One funder for every double close, or a bid per deal?

If the fee comes out about the same either way, why does the approval speed matter enough to vote on? Genuine question. Is it that a slow yes costs you the deal, or that the seller walks?

I thought this was just a hard money loan with a very short term, so wouldn't you shop it the way you'd shop any loan? Rate is rate.

@rigging it isn't priced like a rate loan, that's why the shopping question is different. The money is out for hours, sometimes minutes between two signings in the same office, and the repayment is the C buyer's wire that's already sitting in escrow. So the funder isn't underwriting the house the way a hard money lender would. They're underwriting whether the C leg actually closes and whether the closer will follow their instructions. That's why the terms that matter are the conditions, not the number.

@kestrel I'm still list-building so take this as theory, but the funders I've talked to all wanted to know how many of these I do a month before they'd talk about anything else. Sounds like the discount you're asking about is really a volume discount, and it only shows up if you're captive.

The answer turns on whether your deal flow is uniform. If your A legs sit in a narrow band and your C buyers are cash with funds in escrow before you sign, a single funder is the cheaper arrangement, because most of what you're paying for on a repeat file is the absence of friction. The funder has already vetted your closer, already approved the escrow instruction language, and can clear a file on a call. That saved day is worth real money when a seller has a deadline.

If your flow is lumpy, one relationship becomes a constraint. The deals a funder declines are the ones you most need funded, typically a C buyer using institutional financing where the wire lands after the A leg has to record, or a purchase price far above your usual size. A second funder who prices worse and tolerates more exists for exactly those files.

On the discount question, treat it as unproven until it's in a term sheet. Funders compete on conditions more than on fee, and a fee reduction after five closings is a promise you cannot enforce. Ask for it in writing with the fifth file and see what happens.

One mechanical point that decides more of this than fee: whether your state's closing practice lets the A leg and B leg fund from separate money in the same session, and how your closer's escrow rules treat funds disbursement, both of which vary by state and by title company. Confirm current requirements in writing with the closer and the funder before you commit to either model, because a funder who cannot work with the closing practice where you operate is not a candidate at any price.

I keep two, and the math for it isn't about fee.

Last year I ran nine funded double closes through my desk on the capital coordination side. Fees ranged 1,400 to 2,600 on A legs between 62k and 210k. Total funding cost for the year was about 17k. If shopping every deal had shaved 15% off that, I'd have saved 2,550.

One file died because the funder I'd have used declined it on a Thursday afternoon and I couldn't paper a second one before Monday. My spread on that deal was 11k. So the whole year of shopping savings was worth less than a quarter of one blown file.

That's the argument for redundancy, and it's also the argument against bidding out every deal. Bidding takes calendar days and it keeps you an unfamiliar name at both shops. Two funders both of whom know your closer, one primary, one for the ugly ones. @kestrel, what's your annual funding spend? If it's under 20k the whole optimization question is small.

This looks different once you get to the closing table. Every new funder means a new set of escrow instructions for the closer to read, and in the offices I've talked to that's the part that draws a no. Some closers won't disburse under a funder's instructions at all, some will after their underwriter blesses the language, and that review takes days you don't have. So each funder you add is really a closer relationship you have to rebuild. One funder plus a backup you've already run a dry file through seems like the practical version of what @ledger is describing.

Nothing in my land world resembles this, but the pattern is familiar. Every counterparty you only use once charges you for being a stranger.