Coop Management Company Fee for Equity Loan

[pavlusha]

Management Fees for Coop Equity Loan

Today, 06:16 PM
Our large NYC coop 200 apts management company requests a 16K for finding a broker and new insurance company for a $6 mil loan. Is it fair? This is what they said to us:
As indicated in our contract, handling a Co-operative refinancing is not part of a management companies standard responsibilities. It is typical that in addition to paying the mortgage broker that management also receives a fee for locating and negotiating the mortgage. At last refinancing 10 years ago we received a consulting fee of $9K. Please note while the mortgage broker typically receives 1 point they have agreed to reduce their fee to .40 basis points based on the number of loans we have given them in the past few years. We are requesting a fee in the amount of $16 K which is moderate in comparison to the typical industry fee for this transaction.

Is this fee normal or excessive?. What is the industry standard? Advice is needed.

[aslan]

It seems they are saying that they saved your co-op building $36,000 (0.6% of $6 million), and they are asking for some portion of that savings as a fee to them. Everything is negotiable so it's hard to comment, but the 1 percent mortgage broker fee is not unheard of.

The nice thing about your management company is that they "are requesting" the $16,000 and not simply mailing you a bill. You'd be surprised by how many people in this industry, especially contractors, will just send you an arbitrary bill without discussing or giving you a quote beforehand, and will be willing to take you to small claims court if you don't pay.

Ultimately it's up to you. Perhaps you can counter with a lower fee?

[Mosoc]

A broker fee is common in such transactions, and it's typical for it to be around 1% of the loan amount. In this case, the broker has agreed to a reduced fee of 0.40 basis points, which is significantly lower. This reduction could be attributed to the volume of business the coop has provided the broker. While it's true that managing a refinancing is not typically a standard responsibility for a management company, it's not uncommon for them to charge a fee for additional services beyond their usual scope. The previous consulting fee of $9K from a decade ago isn't directly comparable due to inflation, changes in the market, and potentially increased complexity of the current transaction.