Nine lenders on one file, two funding off the same balance sheet

Table funding means the lender whose name is on my documents isn't actually the one whose money shows up? And I would have no way to know that from the term sheet? Because if wide shopping is normal practice, and I think I've read that it is, then this trap is sitting there for basically everyone who uses a broker on a bridge deal.

@sextant what did the broker agreement say about submissions? The ones I've read split into two shapes. Some say the broker may submit to lenders in his discretion, which is a blank check to do exactly what happened to you. Some carry a schedule of approved lenders attached as an exhibit and require your written consent to add one. The second kind exists, it just doesn't get offered unless you ask.

Also worth pulling out your loan applications from those nine. Several private lender intake forms have a line asking whether the deal has been submitted elsewhere, and some of them have a representation that the borrower hasn't shopped it inside 90 days. If your broker checked no on three of those with your name on the signature line, you have a different and worse problem than pricing.

Genuinely surprised that a committee would remember. I assumed files were just files. So they clocked the same address three times and read it as the sponsor being loose with the numbers rather than the broker being sloppy? That distinction seems like it should matter a lot and there's no way for you to argue it after the fact.

The mechanism is worth being precise about, because the lesson depends on which part actually caused the repricing.

In private bridge and hard money, a large share of the names a borrower sees are originators rather than capital. They underwrite, they close in their own name, and the loan is funded at the table by a fund, a family office, or a bank warehouse line behind them. Several originators commonly share the same source. That is why nine logos can be four checkbooks. Nothing about it is improper, and it isn't disclosed on a term sheet unless you ask who holds the paper after closing and whose credit committee approves it.

Duplicate arrivals get noticed because intake desks track by property address, APN, and borrower entity, and because the same analyst often covers a metro for more than one originator. What lands at committee is a file whose loan amount and rent assumptions differ across versions. Committees price uncertainty.

Which assumption the answer rests on: whether the 75 bps and the proceeds cut were driven by the duplicate submissions or by 62 percent occupancy on a 14-unit value add. @sextant, if the earlier passes cited occupancy, the second explanation is live, and the duplicates may have cost you credibility rather than basis points. Ask the committee lender directly what changed between the first version and the third. Some will tell you.

On process, the controls that hold up are a named approval list, one canonical set of numbers under your control, and a written question to each candidate about who funds and who approves. Get the answer in writing, since verbal descriptions of funding structure change between the pitch and the closing table.

Out where I buy, there are maybe three lenders total who will write a bridge on an eight-unit at a $60k per door basis. If a broker sprayed my file, I would be done in that market for a year. Wide shopping is a big-market habit that translates badly to thin ones.

The $21,000 extension is the number I can't get past. Was that negotiated in the original contract as a set price per day, or did the seller just name it when he had you cornered?

I started asking for the lender list in writing about a year ago and roughly half of brokers push back hard on it. The reason given is always that it slows placement. The real reason, I think, is that the list is the inventory and they don't want you to have it, because you can call those shops yourself next time. Which is fair enough as a business concern, and it's still your file and your reputation moving through the market. @sextant, did yours resist or did you just never ask?

The interest reserve difference is what would have killed it for me if I were the analyst. Same building, same month, and one version needs 12 months of carry and another doesn't. On a 62 percent occupied property that reads like the sponsor doesn't know what his own lease-up curve looks like. The rent roll vacancy delta at 6 versus 8 is smaller but it points the same direction.

Let me put the cost where I think it actually sits. 75 bps on $1.5M is about $11,250 a year, roughly $22,500 across a 24-month bridge, and some of that you would have refinanced away anyway. The proceeds cut from 70 to 62 percent of cost is $192,000 of capital you had to source at a partner split. That is the loss. The rate move is noise next to it.

So I'd frame the control differently than @sextant did. The version of the numbers matters less than the leverage question. If I'm going in at 62 percent occupancy, I want to know before I open escrow which lenders will hold 70 percent of cost at that occupancy and which will not, and I want that in a term sheet, not a broker's estimate.

Near miss on a 9-unit two years back. Broker mentioned casually that he'd already "floated it around" before we signed anything. I asked for names and two of them turned out to be the same capital with different letterhead, which I only learned because the same underwriter emailed me twice from two domains. Pulled the file and went direct. Slower by three weeks, cleaner terms.

Sitting on the other side of intake at a small shop, duplicate files come in constantly and most of the time they're a shrug. What gets marked is inconsistency. If the same deal arrives with two loan amounts we assume someone is fishing for the highest proceeds and we'll usually quote to the conservative version.

I'd push back on the framing though. @sextant, at 62 percent occupancy on a 1970s garden walk-up, I think you were always at risk of a proceeds cut, and the duplicates gave the committee a tidy reason to say what they already wanted to say. The fix is a lender who prices lease-up as a business rather than an exception.

I'd have let the contract die and paid nothing. $21,000 for 30 days on a property that just told you the financing market doesn't like it is a lot of money to keep a deal you'd already learned something bad about. Though I hold land and my clock runs in years, so I'm the wrong person to ask about a lease-up window.

Practical question, how do you actually verify who funds a lender? Do you just ask, and do people answer honestly? @canton if half of brokers won't even give you the list I don't see how the funding question gets answered before you're already in it.

Live version of this right now. My broker forwarded my full package, including my renovation budget and my seller's name, to a lender who also happens to lend to a flipper working the same three zip codes I am. Nothing improper happened as far as I can tell. It still felt like handing my homework to a competitor. There is no clause in my agreement about it and I'm adding one.

$4,800 for a second appraisal on 14 units. I had been budgeting $1,500 for anything with an appraisal in it. Adding a line for a dead first appraisal, apparently that's a real category.

Where I landed after a smaller version of this: two brokers, separate lane assignments in writing. One gets agency and DSCR names, one gets bridge and private, and neither is allowed to cross. It costs me the theoretical best price on any single deal and it means no capital source ever sees my file twice in the same week. @ledger's point is the one I'd carry forward though, since I now get a proceeds indication at my actual current occupancy before I sign a purchase contract, and I'll pay for that conversation if I have to.