Underwriting Agreement
An underwriting agreement commits an underwriter to purchase securities (debt or equity) or provide financing, assuming placement risk in exchange for fees or discounted pricing.
| Underwriting Type | Commitment |
| Firm commitment | Underwriter buys entire offering, resells to investors |
| Best efforts | Underwriter markets but doesn't guarantee sale |
| Standby underwriting | Underwriter buys unsold portion only |
| Bought deal | Underwriter purchases at discount, resells |
| Syndicated underwriting | Multiple underwriters share risk |
| Fee structure | 1% to 5% of offering size |
| Real Estate Context | Application |
| REIT IPO | Investment banks underwrite public offering |
| Bond issuance | Banks commit to buy property-backed bonds |
| Loan syndication | Lead bank underwrites, syndicates to participants |
| Mortgage warehousing | Lender commits to fund pipeline |
| Risk assumed | Market risk if unable to resell |
| Due diligence | Extensive analysis before commitment |
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