed anything with him given that for the initial deal you were just a kind of go between? He's probably a bit miffed that you bypassed him.
I'm a Mortgage Broker and if I charged a client a fee to transact a mortgage with, say, Natwest. If the person that introduced me to that client then applied to Natwest directly and did the whole deal independently, I wouldn't then be contacting them to tell them that they owed me a fee, even at a reduced rate!?!?
Doesn't seem right to me. If you'd gone to him and asked for his advice and he pointed you in the direction of a lender and you went directly to them, I can understand that he might feel aggreived as you've utilised him as a resource and gone direct.
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