Paying a Broker's Fee in a Commercial Real Estate Transaction

For either party to owe a broker's fee, often called a commission, there must be a written agreement (listing agreement) signed by the party who is to pay the fee. The fee is usually stated as a percentage of the sales price. If there is a written agreement, it alone determines when the fee is owed. Commonly, the fee agreement provides that the seller will owe the broker’s fee when the property is sold to a person produced by the broker during the listing period, such as within 90 days or 6 months. The fee agreement could also say that the seller owes the broker’s fee if the property is sold to anyone during the listing period, whether or not the buyer was produced by the broker. In some commercial real estate deals, the buyer and seller agree to split the broker’s fee.