Negotiating a commission on a 4 unit townhome pre-sale

[Eddie Coates]

Hi everyone! This is my first post.

My business partner and I are developing a four luxury townhomes on a piece of residential land in the Midwest. Each unit will be priced around $800,000, which is roughly double what a very nice home sells for in the market. The bank is requiring that two units be pre-sold before the construction loan can be funded and we are in the process of selecting a broker to handle the pre-sales. 

I feel that a lower commission is justified due to the fact that:

• The higher than average sales price
• The agent won't have to give tours of the property or hold open houses
• The project is unique and in a highly competitive and desirable neighborhood adjacent to downtown. This isn't a 1970s ranch-style home in a tired suburban neighborhood that looks just like all of the other tired 1970s ranch-style homes in the neighborhood. There are going to be very few substitutes in the city for the type of product we are developing.

Do you think I could/should negotiate a 5% commission if there is a buyer's broker and a flat 4% if there isn't?

[Wayne Brooks]

Not having to show and do open houses is Not a plus for an agent, actually a negative as that is how they generate more business. It will likely be More effort to find a buyer “based on a set of plans” with no model to view.
It’s going to have to be special if they are “way more expensive than everything else in the neighborhood”.....people who buy an $800k house want to be in an $800k neighborhood, or better.