How sale commissions work
The seller usually pays a percentage of the sale price at closing, shared between the listing broker and the buyer's broker. The percentage is often higher on smaller buildings, where the work is similar but the price is lower, and lower on large ones.
There is no standard commission. It is set by agreement between you and your broker.
How lease commissions work
The landlord usually pays when the lease is signed. It is most often calculated one of two ways:
- A percentage of the total base rent over the lease term
- A set amount per square foot per year of the term
Renewals and expansions are often paid at a lower rate. The listing broker and the tenant's broker share the commission.
What to negotiate in a listing agreement
- The commission, and whether it changes if there is no buyer's broker
- The term of the agreement, and how to end it early
- Which buyers or tenants are excluded if you already know them
- The tail period, when a commission is still owed after the agreement ends
- What marketing the broker will pay for, and what you will
What you should get for the fee
- A pricing opinion backed by real comps, not a guess
- Marketing on CoStar, LoopNet and Crexi, plus direct calls to likely buyers or tenants
- Regular updates on inquiries, tours and offers
- Negotiation and management through closing or lease signing
Free before you commit
Most commercial brokers will give you a broker opinion of value, or BOV, at no cost before you list. It shows what your property is likely worth or will lease for, and how they would market it.
Common follow up questions
Do buyers pay commission on commercial property?
Usually not. The seller typically pays both brokers from the sale proceeds. If a seller will not, agree with your broker in writing how they will be paid.
Is a lower commission always better for a seller?
Not always. A fee that is too low to share with buyer's brokers can mean fewer buyers see your property. Weigh the fee against the marketing and the net price you are likely to get.
What is a broker opinion of value?
A broker's written estimate of what a property will sell or lease for, based on comparable deals. It is usually free and is not an appraisal.
This page is general information, not lending, legal or tax advice. Programs, limits and terms change, and every situation is different. Talk with your lender, attorney and CPA before you decide.