How many term sheets should I get before choosing a lender?
For most commercial and investor deals, getting 2 to 3 term sheets is enough to confirm you are seeing competitive pricing without paying for redundant appraisals or environmental reports across too many lenders. Complex or large deals, or deals with an unusual property type, can justify 4 or more, since pricing and terms tend to vary more when fewer lenders are comfortable with the asset.
The tradeoff
Each additional term sheet you pursue into underwriting typically means another appraisal deposit, another set of fees at risk if the deal does not close with that lender, and more of your time managing multiple relationships. Beyond 3 or 4 lenders, the marginal benefit usually shrinks while the cost and complexity keep rising.
| Deal type | Typical number of term sheets worth pursuing |
|---|---|
| Standard DSCR loan, common property type | 1 to 2, since pricing is fairly standardized across lenders |
| Bridge or hard money, standard property | 2 to 3 |
| Complex commercial, unusual asset type | 3 to 5, since fewer lenders compete and terms vary more |
| SBA loans | 2 to 3, since lender appetite and speed vary significantly |
Why more term sheets on standard deals adds less value
A standard DSCR loan on a rented fourplex is priced fairly consistently across lenders that serve that space, based on published rate sheets tied to your credit, coverage, and leverage. Getting 5 term sheets on this kind of deal often produces very similar numbers, while costing 5 appraisal deposits.
Why more term sheets on complex deals adds more value
A specialty property, an unusual mixed-use configuration, or a large loan size narrows the field of lenders who will even quote it. Pricing on these deals can vary widely, 1 to 2 full points of rate or more, because each lender's appetite and cost of capital for that specific risk differs.
A practical process
- Get initial, no-cost quotes (soft quotes, not full term sheets requiring a deposit) from several lenders first.
- Narrow to the top 2 to 3 based on rate, terms, and lender reputation.
- Move only those into full term sheet stage, paying deposits only where needed.
- Compare using total cost over your hold period, not just headline rate.
- Proceed to full underwriting with the best one.
When a single lender is enough
If you have an existing relationship with a lender who has financed you well before, and the deal is standard, it can be reasonable to move forward with just that one lender rather than shopping broadly, trading a small amount of potential savings for speed and simplicity.
The role of a lending desk
A desk that already has relationships across many lenders can generate the equivalent of several competing term sheets from a single application, since it knows which lenders to approach for your specific deal type without you individually contacting each one.
How CommFi handles it
Our lending desk prices your deal first, and when it needs outside lenders, the desk searches a database of 7,000+ lenders and typically brings back 2 to 3 competing term sheets from the ones that fit, without you managing multiple relationships or paying redundant report fees across lenders that were never going to be competitive. Zero upfront fees.
Related reading
Related questions
- How many term sheets should I get for a commercial loan?
- For most standard deals, 2 to 3 is enough. Complex or unusual properties can justify 4 or more since pricing varies more.
- Does getting more term sheets always save money?
- Not necessarily on standard deals, where pricing is fairly consistent across lenders. It matters more on complex or specialty deals.
- What does it cost to pursue multiple term sheets?
- Each lender typically requires a deposit for third-party reports like the appraisal, so pursuing several in parallel adds cost.
- Should I get soft quotes before full term sheets?
- Yes, this is a good way to narrow down to the best 2 to 3 lenders before paying for full underwriting and third-party reports with any of them.
- Can one lender bring me multiple competing offers?
- Yes, a lending desk with relationships across many lenders can produce competing term sheets from a single application.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.