Are commercial commissions generally lower than residential commissions?

In Selling Property - Asked by Myra R. - Aug 8, 2015
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Answer(s)

Peter M.
Owner/Investor
Niantic, CT

In the most general of terms, commissions on commercial real estate deals tend to run higher than residential real estate deals. Ideally, agents aim for 6% on a residential listing in Connecticut... 10% on a commercial property. The work conducted on a commercial listing can be time consuming. There are fewer buyers looking for commercial properties than residential properties. The listing agent is in frequent discussion with the zoning department, attending zoning meetings, researching the property so as best to market it to the public. The commercial agent can legitimize a higher commission because more time and expertise is involved in the commercial transaction.
Of course, everything is negotiable in real estate and commercial deals sometimes get done when a commission as low as 4% is involved. You have to think of what you must offer to entice a buyer's agent to pursue your property. If you negotiate a small commission from the seller, you have less leverage to lure the buyer's agent. In an idealistic, ethical world agents should be working in the best interests of their clients, but I can certainly say there were times I have worked on deals where agents have played dirty pool and demanded more of the commission I offered. I just learned to remain unwavering in my original offer.

Aug 10, 2015
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Al B.
Broker/Agent
Henderson, NV

Yes, it is a sliding scale downward relative to the higher dollar amount of the sale.

Aug 11, 2015
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Chris R.
Broker/Agent
Denton, TX

Depends. Of course any and all commissions - for any real estate transaction - are entirely negotiable between the parties involved and would be based on the particulars of the property involved. While many commercial transactions would have commissions that would be in the range of a typical residential sales commission - the larger the commercial transaction then the commission structure typically gets adjusted on a sliding scale. So you may have a sale of a commercial property of say $5M with a total of 6% for the first $1.5M and then a total of 3% for the balance. Again - whatever the parties can negotiate and agree to for the particular property and the area of the country for the location. There are no "standard" commissions across the board for any segment of real estate or location.

Aug 14, 2015
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Nancy A.
Broker/Agent
Arlington, VA

Commercial Real Estate Commissions run higher than residential. In most commercial transactions the commission is around 10%, everything is negotiable but do know that 4% is the lowest you want to offer each side depending on property, location and condition. Keep in mind that you want the buyers/investors to purchase your property over someone elses.

Nov 1, 2015
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