Commercial Real Estate Brokers – Commission Challenges and How to Fix Them

In commercial real estate brokerage, you will get a number of challenges when it comes to negotiating commissions and fees.  Some of the clients that you work with will be seeking discounts, and the prevailing market conditions may put some pressure on the size and type of your commissions or fees.

It pays to have a definite strategy to support your agency income structure.  That strategy should feed into all the proposals and presentations you create.  The competitive nature of our business puts pressures on income verses services.  Your competitors will be well placed to undercut your brokerage costs and fees.

As a general rule, discounts should not occur when it comes to structuring your commission and associated fees.  The way to sell that process to the client is to have a highly professional service that stands alone as the best in the market.

It is difficult for a client to choose another agent or broker when they know that you are the best brokerage in the property market specialising in a property type and location.  Most clients will not put cost priorities over the relevance of brokerage professionalism and market coverage.  Always remember that you are the specialist and your clients need your skills; the marketing of commercial property is not a random experiment in promotion.  Top agents are required.

So how can you attract reasonable commissions and fees, and what are they?  They will come to you through a number of different initiatives such as the following:

  • Selling properties
  • Leasing properties
  • Lease renegotiation
  • Project management
  • Property management
  • Lease planning
  • Tenant retention planning
  • Facility management
  • Marketing campaigns and processes
  • Project planning and marketing
  • Property inspections
  • Appraisals and valuations
  • Property budgeting and forecasting
  • Property business planning
  • The time that you apply to a specialised property request or service

So the list is extensive and covers many fee and commission opportunities.  That being said, the services provided by the brokerage in each case should be of the highest standard and highly specialised.  If any of these fee categories are attractive to you, then it is necessary to ensure that you are providing the best service for the clients that you serve.

A larger real estate brokerage will generally provide all of the above services, and on that basis they will be attracting a separate fee for each.  The people behind the process will have specialized skills and experience from the local area to give high value to the services provided.

If your brokerage is still in the growth phase, then select the fee categories that you can serve quite well.  Match the people that you employ to the processes required within your market.  Understand the property types and the specialist approaches that will occur within each.

Some property types require extensive experience; a good example of that would be retail sales, shopping centre management, and retail leasing.  The same can be said for office property, and industrial property, understanding that each property type has a specific skill mix and level of industry knowledge.

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