Money, money, money…
If you’re are selling commercial real estate, you want that net check to be as large as possible, correct? And if you could make a deal without a broker, you would do it. The truth is: you can’t. So if you’re considering a sale, you’re probably wondering: how much does it cost to hire a commercial real estate broker? Allow us to explain. To keep things simple: the discussion below will be involving sales, with the commercial real estate broker acting as a seller’s agent and the seller as the principal.
It’s all about the money – right?
Money, you want more of it, and if you could do it without us, you probably would. Fortunate however for our industry, you need us. Why? Because we connect people, we have data (whether you realize it or not) and, while I can’t speak for an entire industry, commercial real estate brokers work hard to provide a valuable service for you, the client. This question of value is tested in today’s ever-changing world of technology, but for folks like myself in a small tertiary market in northwestern North Carolina, I like to think I am safe, at least for today.
Everything you need to know about commissions
To calculate how much it costs to hire a commercial real estate broker, you have to understand commissions. The commission is typically your most substantial cost if you’re selling commercial real estate. In North Carolina, commissions are determined in agreement between you and the firm you work with. The commercial real estate broker works on behalf of the firm. These are not fixed industry-wide (anti-trust) and are negotiable just as any other term within a listing agreement. Our firm believes that a commission is indicative of the transaction amount and the services that we provide.
The commission is usually a percentage of the gross sales price. This percentage is the total commission which is commonly split between the seller’s agent and a buyer’s agent (if one is involved). You, the seller, typically pays the entire commission fee in a sales transaction. Again, no different than a residential sales transaction. While some firms will charge back their marketing expenses to you, we do not. We pride ourselves on providing you with marketing strategies that surpass our competitors. We pay these marketing expenses as part of our service when listing commercial real estate for sale.
Other costs involved with the transaction
In addition to the commission, the following other costs are included in the sale.
- You pay the excise stamps or transfer tax. In North Carolina, this amount is currently two dollars per thousand. For example, if a property sells for $1,000,000 then the excise stamps would be $2,000.
- You also pay your own attorney’s fees as well as any other vendors or professionals engaged on your behalf.
- Furthermore, the property taxes are prorated as of the date of closing. Typically they are debited to you and credited to the buyer on the closing statement.
- Finally, if financing secures the commercial real estate, then the Deed of Trust or mortgage is paid off as of the closing date.
Obviously, this is not meant to be an end-all list but is representative of the fees that you occur when selling commercial real estate.
Should I hire a commercial real estate broker?
Yes, you should. An obvious message, or a ‘sine qua non’, of course, coming from this platform, but in the end, all we want is the best deal for you, the client. Understanding the fees associated when hiring a commercial real estate broker is important, so that we meet client expectations and no surprises arise.
Why is it worth the cost to hire a commercial real estate broker?
- We work with you to set a selling price that is substantiated by relevant market data.
- We use marketing strategies and platforms that expose the property to the greatest number of prospects possible, and all these costs are out of pocket costs for us.
- We work to ensure that your goals and objectives are understood, so you can let us do the work and have a more stress-free disposition.
Psst… last but not least…
If you decide to hire a commercial real estate broker, make sure you hire one with the CCIM designation. Find out what CCIM means before you start looking for a broker.