1. What is Commercial Real Estate Commission?

Commercial real estate commission is the fee paid to brokers for facilitating the sale or lease of commercial properties. It's typically a percentage of the total transaction value and is negotiated between the broker and client.

2. How Commission is Calculated

The commission calculation is straightforward:

Where:

• Sale Price — The total transaction value of the property
• Commission Rate — The agreed percentage (typically between 3-6%)

Example: For a $1,000,000 property sale with a 5% commission rate, the commission would be $50,000.

3. Typical Commission Rates

Details: Commission rates vary but generally fall between 3-6% of the sale price. Rates may be lower for higher-value properties and can be structured with tiered percentages.

4. Using the Calculator

Tips: Enter the sale price in dollars and the commission rate as a percentage (e.g., enter 5 for 5%). The calculator will compute the commission amount in dollars.

5. Frequently Asked Questions (FAQ)

Q1: Who pays the commission in commercial real estate?
A: Typically the seller pays the commission, though this is negotiable and may be split between buyer and seller.

Q2: Are commercial commissions higher than residential?
A: Commercial commissions are often lower percentage-wise but higher in absolute dollars due to larger transaction sizes.

Q3: Can commission rates be negotiated?
A: Yes, commission rates are always negotiable between the broker and client.

Q4: How is commission split between brokers?
A: The total commission is typically split between listing and selling brokers, often 50/50 but this varies.

Q5: Are commissions taxed differently?
A: Commissions are generally treated as ordinary income for tax purposes.