Top Commission Formulas in Commercial Real Estate Brokerage

When you work as an agent or broker in commercial real estate, the commission that you earn can be a critical part of your business structure.  Understand and choose your commission rewards based on your levels of achievement and market share.

Here are some facts about commission:

  1. You will only earn greater commissions when you achieve results.  Based on that fact you will need to focus your efforts on growth of clients, listings, and deals.  You attract all of these things when the personal value that you provide to your market and your clients is high.
  2. Look at your strengths as an agent and build on them.  Understand your weaknesses and remove them, as they are likely to be the greatest issues holding back your progress.  Skills and relevance as a top agent will help you sell your fair requests on commissions.
  3. When you look at commission only employment with your brokerage, the financial rewards are high only when you have real skills and market relevance.  In other words the business is attracted to you based on what you provide to your clients and prospects.
  4. Some agents will conjunct or share commissions with other agents or brokers.  The process is logical but should only be considered if you see relevance to the client first, and yourself second.  If it helps the client achieve a timely sale (or lease) at a reasonable price or rent, then the logic works.
  5. If you are going to split your commission with another agent, understand who brings the greatest value to the business arrangement.  In most cases it is the listing agent.  The greatest value agent should get the greater share of commission.  That could be 60/40, or 70/30.  A 50/50 split is only relevant with those agents that reciprocate and work with you over time.
  6. In a very active market, it may do you and the client well to stick to the original plan of exclusive marketing and method of sale; on that basis the client should hold out for the completion of the marketing campaign and the full property promotion.  The best prices are only achieved through effort and sustained marketing.  If you have an exclusive agency with a client, allow the listing to be comprehensively marketed before any ‘random’ offer is presented.  Don’t share your commissions too eagerly with outside agents and brokerages.
  7. A client should pay a reasonable commission for the fullest promotion of the property.  Discounts in commission encourage agents to cut corners and get a quick deal on paper.  Not all the deals done in this way are the best deals.  Explain to the client that results in the best price or rent come from their commitment to a good marketing campaign over time; your reward is commission based and will reflect all the hard work you apply to the clients property promotion.

One important point that should always be the focus of top agents is the type of agency obtained.  Exclusivity is required when it comes to a quality property promotion.  Help the client understand that fact and why they should use you to solve their property problem.

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