”Typical” Commission Rates for Selling Agricultural Land?
I’m a commercial broker myself but have no experience whatsoever in selling ag. Someone I know is planning on selling some very large parcels of farm land for $20-30 million. He said the broker he’s likely going with is asking for 4.5% commission. This seems insane to me (I was thinking 1-1.5% at that listing price would be fair) but maybe there’s something I don’t know about selling agricultural land??
[{"id": "euan5l5", "text": "I bought farm land from an ag broker. Standard 3% on each side. My educated guess is that, just like other real estate, as the dollar value goes up, the commission goes down. 1-2% total for both sides sounds reasonable, 4.5% sounds insane.", "replies": [], "depth": 1}, {"id": "euaw1f6", "text": "It depends entirely on the listing and what the broker is going to do for you - I've worked land listings that were 90 minutes away, required a 4WD to show, the local redneck populace treated them like public lands that the resource agency didn't patrol, etc. \n\nLet's assume it's $20MM with a 2% comm. If I can sell a $6MM investment property with a 6% comm, I get 90% of the commission with probably way less than 90% of the work.\n\nIf it's $20MM because it's 40 acres of farmland that the path of development passed over 20 years ago and somebody's grandma was too stubborn to sell, 2% might be reasonable (but still doesn't leave lots of room for a broker on the other side, or factor in the likely significant marketing and salary expenses the broker is going to have). But if it's $20MM because it's 20,000 acres of raw wooded ridgeside without a timber study, 2% might not be reasonable at all.", "replies": [], "depth": 1}, {"id": "eub98yb", "text": "Commissions typically do down as prices go up. You might be lucky to get .5-.75%.", "replies": [], "depth": 1}, {"id": "eubcncu", "text": "There typically aren\u2019t a large number of Brokers who deal in these types of transactions - in my state it\u2019s typical for brokers to not even place a co-broke commission because they know all the buyers for land that large/expensive and anticipate procuring a buyer on their own. So as opposed to asking for 4-5% for both their and the other broker\u2019s commission. They simply request a high number and bring the buyer themselves. \nAlthough, I will say the commission does usually go down once you get into 10 Million + \nNo idea the background on this property, is it possible the broker assisted the owner in completing entitlements and adding value to the property? In which case a higher commission would make sense.", "replies": [], "depth": 1}, {"id": "eucs51v", "text": "1.5-2.5%", "replies": [], "depth": 1}]