What Is the Typical RE Commission on Commercial Sale? (Asked this question everywhere and finally got real answers)

I've been trying to figure out commercial real estate commission rates for months now because I'm looking at buying a small office building, and honestly, the answers I kept getting were all over the place. "It depends" was basically what everyone told me, which wasn't helpful at all.

So I did what any reasonable person would do - I called about 15 different commercial brokers, talked to some property owners who recently sold, and even hit up a few people on LinkedIn who work in CRE. Here's what I actually learned about what people are really paying.

The Quick Answer

For most normal commercial deals:

• Small stuff under $1M: You're looking at 4-8% total commission
• Properties $1M to $5M: Usually 3-6%
• Big stuff $5M+: Can drop to 2-4% or even lower

But (and there's always a but), this varies SO much based on where you are and what kind of property you're dealing with.

What I Learned From Actual Recent Sales

The $850K Office Building in Phoenix

My buddy just sold his small office building for $850K. Total commission was 6% ($51K). The listing agent got 3%, buyer's agent got 3%.

Here's why he ended up paying the full 6%: The building had two problem tenants behind on rent, plus one lease expiring in 8 months. The listing agent had to create rent roll analysis, coordinate with attorneys about lease issues, and find buyers who were either okay with tenant problems or wanted to renovate. Process took 7 months, showed to 30+ buyers, and prepared three different financial scenarios.

My buddy said the agent actually earned every penny. Without someone who knew how to handle tenant issues and present multiple use scenarios, he probably would have had to discount the property by way more than the $51K commission cost.

The $3.2M Retail Strip in Dallas

A guy in my real estate investor group sold a retail strip for $3.2M and paid 4% total commission ($128K). This was 15,000 sq ft with 8 units, but 3 were vacant for over a year. Post-COVID retail is brutal, so the broker had to completely reposition the marketing because traditional retail investors weren't interested.

They targeted three buyer types: retail investors, mixed-use developers, and owner-users. The broker personally reached out to 200+ potential buyers and created three different financial models. What sealed it was finding a restaurant owner who wanted to expand into catering - they used 4 units for restaurant/catering and leased out the rest. That creative approach netted an extra $200K+ on sale price.

The seller admitted he never would have thought to market to restaurant owners, and that strategy made the $128K commission totally worth it.

The $12M Warehouse Deal

This was a 200,000 sq ft distribution center outside Atlanta. Commission was only 1.8% ($216K) because at $12M, even low percentages are big money, plus the broker was handling multiple properties for this client. Clean deal - good financials, solid tenant, excellent location.

The broker's strategy was targeted rather than broad marketing. Instead of general advertising, they directly contacted about 50 companies they knew were looking for warehouse space in that size range. Had a buyer under contract in 45 days, closed in 90 days total.

Even though the percentage was low, the seller said speed and efficiency made it worth it. Carrying costs on a $12M property are massive, so selling quickly saved way more than trying to negotiate the commission down further.

Why Commercial Commissions Are So Confusing

Unlike residential where everyone just says "6%," commercial is all over the place because:

Property type matters a ton. Industrial warehouses are pretty straightforward to sell. Retail properties? Good luck - they're a pain right now with all the online shopping stuff. Hotels and restaurants? Forget about it, you're paying premium rates because most brokers don't even want to touch those.

Location is huge. In major cities like NYC or LA, brokers compete hard and rates can be lower. In smaller markets, you might have 2-3 commercial brokers total, so they can charge more.

Deal complexity changes everything. Simple transaction with good financials and clean title? Lower rates. Messy situation with problem tenants, environmental issues, or weird zoning? You're paying extra.

The Real Talk on What Different Property Types Cost

Office Buildings: Usually 3-6%. Office is pretty competitive so rates are reasonable. Although post-COVID, some office properties are harder to sell so rates might be higher.

Retail: 4-7% and sometimes more. Retail is tough right now. A lot of brokers don't even want retail listings unless the commission makes it worth their time.

Industrial/Warehouse: 3-5% typically. These are hot right now with all the e-commerce stuff, so brokers compete for listings.

Apartments/Multi-family: 2-5% depending on size. Big apartment complexes can negotiate lower rates. Small duplexes might pay higher percentages.

Weird Specialty Stuff: 5-8% or more. Gas stations, car washes, restaurants - these require specialized knowledge so brokers charge premium rates.

Leasing is Different (And Confusing)

If you're leasing instead of buying, the commission structure is totally different. They calculate it based on the total rent over the lease term.

Like if you're leasing 5,000 sq ft at $20/sq ft for 5 years, that's $500K total rent over the lease. At 5% commission, that's $25K total commission usually split between listing and tenant rep.

But here's the weird part - sometimes the commission is front-loaded (paid all at lease signing), sometimes it's spread out over the lease term. And renewal commissions are usually way lower, like 1-2%.

Geographic Reality Check

California: Higher property values but also more competition among brokers. Rates tend to be on the lower end of ranges.

Texas: Still pretty competitive but slightly higher rates than California. Good balance of property values and broker availability.

Southeast: Lower property values but also fewer commercial brokers. Rates can be higher percentage-wise but lower dollar amounts.

Midwest: Really depends on the city. Chicago acts like a major market with competitive rates. Smaller Midwest cities might have limited broker options and higher rates.

New York: Crazy competitive among brokers but also crazy high property values. Rates are low percentage-wise but huge dollar amounts.

The Negotiation Game

Here's what actually works when trying to negotiate rates:

Do your homework first. Know what similar properties have sold for and what commission rates those deals had. Brokers respect clients who understand the market.

Get multiple proposals. Don't just call one broker. Get 3-4 different brokers to pitch you and compare not just rates but their marketing plans and experience.

Consider flat fees for expensive properties. If you're selling something over $5M, a flat fee might save you money compared to percentage-based commission.

Think about reduced service options. Some brokers will lower their rate if you handle certain things yourself like property photos or showing coordination.

What You're Actually Getting for Your Money

Good commercial brokers actually do earn their commission (most of the time):

• They know who the serious buyers are in your market
• They understand property valuation and can price it right
• They handle all the marketing and deal coordination
• They know how to structure deals and navigate financing issues
• They deal with all the paperwork and regulatory stuff

Bad brokers just stick a sign in the yard and hope for the best. Make sure you're working with someone who actually knows commercial real estate.

Red Flags to Watch Out For

Brokers who won't explain their commission structure clearly. If they can't tell you exactly how much you'll pay and when, run.

Rates that seem way too high or way too low. Both can be problems. Too high and you're overpaying. Too low and you might get terrible service.

Brokers who pressure you to sign exclusive listings immediately. Good brokers are confident enough to let you think about it.

Anyone who guarantees specific sale prices or timeline. Commercial real estate is unpredictable. Anyone making guarantees is probably lying.

My Bottom Line Recommendations

If you're selling commercial property:

• Expect to pay 3-6% for most normal deals
• Get multiple broker proposals before choosing
• Focus on the broker's experience and marketing plan, not just commission rate
• Negotiate based on your specific situation

If you're buying:

• Clarify upfront who's paying your buyer's agent commission
• Don't let commission costs scare you away from using representation
• Good buyer's agents can save you way more than their commission costs

The commercial real estate world is relationship-driven and commission structures reflect that. Don't try to save a few thousand on commission if it means getting inferior representation on a million-dollar transaction.

Update: Since posting this, a few people have asked about specific markets. Happy to share more details if you're looking at particular cities or property types. This stuff varies so much by location that general advice only goes so far.