As a First Year IS Associate, anyone close a big deal ($50 million+). What was your commission?
As a 1st year IS associate, has anyone closed that big of a deal. Say you call owners and find a seller, your boss has the buyer. What can your expected commission be? I'm assuming since they're helping with the meetings, you can do the marketing/talking on phone but he's leading it and helping a lot on your side too. What can be your expected commission if say its 4% total (of $50 mil+ sale) to bring buyer and seller and you do? Anyone have direct experience on what the commission for a 1st year can be, my friend is in this scenario. There's only two people (him, his boss) on the team, but want insight into what I can tell him for expectations.
I don't work on the brokerage side, but have many friends that do. My guess is that in the very BEST case scenario, your boss goes 50/50 on the commission.
All it takes is your buddy's boss to be involved in ONE conference call for him to be able to take credit for the deal, i.e. "you got us the listing, but you could have never closed this deal without me".
I'm thinking definitely not 50-50 bc he's helping him with that too. He's taking the lead, my friend just brought the idea they want to sell and is doing the more menial tasks but still helping with the deal and following up after speaking with his boss. We'll see if it closes but I'm curious based on comments below too.
I doubt anyone is paying 4% on a $50mm deal.
Probably closer to .5%
For both sides of the deal? 2% each side. .5% no way, that's like Stuy Town commission %
I call bullshit that anyone is paying 2mm to have someone sell their $50mm deal.
Nobody pays 4% on any IS deals. I work on a team that closes deals in the $30M-$90M range (per asset) and on the extremely high end we get paid 125 bps for a sale. Anything we sell for more than $80M, including portfolios, we make around 60-75 bps. As an analyst you could expect your bonus to be about 1%-1.5% of gross commission.
Sorry to clarify my friend isn't an analyst, he's a junior broker 100% commission. Does that change anything?
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We just sold some dirt for $50M and we paid our broker 1.5%
Usually higher commission for selling land.
No way in hell you will get a 4% commission for an existing property unless the seller is clueless. You might as well get a few friends together to buy that asset at a discounted basis and do your first syndication.
My experience is in Europe so not sure but a top broker will charge 0.75% on something worth 50M$ and a 7.5% incentive above the fair market value of the pitch. For bigger deals, I remember a deal for 400M€ was a 0.2% commission. And when it comes for the bonus of the broker the rule of thumb is 15% of the commissions in bonus but it could be lower if it gets really high.
Reiterating that assuming 4% of a $50MM+ sale is comical. Not apples to apples obviously, but we just recently sold something for ~$110MM. The broker effectively received a 0.89% commission and they did a great job.
Did they bring both or one side of the deal? I'm assuming both, is it far fetched to say 2-3% for bringing both the seller and the buyer for a smaller deal? I'm surprised it's that ridiculous to even expect 1% for each side of the deal lets say.
At that level, brokers are hired by the seller to source the buyer; they don't co-broke. So everyone telling you 0.5% to 1.5% is talking about both sides of the deal. In my experience, multifamily commissions are usually capped around $500k - $600k in the price range you're speaking of.
In big time investment sales, the seller hires the broker to find buyers. The buyer doesn’t need a broker to find sellers - the buyer has relationships and internal people out looking for deals.
So of the Broker fee, the analyst usually will see 4% of that. Can be diluted if another analyst helps, as well as administrative stuff (IE Secretary, Graphics for OMs etc). That's how we did it at HFF (RIP The GOAT) when I started there.
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I believe it's what drove the ~40% analyst to broker metric they threw around at HFF propaganda events. Some of our mulit IS/debt analysts were easily surpassing 200k a year after year 3-4 (Probably a larger % but still they were only analysts).
Using the $50MM sales figure, what would a reasonable total brokerage fee be?
Sorry to clarify my friend is not an analyst, he's a junior broker on 100% commission.
4%? Man I got f**ed...
From my understanding, a lot of the day to day has stayed the same for HFF folks. I can't imagine the HFF brokers willing to take a hair cut, but the JLL brokers probably have more security in a sense aka an actual salary. To answer your question, I'd say for the capital markets side, yes it will stay the same. If they did change, it would cause a mass exodus of analysts to firms like ES.
ES and who else though?
Exactly. As you see ES start spreading to secondary markets, you'll begin to see the shift in talent if JLL can't keep up. In the end, it's the teams that drive competition for analysts. The teams that do the best deals, exposure to the clients on those deals, and the quality of mentorship will continue to attract the best talent. You tend to see the analysts that work for the most touted producers get poached by the best developers, funds, and other buy-side/sell-side clients they directly work with on a day to day basis.
To clarify, my friend is a junior broker on 100% commission. Not an analyst
That won’t change much from the example I gave above. The gross commission will still likely be in the $250-500k range. If he’s the sole broker on the deal, he’ll keep most of the net after a 50/50 split with his shop. If he works with a senior broker or as part of a team, his share of the net will depend on team size, seniority, and generosity of the brokers he works with.
Just them two, he could clear $100k after his senior guys take right? Let's say it's $300k total commission on the deal, senior takes $200k gives him $100k? Realistic?
the brokerage shop would take a 50/50 split first, so $150k would go to the shop and then the team would split the other $150k, and his share would then be $50k in your example.
Also, you don’t need to keep referring to yourself as “your friend” when using an anonymous username.
1% commission on that size transaction for multi fam, so 500k, maybe.. could be less. 50% goes to the house 250k left, taxed at ~40% 150k left The boss has to eat I'd assume, without knowing what your friend's contract says, he'd walk away with ~50k? If that is his only deal, that would be what he makes, or if they land 2 to 3 deals he may make 150k for the year, but then he's also paying his own healthcare, etc, so... yeah... that would be my guess.
Did he ever find out what he's going to get?
Had a $30M portfolio listed during my first year as an IS broker due to a lucky cold call. Commission was 2.5% for each property (4 total).
For one property, we represented the buyer and seller, enabling us to collect a full 2.5%. Two other properties we had to split with a cobroker. And for the final property (which was a dog) -- we had to take some of our commission off the table to make the deal go through.
On top of any cobroker splits, I had to give half to the house, then half to my senior partner.
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