Cross Posted from Business Board

What do you guys expect to pay in commissions for a multi million dollar commercial real estate deal in DFW? When we bought the building, the commission was 6% on the first million and 3% after that. When we placed it for sale, we worked a deal with our broker for the same although he was reluctant. Now we have an LOI from a company using a different broker. The buyer's broker is wanting a full six percent commission (to be split between brokers) and our broker says we need to pay that or he'll take his client elsewhere. He says the market is typically a full six percent. Is this typical for the market on such high priced real estate? There's not much work or expense for the buyer's broker on this type of deal and the brokerage would still net over $50K. I'm a realtor (Mostly residential and land) from out of the area and I handled the purchase, so I know what all is involved. One thought is that our counter will require the buyer's to pay the additional commission, but I don't want it coming off the top from our pot as this deal will be very tight for us as is.

Thanks

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The buyer's broker is wanting a full six percent commission (to be split between brokers) and our broker says we need to pay that or he'll take his client elsewhere.

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That seems ethical.

Martin Q. Blank said:

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The buyer's broker is wanting a full six percent commission (to be split between brokers) and our broker says we need to pay that or he'll take his client elsewhere.

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That seems ethical.

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I agree that it's not and I personally show my client's whatever they want to see regardless of commissions. It's my duty to serve my client's interest first. To clarify, it's not my broker pushing the buyer's away, but it is my broker claiming that the other broker will. Furthermore, our listing agreement does specify that if a cooperating broker demands a high percentage, that we will be required to match that for our broker as well.

DallasAggie0 said:

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Yes... 6% is typical for commercial sales.

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Thanks, guess I need to move to a major metro and get out of residential/land. Understandable from the selling broker's perspective due to the amount of showing and cost of marketing, but a buyer's broker demanding the higher rate seems a little odd.

DallasAggie0 said:

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Well there's a little more to it in commercial. Cash flow analysis, lease analysis, market research and absorption analysis. I don't know if the broker is actually doing all that but that's the reasoning why.

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Doubtful, this is a well established construction business buying it for their personal office space. Not retail and not leasing.

Read below.

I've been doing this for 13 years and I would disagree that 6% is a market commission on any sale unless under a million. Leasing commissions are different. I have paid things all across the board and its a negotiated point in most transactions and not knowing who your listing broker is that is their responsibility to negotiate and if they are telling you to do that I would fire them. On land sales its very common to do 6% of the first million and 3% after that and there will always be brokers that argue otherwise. It also depends on what size deal you are talking about. We sold two separate small high end retail strips last year with a reputable broker and the commission was 3% if no co-broker and 4% if a co-broker split 2.5% to the listing broker and 1.5% to the co-broker.