Buyers Commission on larger $10M deal

[Mike Xiao]

Hi,

Not sure if this is the right place to ask, but figure I'd give it a shot.  I have a client looking to potentially buy a $10M multi family apartment building.

I asked the seller agent what the buyer's commission is, and he said the seller is not paying buyers commission.  

Is this common in these types of transactions? 

If so, I am planning to work out a deal with the seller and agent to write it in the contract to get a buyer's commission.

Is 2.5% a reasonable commission percentage in these types of larger deals?

[Steve S.]

Yes that is standard and usual for these majorly large deals for the seller's agents to state there is no commission for the buyer's side. But, usually that is because those guys are in fact middle men to the actual agent.

When you get into big market commercial real-estate like that many times the owner's are not actually "For Sale". Someone will approach the seller and gain some minor interest to sell basically "If I can get you this much money, will you sell then?" The seller's are not overly motivated, they're just looking for the right price is all. So they offer a lower commission rate then usual.

2.5% is not reasonable on major commercial like that. When commercial property starts getting into the multi-millions it is often reduced to 2% each side, and then when it climbs even higher it gets reduced to 1% each side. More than likely these guys are getting 2% from the seller and they don't want to share it and there is nothing obligating them that they have to. 

So yes ... they can mandate you that your buyer pays the commission and yes you can dictate it that your buyer pays your commission. Get a fee agreement with your buyer and lower the overall offer so you both win. Simple as that. If there is really a deal to be made I bet the seller and buyer and agents will be able to come to some agreement. 

The real question is .... is the deal real? There are so many BS deals out there in off-market commercial real estate. I wish you the best.