agents commission on commercial
- Thread starter belleran
- Start date
How much are they all asking?
Advertising costs on realcommercial or commercialrealestate websites are more expensive and many agents only advertise on one or the other but not both.
Advertising costs on realcommercial or commercialrealestate websites are more expensive and many agents only advertise on one or the other but not both.
It will depend on the property, the method of which it is being offered for sale and what marketing is being done and who is paying for this. Generally, anything under $1M is 2.5-3.0% + GST, anything over $1M is generally 2.5% but in some cases you might get them down to 2%.
0.5% of $2M is only $10k though; a good agent will without a doubt get you a result which is $10k better than the result a cheaper agent will get you, in most cases. I would recommend you choose the agent which conducts the most extensive marketing, presents well and has a good market share before choosing one to save you $10k.
Hope this helps.
Best of luck with it!
0.5% of $2M is only $10k though; a good agent will without a doubt get you a result which is $10k better than the result a cheaper agent will get you, in most cases. I would recommend you choose the agent which conducts the most extensive marketing, presents well and has a good market share before choosing one to save you $10k.
Hope this helps.
Best of luck with it!
I see 3% as about the average on the contracts that come through (and the debt matters where we chase commissions for agents that give us other work. I have never seen a residential seller who didn't pay commission, I have seen numerous commercial sellers where the agent introduces the buyer to the seller and then the seller proceeds to contact buyer directly and try to cut out the agent)
The property has been on the market ie realcommercial.com and advertised in the local area as EOI but now the agent wants us to put a price on it. I am concerned that putting a price on it may limit the outcome. I am not sure why we wouldn't go to auction. Even if it is passed in we can then negotiate with bidders afterwards.
It does seem like not too bad a time to sell with interest rates low and the election passed.
It does seem like not too bad a time to sell with interest rates low and the election passed.
As always, knowing the market in my opinion is important. The market is effectively, the ratio of buyers to sellers. I believe one of the most important discussions an owner and an agent can have, is knowing how many "similar" properties are available, and how many sell or lease each month. What is also important, is knowing if they need to, and by how much owners may have to adjust to finalise a transaction. I agree with the OP that putting a price, may limit an outcome. I also believe that putting an end date on a marketing campaign does move potential buyers from considering to acting. How a property is presented to the market, together with the marketing strategy combine to boost outcomes. I believe some agents fear losing a listing and don?t have the "in depth" conversations needed. Good luck with your outcome.
The only other significant commercial/retail sale in the area was in 2010 and it was a newer property so it is difficult to find something with which to compare the property in question. So in the end the yield will probably be the most impt factor for investors. The location is good. There is no urgency to sell. In terms of having an end date for potential investors to work towards this would either mean a tender process or auction. Tender would be a cheaper process but both methods would bring out serious bidders.
Our agent is an independent local not asssociated with a well known national real estate group unfortunately.
Our agent is an independent local not asssociated with a well known national real estate group unfortunately.
Net rent/sale price = capitalisation rate
net rent in order to be comparable excludes rates, taxes, interest, utilities, management fees, capital works.
Net rent = gross rent less council rates, water rates, PM fees, land tax, building insurance etc.
Capitalisation rate is net rent/sale price. eg if it brings in $120k pa gross and there are $20k in outgoings then your net rent is $100k. If the asking price is $1M, then:
$100k/$1M = 10% capitalisation rate (yield)
You need to look at what properties have sold for in the area with similar characteristics. The yield an investor will purchase it at, will be related to the risk. ie if it is a new building with a MNC tenant on a 10 + 10 yr lease and it is in a prime location then it is generally low risk and an investor may only want 6% yield.
If it's a dilapidated building in a bad position with expired leases to poor tenants, investors may want 10% or more.
When marketing an investment property, you need to ensure all leases are current (more attractive to investors, and will make it easier for them to obtain finance) and any potential problems are sorted out before marketing. If the property has numerous issues, investors often won't touch it as it starts to get too 'messy' and complicated. And more issues = higher yield = lower sale price.
It is important to look at what marketing your agent is doing. If his marketing is very basic and makes it difficult to discern the necessary information to make a purchasing decision, you will not have as many buyers as you may have otherwise had. This will lead to an inferior result.
I hope this helps!
Enjoy your weekend.
John
Last sale in area 2010 on approx. 6.2% yield.
Yield on property in question 6.5%. This building is old but with some money put into it can then be stratatitled. It is currently a mix of resi and retail. There is land at the back of the property which may suit resi units. Position is premium.
Yield on property in question 6.5%. This building is old but with some money put into it can then be stratatitled. It is currently a mix of resi and retail. There is land at the back of the property which may suit resi units. Position is premium.
The commission is not fixed and are therefore negotiable. Any successful investor will tell you that if you choose the right agent they are worth far more than the commission they charge. Never choose an agent on the fee structure alone. The final result is where the money is made, not through negotiating a lower commission.
Find many real estate agents at commercialproperty2sell.co.au
Find many real estate agents at commercialproperty2sell.co.au
