In a commercial sale, who pays broker commission? Seller? Buyer?

In Buying Property - Asked by Craig F. - Jul 13, 2012
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Answer(s)

Daniel D.
Corporate Investor
Chicago, IL

Hi Craig.
The short answer is whoever the contract states will pay it. Paying broker commissions is a negotiable contract term no different then deciding who pays for title, appraisals, etc.
If you are looking to completely avoid paying broker commissions I am working with a company called Buildings By Owner that has exclusive For Sale and For Lease By Owner commercial properties. Since you are dealing directly with the seller there are no commissions. If you are looking for more information feel free to contact me.

Jul 13, 2012
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Rob B.
Chandler, AZ

Craig...
The real answer to your question is the buyer will usually always pay for the commission, no matter what the contract states. What I mean by this is, if the seller contracts to pay the commission, it will certainly be factored into the sales price, as most sellers know what the bottom line, net from sale, is that they seek. In my experience this is called the sales price, reservation line. (The lowest price a seller will accept, which is never divulged to anyone.) A reason the seller may choose not to offer a commission is that he or she hopes to use the amount that may have been offered as a discount on the price, without it costing the seller’s net from sale.
If by contract the buyer pays the commission, he or she will simply factor the cost of the commission as a part of the cost of the property. When the buyer contracts to pay, he or she at least controls how much the agent is paid that represents the buyer. The buyer will rarely pay the seller’s listing agent.
Otherwise, the agent representing the buyer receives his commission from the seller as a percentage of the overall commission offered in the listing agreement. In our profession, this is referred to a cooperative agreement between brokers.
Neither buyers nor sellers should get hung up on commission paid. They should concentrate on the professional service being provided by the commercial agents; and, the bottom line economics to the property sold and purchased. As I often like to say, the best transactions are those where the sellers, the buyers and the agents all believe they had to give to get the deal done.
Good luck Craig
Onward and Upward!
Rob Baird
rob@capratecommercial.com

Jul 14, 2012
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Boyd C.
Broker/Agent
Seabrook, MD
Premium Subscriber

They both pay. The seller typically will pay a fee to their Broker that would allow for some amount to be shared with a cooperating/Buyer's Broker. Additionally, the buyer's Broker should have a contract with the buyer spelling out representation and compensation What is typical in my market is the buyer contract allowing for their fee to be paid in part or full by the seller's Broker. If the fee from the seller's Broker is in adequate the Buyer pays the difference. It is noteworthy most sellers have already baked in some $ amount in the asking price to be paid to both brokers. What is important is that ALL parties have adequate and competent representation via a WRITTEN contract. Cooperation and compensation between commercial Brokers is a local matter for the most part. Its just a question you ask upfront of a Broker who has invited you to cooperate.

Jul 16, 2012
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Chris S.
Broker/Agent
Coeur D Alene, ID
Premium Subscriber

Negotiable, but common practice suggests the seller is the norm.

Aug 1, 2012
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Lisa R.
Broker/Agent
Mooresville, NC
Premium Subscriber

in NC, typically the seller pays the commission, however there are times, we as agents have the buyer pay us a flat fee to get started searching the commercial network and showing buildings. We, at Southern Charm Realty, do not charge any fees to buyer, we get paid by the sellers for our efforts. Hope this helps you

Oct 1, 2012
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Olen C.
Owner/Investor
Seattle, WA

Craig, there doesn't really seem to be a solid, consistent answer does there? The great thing about this, is the amount of creativity that you can bring into each deal. The reason I landed on your thread is because the owner of a property we're looking to put under contract is also the selling broker. Which is fine, I don't really mind.
The seller can have their commission in addition to the down payment (seller finance), but that means the sales price will have to be negotiated.
It always becomes more interesting when the seller or buyer is also their own broker. Because of this, I've thought of getting my own license lol.

Nov 21, 2012
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