What's appropriate sales commission for a US$9 mil sale?

Question

3 adjacent properties in NYC are being sold together for $9 mil.  What commission is reasonable?  I would think the larger the amount, the percentage maybe be lower....?  Broker is proposing 4.5%.

Derek T. · Answer

And just to follow up....in the four DC listings that are $10-25m, all of them have 5-6% listing fees.  You would have to check your NY market, but I think your 4.5% would send the wrong message and I don't think its worth the extra .5-1.5%.  Just hire the best agent you can find in the city and let them list it with 5-6% commission.

Derek T. · Answer

Out of the 22 listings here in DC with a 5mil-10mil sales price all of them have 6% total and 3% for buyer's agent except for 2.  I think what a person needs to realize when they buy or sell at this price range is that you are hiring a professional to do a professional job.  Just because the commission is larger, I don't believe it is a reason to ask that professional to cut their fee down.  In higher priced homes, realtors often have to spend more time and resources on the property.  Often times these are appt only showings that require multiple open houses.  Many of these realtors put their own funds up to market the house which includes hosting, print outs, Internet/print marketing, staging, professional photos, etc.....all without a guarantee that their investment will be returned to them.  Can you imagine how frustrating it is to spend 3 hours just to drive to a property show it and it not sell and do that 20-30 over again?

I mean is your seller going to ask their financial adviser or stockbroker to take less commission because they are investing more money than their other clients?  Or ask their loan officer to cut his commission down because they are buying a higher priced house?  My point is let professional do what professionals do and don't try to discount their work or discount pay because of potential commissions.  Personally I would recommend 6% but wouldn't go any less than 5%.  You get what you pay for and an established luxury listing agent isn't going to agree with your 4.5% anyway.  Just my thoughts.....

Account Closed · Answer

4.5% of $9,000,000 is a $405,000 pay check. A real estate broker will often be flexible regarding a commission rate when the property value gets in the millions.

Steve Babiak · Answer

Is that the total commission, or just the listing agent commission?  If total, how is it being split between listing agent's brokerage and buying agent's brokerage (OK, the buying agent is referred to as the selling agent, but too many here wouldn't be aware of that)?

Russell Brazil · Answer

Marketing for this property is going to cost a lot more than your median income property. So if I am marketing this property through my brokerage, we would list it in Christie's Real Estate Magazine. (We are affiliated with Christie's.) This is going to cost me anywhere from $2k-5k per quarter. A property this expensive is going to take a long time to sell, so I might be into this property almost $15k-20k  just on a Christie's ad.

After splitting the commission with the other agent, and then with their brokerage, this agent might get $150k if they sell it for $8 million....however I could see them easily spending $40k or more marketing the property.  So their true commission would be somewhere around $100k which I think is fair for the amount of work I could see being put into selling the properties.

Joel Owens · Answer

At the end of the day everyone it's NOT about the commission.

It's about the experience and quality of the representation you are getting for what you pay.

You get someone to list at 4.5% but they are a horrible negotiator and have limited experience.

You got 4.5% but did you really save??

It's not about a number but what VALUE are you getting from that relationship and will it get the results you want. Experience costs dollars. People need to quit trying to step over them to save pennies.

Matt Bowyer · Answer

I agree in one sense  @Derek Tyler. At the end of the day, if the right agent gets you the right price, the commission is well spent. It is interesting, however, how vastly different the culture surrounding commissions is in other countries. According to this article in the NY Times, commissions can be as low as 0.75% for high-end properties in Britain...

Rob Beland · Answer

Thats a reasonable fee @Robert Fisher. Is this a national brokerage? I wouldn't give a listing of that value to any old schmuck agent. Be sure you know up front what type of marketing is being done and be sure its actually worth $9M with recent comps. Good luck.