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Is It Time To Start Asking Your Owners for 10% Commercial Real Estate Commissions?

By Jim Gillespie | July 30, 2014

There’s a very successful SIOR member who I’ve coached, and he told me something interesting that he does whenever he’s having a listing agreement signed. He includes 10% as the commission he’s asking for within the agreement.

What this does, he says, is it oftentimes raises the bar in terms of the minimum amount of commission the owner will agree to.

"Sometimes the owner will agree to the 10% commission I’ve asked for," he says, "And sometimes we’ll negotiate down to 8%. But now, at the absolute minimum, the owner will be agreeing to a 6% commission."

Compare this now with starting out asking for a 6% commission, and having it become the beginning point for the owner to want to begin negotiating down from. When you’re starting out at 10%, the final amount agreed to is probably going to be higher.

When I asked the broker how his owners react whenever they see this 10% amount that he’s included within the paperwork, the broker responded to me with, "Sometimes they’ll look up at me and say, ‘Isn’t 10% a bit high?’ And then I’ll respond back to them with, ‘Well I’d really like to be charging you 18%, but 10% is just going to have to do.’"

Then both the owner and the broker begin laughing at this, breaking the tension.

Even though asking for 10% may sound like it’s on the high side to you, recognize that you’re definitely in the negotiation business. All day long you’re dealing with people who are negotiating directly through you, trying to get the other side to give more to them. With this in mind, whenever you’re negotiating for your own commission, the percentage that you start out with will help determine the percentage that you’ll end up with, especially when you’re dealing with owners who negotiate everything. 

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Topics: Persuasion, Uncategorized | No Comments »