How much does it cost to sell a commercial property?

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When choosing an agent to sell your commercial property, don’t make the mistake of only looking at the commission rate each agent charges. The real estate commission fees are not the only costs of selling a property. If you base your decision on commission alone you will be in for an unpleasant surprise.

So, how much does it really cost to sell your commercial property?

The cost of selling your property can be broken down into three expenses. The three costs to consider when choosing an agent are:

1. The agent’s fee, or commission rate.
2. The amount of advertising and marketing they are asking you to commit to.
3. Finally, the cost of underselling. This is the biggest cost and it’s a “hidden” cost. More on this and how you can avoid it later.

These are the main three costs associated with selling.

Typical agent fees average between 2% to 4%. Some agents will offer a lower commission but charge higher marketing fees and upfront advertising costs. When selling property many owners are talked into committing to unnecessary and expensive advertising campaigns. These can typically range from $5,000 to $25,000 depending on the property, and are payable regardless of whether you sell or not. Selling a commercial property does not require unnecessary expensive advertising campaigns.

To cut costs when selling a property some sellers hire a discount agent. What these sellers don’t realise is, in order to survive, the discount agent is more concerned with getting the property sold regardless of the price. This often leads to selling your property at a lower price. The agent’s fees when selling should not be your primary focus. What if the buyer was prepared to pay, say $100,000 more, but your agent couldn’t get it from the buyer because of their poor negotiation skill or because of their choice of selling method. The amount you stand to lose could be as much as 10% of your selling price. This lost sum of money is much more than any savings you may get from the discounted estate agent’s fees. The costs of selling a commercial proeprty can become very expensive if you have the wrong agent working for you.

In a quest to find the best agent, some sellers get derailed and start looking for the best deal. These are two different things. It’s critical that you evaluate agents on their marketing and more importantly their negotiation skills. Their negotiation skill will determine whether they are skilful enough to get the buyer’s highest price for your property or not. If they are not skilled they will undersell your property and you stand to lose hundreds of thousands of dollars, and guess what, you won’t even know it. As you can see when it comes to calculating the cost to sell a property, there is more to it than just comparing agents’ fees.

When you calculate the amount by which many properties are undersold, the average cost of selling can be as much as $50,000 – $100,000. This is a huge cost and most sellers are not even aware of how much they are losing when they choose an agent on fees alone. The cost to sell a commercial property does not have to be this high. You can bring down the average cost to sell by having an agent who is a qualified negotiator acting for you. With an agent who is skilled and trained in negotiation, the only cost to sell your property is the real estate selling fee.

Another area to be careful of, is the method of sale you are encouraged to use. If your agent’s preferred selling method focusses on your lowest price, or your reserve, and not on the buyer’s highest price, you are again at risk of underselling your property.

The method of sale and your agent’s negotiation skill level will have the biggest bearing on how much more you end up with in your pocket, than any concession you may get in their commission rate.

About The Author
Luke Kounnas

Luke Kounnas

Luke Kounnas is a Director of Hudson Bond Real Estate having established Hudson Bond’s Commercial Sales and Leasing Division in 2011. Having completed a Bachelor of Property and Construction at the University of Melbourne, this led him to becoming a highly regarded Valuer having over 6 years’ experience as a Certified Valuer in both commercial and residential developments. Luke was recognised for his outstanding sales success and holds a prestigious Gold and Platinum Badge, joining only 21 individual Sales Consultants amongst 160 affiliated offices throughout Australia and New Zealand.

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