Commercial Real Estate Commission Question
I recently made the jump from residential residential real estate to commercial real estate after about 20 years, buying and renting single family homes and small multifamily. I purchased a 40k sqft industrial warehouse in Florida which I have rehabbed and is listed for sale. My agent is very good at spotting opportunities and in the almost 2 years that I have known him, seen many off market deals work out for other investors. This warehouse is looking like it'll return 70+% in less than a year if it sells or 12-18 cap if it leases.
I know literally every thing CRE is negotiable, but what is a standard commission? What would you pay an agent to have him call you first rather than giving a great lead to someone else? I have a good relationship with the broker and he says his typical commission is 10% but he agreed to 7% on this deal, if it sells. Because we have a good relationship I'm not sure if he is joking or serious. I've seen him lower his commission to 3-4% to make an offer work.
Details of this deal.
- Purchased for $1.225m with a 500k hard money loan at 12% +2 points. Closed in 3 weeks.
- Rehab and other expenses to date of $400k.
- Listed for sale at a very reasonable $2.86m with purchase offers starting to come in around $2.6m.
- Lease rates would be between $20k-30k/month depending on tenant improvements (TI).
Any thoughts or feedback is appreciated.