Are Agent Fees Different for Commercial Property?

Are you planing on selling a commercial property? Understanding how agent fees are structured can help you negotiate the best deal.

Real estate agents' fees can vary widely, depending on your commercial district and the level of work required to sell a property. Agent fees and commissions are largely unregulated, meaning agents can charge whatever they feel is fair. 

Commission fees

An agent's commission is calculated as a percentage of the property's sale price, generally averaging between 2% and 3%. Commission-based agent fees are the most popular, as they motivate the agent to achieve the best sale price. Laws preventing agent/buyer collusion are stringent, so you don't have to worry about an agent trying to make a deal with a separate buyer: On the contrary, agents are bound by law to work toward getting the best deal they can for you and only you.

Flat fees

Another fee structure is the flat rate, which can provide a known figure, but may also end up costing you more than commission if your commercial property ends up being difficult to sell and comes in under your desired price. However, this can lead to selling the property quickly at any cost rather than trying to get the best possible price, which may considerably impact your profit.

Tiered fees

A tiered commission pays the agent a certain percentage of the sale price up to a predetermined dollar amount. A higher percentage is paid for the rest of the sale price in excess of that amount. This can provide increased motivation for the agent to achieve the best possible sale price, while providing a break in case a property sells for lower than expected.

Marketing fees

You may have to pay additional fees for marketing needs, which you and your agent should carefully discuss. Advertising can speed the sale of a property and prevent financial losses. Factor these into your asking price, and be prepared to spend money to make money.

Negotiating commercial property agent fees

Since there is no set fee structure, you have the ability to negotiate such rates with your agent. However, don't forget that the price they ultimately sell your commercial property for is the most important thing.

If you agree on 3% and your home sells for $200,000, your agent fees will be $6,000, meaning $194,000 profit (subject to other fees and taxes). If you agree on 2.5% and the property only sells for $195,000, fees are only $4,875, but your profit is just $190,125. It's better to have a motivated agent focused on getting the best price than one who simply wants to move the process along and get on to their next property transaction.

Ready to sell your commercial property? Contact Ray White Surfers Paradise today and a member of our team will be happy to help you.