Question : Financing: Apartment Building Commercial Mortgage – Business & Ethical Question?
Hi All,
I am a real estate investor. I have an accepted offer on a 7-plex.

My two questions are:

1. Is it ethical to contact two mortgage brokers I know and ask both of them to work on my mortgage application at the same without telling them about the other broker? meaning apply for a mortgage with both of them? I just see such different financing conditions that I want to get a competitive mortgage and not be taken advantage of . the problem if I apply with only one of them first is if I wait till the first response, I may lose the deal as I have only 3 weeks to release the financing conditions. so is it OK to have 2 mortgage brokers from different companies work on the same deal for me at the same time? then if one of them wants a fee double than the other broker for example, then I will tell him no thanks. this type of building is a lot of work for the mortgage broker so I would feel bad saying no if he gives a positive response in the end just because another broker offers me better financing conditions. on the other hand, as mentioned I want the option to reject a broker who charges too much or arranges bad financing conditions! Also, will the brokers be able to tell/know somehow that I applied elsewhere in parallel?

2. A broker wants $ 6000 for arranging financing for a 7-plex that costs only 350,000! he said they charge the higher of $ 6000 and 1% of purchase price. so unfortunately in the case of 350000 i pay 6000 which is around 2% of purchase price! is this reasonable fee for a commercial property or is he charging too much?

THANKS.
commercial mortgage finance

Best answer:

Answer by linkus86
1. There is no ethical implications if the two mortgage brokers are aware that they are in competition with one another. Personally I think it is not only ethical to provide such information, but also very wise to do so because it motivates both to be competitive with rates and fees. I just would try to avoid pointing each specific broker out to one another, but they might be able to identify each other based upon credit inquiries on your credit report.

2. The amount of fees one mortgage broker asks for to provide financing is moot and only serves as a starting point for negotiations. My guess is that many commercial brokers aren’t real busy right now and might be willing to do it for that original 1 % or maybe even less. Remember, it isn’t always about the origination fee.