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Multifamily Realtor Commission

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Shawn11100

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Hey everyone, I have been looking at a couple MF buildings lately, and I am wondering what is fair market value for MF Realtor Commissions. As the investment becomes larger, what is the typical commission scale? Thanks!
 
Devin Roberts

Devin Roberts

Devin Roberts - Brent Roberts Realty
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Hi,

As everything varies with location I can only speak on BC pricing.

Generally the higher the list price, the lower the percent of commission. Which is then further split.

It can similarly to residential, especially with smaller buildings as to ~7% first 100k and 3.25% on remainder is very common which is then split.

Really hard to give you one exact rate as every Realtor is different.

Not rare to see <$20m buildings be 3% flat rate split. Over that, rates can drop to around 1% split.


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Mike Milovick

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I think it depends on how much interest you want to generate from the estate community. I listed a $7.9 MM property in April in Kitchener, Ontario. Commission was 4 percent with half offered to the co-operating Broker. In the 30 days, we had over 60 showings - with 13 offers - and the building sold for over $625,000 over asking. The seller had no issues with my commission :)

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Shawn11100

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MikeMilovick said:
I think it depends on how much interest you want to generate from the estate community. I listed a $7.9 MM property in April in Kitchener, Ontario. Commission was 4 percent with half offered to the co-operating Broker. In the 30 days, we had over 60 showings - with 13 offers - and the building sold for over $625,000 over asking. The seller had no issues with my commission :)

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That makes sense. As expected, some of the buildings I've viewed are not listed, nor has the realtor really done that much work to list or market the building. So, I am ware this can be a sensitive subject, but I'm just trying to get a sense of the general commission range.
 
Thomas Beyer

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MikeMilovick said:
I think it depends on how much interest you want to generate from the estate community. I listed a $7.9 MM property in April in Kitchener, Ontario. Commission was 4 percent with half offered to the co-operating Broker. In the 30 days, we had over 60 showings - with 13 offers - and the building sold for over $625,000 over asking. The seller had no issues with my commission :)

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4% on a $7.9M apartment building is utterly ridiculous unless the market is very weak and it takes a year to sell. I’d say 2.5% or even 2% is the right figure.


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Mike Milovick

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I think you get what you pay for. You pay peanuts, you get monkeys. You pay a reasonable commission, every multi-res apartment expert in Ontario makes an effort to sell the listing. Seller paid me $300k and won an additional $625K over list. Thomas: you may disagree, but if I was seller, I would pay that all day long - with those results - on any of my properties. Mike

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Thomas Beyer

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MikeMilovick said:
I think you get what you pay for. You pay peanuts, you get monkeys. You pay a reasonable commission, every multi-res apartment expert in Ontario makes an effort to sell the listing. Seller paid me $300k and won an additional $625K over list. Thomas: you may disagree, but if I was seller, I would pay that all day long - with those results - on any of my properties. Mike

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I get that.

I assume that the KWC market is decent, very high demand, very little decent supply in that price category and that the price was independent of commission paid.

You got lucky with the 4%. It is not the norm. Congrats.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
Cory Sperle

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Around 3% is the norm. Many brokers do not cooperate with others and some actually charge the buyer! Since most buyers are sophisticated vs. Not in SF many listings are exclusive and double dipping is common place and it never hits MLS. If your buying what concern is the commission?
 
Mike Milovick

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CorySperle said:
Around 3% is the norm. Many brokers do not cooperate with others and some actually charge the buyer! Since most buyers are sophisticated vs. Not in SF many listings are exclusive and double dipping is common place and it never hits MLS. If your buying what concern is the commission?
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Hi Cory;

With all due respect, if a property is listed on MLS, the buyer agent sees what is offered to him from a co-op broker perspective. So the public sees only one part of the commission available. The listing agent commission is never known - unless you are the seller. It would be a mistake to assume that because the buyer agent is offered 1.5%, that the seller is paying 3.0% commission total - as an example.

To suggest that there is a norm from a commission perspective would be to suggest that there is collusion amongst brokers. I know what I charge. To suggest that a competitor broker does the same - or that all brokers in the market place charge the same for a property in a certain price range is collusion.

Cheers,
Mike
 
Cory Sperle

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Hi Mike and thanks for your input, however the question was asked what is the typical commission selling a multi, and I have sold several and paid 2.5 to 3% commission so that is my experience. Your comments about collusion make no sense, or have any basis in this discussion. I 100% agree with Thomas that 4% on a sale that large is ludicrous, and the seller was either grossly misinformed, you robbed him blind, or both.
 
Thomas Beyer

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CorySperle said:
Hi Mike and thanks for your input, however the question was asked what is the typical commission selling a multi, and I have sold several and paid 2.5 to 3% commission so that is my experience. Your comments about collusion make no sense, or have any basis in this discussion. I 100% agree with Thomas that 4% on a sale that large is ludicrous, and the seller was either grossly misinformed, you robbed him blind, or both.
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Once in a while one gets lucky.

Around 3% is indeed common for a 15-24 suiter in the $1.5 to $3M range. Higher % if lower than $1.5M and 2% or below 1% for $5M+ buildings, depending on brokerage appetite. MLS listing uncommon but do happen occasionally, usually overpriced. Since most bigger buyers are on all brokerages lists, sharing is not common as you indicated Cory for larger deals.

When we sold a recent building for $5M+ the commission was slightly below 2% but another 0.75% was paid if another firm was involved above a certain price.

It’s a free market and in high demand markets there is no need to overpay. I’d count KWC in that space. You pay more in rural areas with far less demand or long drive times just for showings, both initial and for interested parties.
 
Cory Sperle

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My thoughts precisely. yes it's a free market and I'm sure you had options to sell your 5M project, say 4-5 competent realtors you could have used if you desired, but none that would charge you 4%. I can't pinpoint any individual that would be that stellar to justify this, but perhaps there is something we are missing here and this seller did receive a higher price solely because of this outstanding agent and not because of strong market for multi family product, and well if he can consistently get 600K over list I'll pay the 4% all day long. I do know that any agent charging this much in Alberta would get very few listings.
 
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