Commercial real estate brokers charge fees on both property sales and leases. The amount of the broker’s fee is usually linked to the size or the complexity of the transaction. While there are some industry standards for commonly charged fees, brokerage fees, like other commission-based arrangements, will vary.
Fees can be a set dollar amount, but they are most often a percentage of the dollar value of the transaction being negotiated. It is common for a broker to make four to six percent on the sale of a property. Such arrangements are similar when purchasing a farm or unimproved property. Leasing commissions average between five and six percent of the aggregate lease value (monthly rent plus term of lease). Most fees are limited to the first 10 years of the lease.
Fees are usually negotiable. However, keep in mind that the demand for the property will weigh heavily on your likelihood of negotiating lower fees. In depressed areas, a broker may lower the commission one or even two points, just to make a sale.
Before working with a real estate agent or broker, you should know the manner in which you’ll be charged, and how much the fee or percentage will be. Plus, if the broker or agent charges additional fees for listing the property, performing a search, or for any other purposes, you’ll also need to know this in advance.
Since real estate agents and brokers are in this business to make money, they can, on occasion, put their own needs ahead of yours, by turning down potential deals from which they cannot make enough money on a commission. This is neither ethical nor legal. Make sure that if you’re selling a property, the agent or broker adheres to the law and tells you about all offers, even if some are low and won’t yield the hefty commission checks they’d prefer.