For a CRE broker, the capital partner relationship is the single most important asset in the business. A good capital partner is a multi-deal channel that closes consistently, protects your client relationship, and pays you cleanly. A bad one wastes your time on dead deals, solicits your clients, or fights you on the fee at closing.
The three channels brokers use
- Direct outreach: cold-emailing or calling debt funds, private capital sources, and balance-sheet lenders. High effort, slow to build, but builds direct relationships.
- Referral: another broker, operator, or attorney introduces you to a capital partner they've closed deals with. Faster trust, but limited to your network.
- Capital-partner platforms: firms like Passy Capital that explicitly run a broker channel — broker submits deals, platform underwrites and funds, broker gets paid at close. Lowest friction to get started.
What to look for in a capital partner
- Term-sheet speed: 24–48 hours on a clean file is the bar. If they take longer, your deals die in the meantime.
- Capital range: their sweet spot needs to match your deal book. A $5M-average broker doesn't fit a $25M-minimum platform.
- Asset class coverage: confirm they actively fund what you submit — multifamily, mixed-use, retail, hospitality, SFR. A "we do everything" answer often means they don't have deep relationships in any one vertical.
- Geographic reach: 50-state or specific regions. Brokers covering a metro need a partner that funds in that metro.
- Closing rate: ask what percentage of issued term sheets actually close. Below 60% is concerning.
- Capital source disclosure: do they disclose the actual funding source per deal? "Our network" is a non-answer.
Red flags to avoid
- No written engagement before they start working the deal — leaves your fee unprotected
- Vague no-solicit language or refusal to sign an NDA on broker introductions
- Bait-and-switch on term sheet: lower leverage or higher rate at commitment than at term sheet
- Upfront fees of any kind — application fees, retainer, expedite fees
- Requirement that you stay out of the borrower communication entirely — undermines your client relationship
- Slow response time on follow-ups (5+ days) — predicts how they'll behave at closing
How to structure the relationship
Per deal, get the engagement letter in writing before substantive underwriting begins. The engagement should specify: your fee (typically 50/50 split of the broker fee, or a referral fee structure), the no-solicit clause, the timeline expectations, and the capital source if known.
Track outcomes: what percentage of your submissions get term sheets, what percentage of term sheets close, average days to close. If a partner's term-sheet-to-close ratio is under 60%, drop them — they're costing you client trust.
Build relationships with 2–3 capital partners in your sweet spot, not 1. Single-channel dependency kills brokers when the partner shifts strategy or pauses on your asset class. Multi-channel keeps you funded.