What Commission Do Commercial Brokers Charge in Florida?

Nobody in my industry likes to publish this number, which is exactly why I am going to. If you own an apartment building and you are wondering what selling it will cost you in commission, here is the straight version.

The typical range

For mid-size commercial properties in Florida, the buildings most private owners actually hold, commissions commonly run from 4 to 6 percent of the sale price, sliding downward as deal size grows. A very large institutional deal negotiates a much lower percentage. A very small deal sometimes runs higher because the work is the same and the check is smaller. Everything is negotiable, and every broker saying otherwise is negotiating with you right now.

What I charge, since you are wondering

My listings are 4 percent, paid only at closing, on a 90-day listing agreement that fits on one page. No marketing fees, no admin fees, no payment of any kind unless your building actually sells. I publish this because I would rather compete on the number than dance around it, and because an owner who knows the market rate negotiates better with everyone, including me.

What the fee is supposed to buy

A commission is not a fee for putting your building on the internet. On a properly run sale it buys the valuation work, the marketing package, access to a real buyer list, the vetting that filters out the tourists, the negotiation, and the shepherding of the deal through inspection, financing, and closing, which is where most deals actually die. If a broker cannot explain, specifically, what they do in due diligence to keep your deal alive, the percentage is the wrong question.

The questions that matter more than the rate

• How many buildings like mine have you closed? Ask for addresses. A licensed broker's history is real and checkable.
• How did you arrive at your suggested price? If the answer is not built on the income math buyers use to value apartment buildings, you are hearing a number designed to win your listing, not to sell your building.
• Who are your buyers? A specialist should be able to describe, credibly, who is going to buy your building before it is ever marketed.
• How long is the listing and what does it cost to leave? Twelve-month exclusives with cancellation fees are a cage. Ninety days keeps everyone honest, because the broker has to perform to keep you.

The expensive broker is not the one with the higher percentage. It is the one who prices your building wrong, in either direction.

The real math

A point of commission on a two million dollar building is twenty thousand dollars, and owners are right to care about it. But pricing is worth more. A building priced 5 percent under the market gives away a hundred thousand on that same deal, and an overpriced building that sits for six months and closes after a re-trade usually nets less than an honestly priced one that closed in ninety days. Hire for pricing and process first. Then negotiate the fee like the businessperson you are.

If you want to see the pricing work before you ever talk to a broker, including me, run your building through the model below. The number it gives you is the one the fee conversation should start from.

Questions owners ask

Is a commercial real estate commission negotiable in Florida?

Yes. Every commission is negotiable, and any broker who says otherwise is negotiating with you right now. Mid-size Florida commercial properties commonly run 4 to 6 percent, sliding lower as deal size grows. Very large institutional deals negotiate a much lower percentage, while very small deals sometimes run higher because the work is the same and the check is smaller.

Do I pay anything if my building does not sell?

Not with me. My listings are 4 percent, paid only at closing, with no marketing fees, no admin fees and no payment of any kind unless your building actually sells. Before you sign with anyone, ask in writing whether there are upfront fees, marketing charges or a cancellation fee, because those terms matter as much as the percentage.

How long should an apartment listing agreement be?

I use a 90-day listing agreement that fits on one page. Ninety days keeps everyone honest because the broker has to perform to keep you. Twelve-month exclusives with cancellation fees are a cage. If a broker wants a long term, ask what it costs to leave and get the answer in writing before you sign anything.

Is a lower commission always the better deal?

No, because pricing is worth more than a point of commission. A point on a two million dollar building is twenty thousand dollars, but a building priced 5 percent under market gives away a hundred thousand. An overpriced building that sits and closes after a re-trade usually nets less than an honestly priced one. Hire for pricing and process, then negotiate the fee.

What should a broker's commission actually pay for?

It should pay for the valuation work, the marketing package, access to a real buyer list, vetting that filters out the tourists, the negotiation, and shepherding the deal through inspection, financing and closing. That last stretch is where most deals die. If a broker cannot explain specifically what they do in due diligence to keep your deal alive, the percentage is the wrong question.

If you are comparing quotes from a Florida apartment broker, a national firm and a local agent, put the fee, the term and who works your deal in writing for each. I do, at 4% and ninety days.