A CRE loan term sheet is a written, non-binding summary of the proposed loan: amount, rate, term, amortization , recourse , fees, reserves , prepayment, and material conditions to closing . It is issued after a brief lender review and before formal underwriting . Acceptance moves the deal into closing diligence under exclusivity .
What is binding versus non-binding?
The economic terms (rate, spread, amount, structure) are non-binding until the lender issues a commitment after underwriting. The exclusivity period, typically 30 to 60 days, and any application deposit obligations are binding upon acceptance. Borrowers should treat the term sheet as a serious commitment to one lender.
What does a competitive process produce?
Multiple term sheets in parallel from lenders in different pools (banks, life companies, agencies, debt funds, CMBS). Side-by-side comparison reveals real spread differences, structural tradeoffs, and the actual market price of the loan. Borrowers without a competitive process pay 10 to 25 basis points more on average and accept tighter structure.
What are common term-sheet traps?
Vague proceeds language ('up to' instead of a firm amount), unbounded lender legal cap, missing extension test detail, ambiguous reserves, and silent prepayment language. Each of these can move 25 basis points of all-in cost or several million dollars of proceeds during closing. Negotiate the term sheet, do not just accept it.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Multifamily Market Commentary · Fannie Mae Economic & Strategic Research · 2026-Q1