| Detail | Explanation |
|---|---|
| Represents | The borrower |
| Main work | Structuring, lender selection, competitive process, negotiation, and closing management |
| Lends its own money | No |
| Common compensation | A fee disclosed in a written agreement, usually paid at closing |
| California licensing | Brokering loans secured by real property requires a real estate license |
What does a commercial mortgage broker do at each stage?
A broker's work starts before any lender sees the deal and continues until the loan funds. The table shows the typical sequence, from a first pass through a loan sizing calculator to comparing term sheets and closing.
| Stage | What the broker does | What the borrower gets |
|---|---|---|
| Intake and review | Tests the request against lender sizing, property, and sponsor requirements | An early read on what the deal can realistically support |
| Structuring | Recommends loan type, leverage, term, recourse, and any subordinate capital | A request lenders can approve without restructuring it |
| Packaging | Builds the executive summary and organizes financials, rent roll, and sponsor information | A consistent package that answers the first round of lender questions |
| Lender selection | Identifies lenders whose programs and current appetite fit the property, size, and market | Fewer wasted submissions and less exposure of the deal in the market |
| Competitive process | Collects indications and term sheets and compares them on full cost and structure | Negotiating leverage and a clear side-by-side comparison |
| Negotiation | Pushes on proceeds, rate, recourse, reserves, prepayment, and closing conditions | Better terms than the first offer on the table |
| Closing | Coordinates third-party reports, document requests, and lender conditions | Issues solved early, before they delay or kill the closing |
How is a broker different from a loan officer at a lender?
A loan officer works for one lender and can offer only that lender's programs. When a request falls outside those programs, the answer is a decline or a restructured request that fits the lender's box. A broker works for the borrower and compares programs across lender types, from banks and life companies to debt funds and private lenders. The guide to commercial real estate lender types explains how those categories differ.
How do commercial mortgage brokers get paid?
Compensation structures vary, and a reputable broker puts the terms in writing before starting work. The common arrangements are:
- Borrower-paid success fee: a fee, often expressed as a percentage of the loan amount, paid at closing and only if the loan closes
- Lender-paid compensation: some lenders pay a broker directly, which should be disclosed to the borrower
- Upfront or engagement fees: some brokers charge a fee to begin work on complex or large assignments, credited or not against the success fee
- Third-party costs: appraisals, environmental reports, and lender legal fees are paid by the borrower regardless of who arranged the loan
What should be in a broker engagement agreement?
- How the fee is calculated, when it is earned, and who pays it
- Whether any lender compensation will be paid and how it is disclosed
- Whether the engagement is exclusive, and for how long
- Whether a fee is owed on a loan from a lender the borrower already knew
- What happens if the borrower declines a term sheet that matches the request
- Confidentiality of the borrower's financial information
When does using a commercial mortgage broker help?
A broker adds the most value when the right lender is not obvious or when the borrower lacks time or relationships to run a real process.
- Transitional, construction, or specialty property that fits only a narrow set of lenders
- Loans larger than a borrower's existing bank can hold
- Requests that need more than 1 layer of capital, such as a senior loan plus mezzanine financing
- Tight closing deadlines where a failed lender process would cost the deal
- Sponsors entering a new market or property type without local lender relationships
- Refinancing a maturing loan when the current lender will not extend
When might you not need a broker?
A borrower with a strong relationship bank that actively lends on the property type, and a simple stabilized request well within that bank's policy, may get competitive terms directly. Even then, some borrowers use a broker to test whether the relationship terms are in line with the rest of the market.
What to ask a commercial mortgage broker before hiring one
- Which closed transactions are most similar to this property type, size, and business plan
- How lenders are selected and how many will see the deal
- Whether the broker holds the required real estate license in the relevant state
- Who will personally work on the request and review the package
- How the fee works, in writing
Do commercial mortgage brokers need a license?
Licensing rules are set by each state. In California, the Real Estate Law defines a real estate broker to include a person who, for compensation, solicits borrowers or lenders for, or negotiates, loans secured by real property. Borrowers can check a California license on the Department of Real Estate public license lookup.
How Capital Partners works as a commercial mortgage broker
Capital Partners, Inc. is a commercial real estate capital advisory firm that arranges debt and equity from $1M to $100M nationwide. It works on commercial and business-purpose financing only.
A principal reviews every request. Each deal is matched against a private lender criteria database, categorized by property type, structure, loan size, geography, and current appetite. Lender identities in that database stay private, and the deal goes only to the lenders that fit.
Capital Partners is a licensed California real estate broker, DRE Corporate License 02093339, and a member of Commercial Real Estate Capital Advisors (CRECA). Its published track record lists 30 transactions, and the 24 with a disclosed amount total $204.1M.
To see how a lender would view your request, submit the deal for a principal's review, or start with the capital plan to size the scenario without documents.
Sources
Common questions
How do commercial mortgage brokers get paid?
Most are paid a success fee at closing under a written agreement, often calculated as a percentage of the loan amount. Some receive disclosed compensation from the lender, and some charge an upfront engagement fee on complex assignments. Ask for the full fee terms in writing before the broker starts work.
Is it worth using a commercial mortgage broker?
It usually is when the deal is transitional, large, time-sensitive, or outside a single bank's policy, because the broker reaches lenders the borrower would not find and creates competition among them. For a simple stabilized loan with a strong existing bank relationship, going direct can work.
Does a commercial mortgage broker lend money?
No. A broker arranges financing from lenders and investors and represents the borrower through closing. The lender funds the loan and holds or sells it.
Will a broker send my deal to every lender?
A good broker should not. Sending a deal to lenders that do not fit wastes time and exposes the property and financials unnecessarily. Capital Partners sends a request only to the lenders whose criteria and current appetite match it.
Can a commercial mortgage broker help with a construction loan?
Yes. Construction lending varies more by lender than most loan types, so matching the project to the right bank, debt fund, or private lender matters. See the construction loan requirements checklist for what lenders will ask for.
Send this deal to a principal
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