large deal (100+MM) commissions- curious what these look like
Small town guy here looking for some insight from the big boys. I was looking at the sale of office buildings in NYC. Lets say, you were the broker on a $100MM sale, how is the commission structured, what is the percentage? Assuming you sell it to a huge investor with no brokers on the other side and there are 3 other brokers on the sale? What would your gross commission be?
[{"id": "hrji1ke", "text": "Working as a broker in Europe, we would usually pitch with ca. 0.45% and a kicker above a certain volume, if we achieve a price above the base price e.g. &gt;110mm 5% of that part, as an incentive.", "replies": [{"id": "hrjl7iz", "text": "That's typically how we structure our sales.", "replies": [], "depth": 2}, {"id": "hrjox5r", "text": "What does CA mean?", "replies": [{"id": "hrjv862", "text": "Circa.", "replies": [], "depth": 3}, {"id": "hrjvrri", "text": "Commission Agreement", "replies": [], "depth": 3}], "depth": 2}, {"id": "hu8i1t8", "text": "Can you give an example with numbers?\n\nNot sure if i'm understanding it correctly\n\n$110,000,000 \\*.45% = $495,000  fee\n\nLet's say you sell it for $112,000,000 so does that mean you get 5% of the delta between $110,000,000 and $112,000,000? ($2,000,000 \\* 5%= $100,000) so your total fee would be $595,000?", "replies": [{"id": "hu9l64h", "text": "Yes", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hrjjjqs", "text": "Between .5 - 1.5% splits depend on how the team is structured", "replies": [], "depth": 1}, {"id": "hrjlqbo", "text": "When you start getting to the absolutely huge sales that are over $500 million or in the $1+ billion range it will all be less than 50 bps.", "replies": [], "depth": 1}, {"id": "hrjmunn", "text": "For a $100mm deal I typically target an aggregate comp number - will usually structure it as 40-45BPs to mid point of BOV then a 3% kicker for anything above up to total comp of 60bps at the top end. I\u2019m overall on a $100mm deal broker would get paid ~500k ideally.", "replies": [{"id": "hrlirru", "text": "BOV?", "replies": [{"id": "hrlmb63", "text": "Broker opinion of value. They typically come up with low / medium / high range of values.", "replies": [{"id": "hrlmhti", "text": "Got it. We call it BPO in residential.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hrk7t4s", "text": "50 BPS", "replies": [], "depth": 1}, {"id": "hrkjjg0", "text": "I would FOIA property tax assessment appeals of these buildings. In my jurisdiction they need to submit settlement statements if they appeal and the building sold within the last 3 years.", "replies": [{"id": "hrmrz7z", "text": "Why is this being downvoted? I\u2019d never thought to do this to get comps but seems like a smart idea.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hrl9xyk", "text": "There are so many ways you can negotiate large deal commissions, and all the suggestions above can be applicable, but it depends on how and what you ask for within reason of not being greedy past the value and reputation you add. It still needs to be fair, and because of that it\u2019s usually tiered like mentioned above, or it\u2019s a low fractional percentage relative to the deal value.", "replies": [], "depth": 1}, {"id": "hrlaqsr", "text": "I concur with the 0.5% to 1% broker estimates in this range. Ironically as purchase price increases there is a smaller group of investors looking to buy a property so the sales effort is easier and smaller but you need to have the contacts and prior sales to get the big listings.\nAdditionally brokers will try to cut commissions to cost basis on big deals to make headlines and free advertising with a bigger than average deal.\nFrom a sales perspective I would choose a broker that usually handles similar size transactions unless you have a good justification.", "replies": [], "depth": 1}, {"id": "hrlgcex", "text": "I personally a contract out for $192M with the commission being signed off at $1.92M\n\nI think this is the exception though. Usually it would probably be half of that.", "replies": [], "depth": 1}, {"id": "hrlhh0x", "text": "Analyst here at a NYC brokerage - should be able to get .75% to 1% on a $100m deal. \n\nSay there is a senior Managing Director team lead and 2 VPs under him helping run the deal. You can assume they get ~20% each if their broker treats them well (really all over the place). \n\nLet\u2019s assume a 1% fee with the senior managing director\u2019s house split at 60% to him, 40% to the house - $1m commission - $600k to split - $120k for each VP broker helping on the deal. \n\nAgain could be more or less depending on the broker and how much work they expect you to do.", "replies": [], "depth": 1}, {"id": "hrm2sqj", "text": "A major brokerage (jll/colliers/cbre) sold something for us in the office sector in the 100-150 musd range (Wide range to avoid identification) and commission came to 0.42 %. We had a tiered structure where they hit just above the goal for a kicker. This is in Northern Europe.", "replies": [], "depth": 1}, {"id": "hrsfpzd", "text": "Just wondering - based on some comments here it looks like people are saying between 0.5 - 1% in fees - so let\u2019s just assume the middle of $750k of broker fees. How does that get split among the actual constituents at a larger brokerage? Say CBRE.", "replies": [], "depth": 1}]