How Much Does a Broker Cost?

Often a new customer will contact Shire Commercial looking to either lease or purchase a commercial property. As the conversation starts, there are questions that are qualifications. This is the first step so we are able to understand and determine how we can help you find the right solutions.  Usually the question comes up , “how much does using a broker cost?”

Actual Costs

There are 3 types of costs, let’s call these main costs.

• Tenant representations costs – commissions
• Buyer representation costs- commissions
• Seller and Landlord costs- commissions

Tenant Representation Commissions

A tenant representation  executes when a commercial real estate broker or agent has an agreement in place with a business or a person. This is to show they represent them.  99% of the time , tenant representatives are paid by the owner of the commercial property.  We call these “LC’s” or Leasing commissions. There is a standard in most markets and in Austin the standard commission fees or costs are 4%.

• 4% represents the commission due upon an executed lease
• This commission is due by the landlord or owner of the commercial property
• Example: a commission is not payable by the owner of the commercial property. However, the tenant still wants to lease the subject property. They may have to pay the leasing commissions
• If a tenant has to pay a commission, it should be made clear to the Tenant Client before they execute a lease.
• Tenants paying broker fees is a rare occurrence. There may be an instance where the deal is too small and a minimum commission can be in place

More about tenant representation

Fees for Selling a Commercial Property

Costs are set up just like a residential home when it sells. Simply stated, it is a total of 6%. Is this negotiable? It all depends on the size of the deal. For large purchases that involve tens of millions , there is most likely a reduced cost structure paid to the commercial real estate broker.

• 3% is due to the Buyer’s representative at closing
• 3% is due to the Seller’s representative at closing

In Closing, it is important to note that most Broker costs are not due from the Client. If there is a cost to the Client, it should be in writing and made very clear before the Client executes a lease or closes on a commercial property.