Broker compensation in CRE financing is one of the most negotiable — and most contentious — parts of any deal. The structure depends on who originated the borrower relationship, who is doing the underwriting work, and whether the broker is staying in the borrower communication through close.
The starting point: borrower-paid broker fee
On most CRE deals, the borrower pays a broker fee at closing equal to 1–2% of the loan amount. On a $5M bridge loan that's $50K–$100K. The fee is funded from loan proceeds (which means the borrower technically pays it but doesn't write a separate check) and is disclosed in the closing statement.
When the deal originated with one broker and the capital came through a capital partner who is itself a broker (or a partly-broker capital orchestrator), that 1–2% fee gets split.
The two common split structures
- 50/50 broker fee split: borrower pays 1.5%, originating broker takes 0.75%, capital partner takes 0.75%. Most common when both sides do meaningful work — broker brings the deal and stays client-facing, capital partner underwrites and closes.
- Referral fee structure: borrower pays 1.5% to the capital partner as the total broker fee, capital partner pays the introducing broker a fixed 50–75 bps as a referral. Common when the originating broker doesn't want to stay involved post-introduction.
When you'd use each
Use the 50/50 split when you're the client's primary broker, you stay involved through underwriting and closing, you're managing the borrower's expectations, and you want to maintain visible authorship of the engagement.
Use the referral fee structure when you don't have the bandwidth (or want) to stay in the workflow, when the capital partner has stronger underwriting capacity, or when the borrower wants to deal directly with the capital partner from term sheet onward.
How to protect your fee before closing
- Written engagement letter signed before any substantive underwriting begins — specifies the split, who is paid by whom, and when
- NDA on the borrower relationship signed by the capital partner before introduction
- Confirmation of the fee disclosure on the borrower's closing statement (Settlement Statement / HUD-1 equivalent)
- Wire instructions in writing — broker fee wired to your firm directly at closing, not routed through the capital partner
- No "discretionary" or "performance-based" fee structures — every dollar should be defined in the engagement before underwriting starts
When the borrower pushes back on the fee
Borrowers occasionally push to negotiate the broker fee down at closing. If you and the capital partner have an engagement letter agreeing to a 1.5% total, neither party should unilaterally renegotiate at the last minute. If the borrower pushes, the capital partner should bring you into the conversation, not cut your share to placate the client.
The capital partners worth working with hold the line. The ones that don't are signaling how they'll behave on the next deal — and that's information worth using.