Are there any investment sales brokers who can shed some light on the structure of commission splits? I'd like to know what the industry norm and percentage breakdown is for assets trading over $1MM, $5MM, $20MM, $50MM, and $100MM.
I'm currently based in NYC, so if there are any NYC brokers it would be great to here how your commission is structured.
If you're working at a brokerage they should've outline your split with the brokerage and then your split with your team if you're on one.
I'm not involved in investment sales so I'd like to hear what investment sales brokers are clearing when they are involved in these types of transactions.
A listing agreement at a big shop typically lays it out like this:
Sub 5 m: 6% Sub 10 m: 4% Sub 25 m: 3% > 25 m: 2%
That being said, it rarely plays out like this and I have never seen a 6% commission or a commission that is greater than $1,000,000 (highest I’ve seen 800 k on a hairy $50 mill deal)
Short answer is they vary greatly and flat rates are common on larger deals. Some brokerages will compete on commission for a listing but this is more typical of bottom bucket teams.
On really big deals, like $200 million and up, its usually no more than 25 or 35 bps. At least from firms like Eastdil, Newmark, CBRE, etc. They can also have caps of max fees as well. It's very competitive on institutional deals, the client gets to set terms with brokers almost always. Smaller deals, like sub $50 million or especially sub $20 million, its likely higher % but still with fee caps.
Totally dependent on amount of time needed to execute the deal. If you don't believe that, just ask a STNL broker what his average % is - hint: they usually get 2% on even the smaller STNL deals knowing they'll split fees.
An IS broker who can be picky is going to set a floor commission (bare minimum to staff any deal) and then apply a premium for the amount of time they'll spend. Non-entitled land deals are going to be expensive, a fairway deal will float at that minimum level. It's true that you can get away with some gauging in the middle-markets, but at the same time you can get burned by the private shops that will undercut fees to win business. Honestly the most difficult space to negotiate is the major private world - 100-500mm AUM - as they tend to underestimate the level of difficulty in execution. Middle to lower markets also have the slimmest buyer pool, so even if you're ripping fees, your work is cut out for you.
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