Home Buying in San Jose>Question Details

Philip Banta, Renter in San Rafael, CA

large land transaction real estate commission percentage?

Asked by Philip Banta, San Rafael, CA Wed Oct 10, 2012

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Tina Lam’s answer
Philip,

Are you wondering about the real estate commission as a buyer or seller? The percentages can vary depending on the complexity and size of the land transaction. 5000 acres of ag land may be a smaller and easier deal than 5 acres of prime commercial land.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Tue Oct 16, 2012
Land commissions are usually more, and all commissions are negotiable. What the client and agent will do is discuss the entire project and come up with a number which makes sense.

For example, if a developer is purchasing land to build homes and resale, the agent may negotiate a different number on the land sale and build in a guarantee listing on the resale of the homes at a different rate. It all depends on the scope of the project.

Have an amazing day!
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Wed Oct 10, 2012
Large land deal commissions are usually a fixed fee (a "finders fee" if you're working for the buyer) or variable fee tied to your performance as a listing broker. Most land sellers do not offer a commission to the buyer's broker, that is left to a separate agreement on the buyer side (usually a fixed fee).
There are a number of differences between land sales and home sales that take extra thinking regarding broker compensation. For example, if the land is being purchased for development, escrow may take over a year while the buyer secures entitlements. In these sales, there are often option fees or non-refundable deposits that pass through to the seller after the first 60 to 90 days. Should the listing broker receive a commission on those fees or deposits since they stay in the seller's pocket even if the sale falls out of escrow? Should the listing broker receive a bonus if they maximize the amount of these early fees?
0 votes Thank Flag Link Wed Oct 10, 2012
As pointed out below there are lots of different kinds of land deals. If you are talking about selling a large piece of acreage, most will want at least 10% because it's a lot more work.
0 votes Thank Flag Link Wed Oct 10, 2012
As Maria pointed out, Brokerage fees, or commissions are not any set or fixed number. They are negotiable.

There are a number of factors to consider in deciding on the number.

Onr large factor is the amount and quality of service that is expected. For example how much marketing is expected by the seller and what quality of marketing is expected?

For example in a large land transaction, this could be land for a ski resort, a development for a vacation resort, a large commercial shopping center or large residential development, or a large commercial farm. The marketing for each one of these end uses will be very different.

The market, or potential buyers need to be identified. For example will they be end users, consumers or will they be commercial developers. We will need to identify what are the best sources of communication to reach the target market. For example is television, radio, magazine, newspaper,direct mail, internet, or some other method or methods the best way to reach the target market?

If the target market is end consumers for a ski resort or a lakefront vacation resort, the marketing materials and the methods of communication with the target market will be very different than if the target market is commercial developers.

The cost, the time and the effort that is necessary for that marketing will have a wide range of cost in both terms of time and money, particularly depending on what level of service is desired and expected. .

The amount of the brokerage fee that is expected will vary accordingly.

For more information you may reach me at my cell phone: (408)509-6218

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
DRE#00901872
.
0 votes Thank Flag Link Wed Oct 10, 2012
Commission is always negotiable. There is no set rule as to how much the broker can charge. However, there is always a norm or average commission charged per state and transaction.
0 votes Thank Flag Link Wed Oct 10, 2012
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