Thread: What commission to Pay on this deal???

Our family owns some commercial assets and isn't in the market to really sell any. A broker has come to me unsolicited with 2 buyers that are interested in my property. Everything is for sale for the right price but I don't know what it's worth to pay the broker. I know the residential real estate commission game but I'm not as familiar with the commercial. What are y'all guys thought on a fair flat amount or percentage of this deal. The broker would only represent the buyer and my attorney would represent us, the seller. It's a $10-10.5 million deal.

8 to 12% IMHO.

Originally Posted by LAbull

8 to 12% IMHO.

Thats hugely high. What is your number based off?

Originally Posted by BogeyBoy82

Thats hugely high. What is your number based off?

Asked my buddy who is a commercial real estate agent here in LA what the going commission rate is.

I guess, I answered the wrong question. Apparently in a major city that is that is the going rate, and may not apply in the sticks.

If he's coming to you then I'd ask the buyers to pay the commission. On an unsolicited deal of that magnitude it is not very uncommon. Remember he came to you, your property was not listed for sale and if you're not so inclined to sell, then make his buyers pay the commission.

7-10% is avg on commercial

Originally Posted by SouthFloridaRealtor

7-10% is avg on commercial

Good, I was a mere 2 points off a 10.5mm dealer per an official realtor.

I will maintain my friendship with my buddy

I just had a sit down with my best friends dad who has been a big commercial broker for the past 30 years. He told me that as the price goes up the commmission goes down. He told me exactly what Redlinerobert said. He did say if that doesn't work 2-3%max for him.

Originally Posted by BogeyBoy82

Everything is for sale for the right price but I don't know what it's worth to pay the broker.

Everything is negotiable in life. Just like the negotiating that you'll be doing with the sales price, negotiate the buying agents commision as well. Don't worry about his feelings or lowballing him, he's probably used to it. If he NEEDS a commision to pay his next months mortgage, you might find that he'll take what he can get for fear of losing the deal. Again, if you're not going to NET what you want out of the deal then don't sell it. The ball is in YOUR court.

I have seen commissions as high as 12% to split and as low as 4% to split between agents. It all depends on the market, property type, location, non-solicitated offer as well as the sales price. On a deal approaching $10 million, it generally start heading towards the lower end as there is still a decent commision to be made purely by the dollar amount of the transaction.

I don't know where you guys are getting your numbers. I run a commercial real estate company and broker $10M+ deals - at that level, the fees drop to about 2-3% max.

As an example; I'm brokering one of the only new developments in the fashion district in Los Angeles right now - purchase price is $22M, our fee is 1.5% - do the math, it's good money.

The ONLY time I've seen fees over 6% in commcerical real estate is sub $1M or when there's a business component because commercial brokers are legally permitted to sell a business which has a going rate of max 10% fee.

Any other questions please let me know.