One of the biggest pressure points between brokers and agents is how much money is allocated to individual commercial real estate listings.  Especially if one agent or team continually gets higher budgets than other agents.  If you’re going to allow some of the broker’s cut to go to marketing, best practices would state you define a marketing budget structure and stick with it.  Here are the 2 most popular ways to budget marketing for commercial real estate listings.

Percentage of potential revenue

Using percentage is the most popular way brokerages allocate funding to individual listings.  It’s an easy way to keep costs under control and prevent over spending on small pay-out listings.  5% of broker’s cut is standard, but it’s often not enough to afford a single sign.  If you need more than 5%, you’ll need to state your case.  Is it a big client that will bring in consistent revenue?  Did the former agent provide more services?  All of these questions will have to be answered before you approach your broker for additional funding.[/fusion_text]

Average Transaction $250,000
Average Commission Rate 2.5%
Overall Potential Commission $6,250
Broker’s Cut (45%) $2,812
Listing Marketing Budget at 5% of Broker’s Cut $140.60


Fixed Ranges

If your brokerage gets a ton of small listings, a fixed range may be the best fit.  When you apply percentages on low pay-out listings, you’ll end up with impossible budgets.  “Oh great, I can afford a box of pens and a note pad!”

Since signage is a listing’s biggest expenditure, make sure you have quite a few generic signs: “AVAILABLE” with company phone number.  Using “available” instead of sale or lease will allow the sign to be used for any low pay-out listing.

Here’s an example of a Fixed Range Marketing Budget

Overall Potential Commission Marketing Budget
$1,000 to $2,000 $45
$2,001 to $3,500 $80
$3,501 to $5,000 $115
$5,001 to $6,500 $150
$6,501 to $8,000 $180
$8,001 to $10,000 $225
$10,001 to $15,000 $340
$15,001 to $20,000 $450
$20,001 to $35,000 $790
$35,001 and above 2.25% of Overall Potential Commission