We were approached by an independent broker. This broker has made us an offer on our house on behalf of a reputable developer in our city. I won't get into details but it is for an inner city multi unit development. 2 adjacent lots (other owners) are also involved. I am not concerned about the legitimacy of the parties involved or the fairness of the amount offered (I have looked into all this).
Question 1 . We have been offered just over 1 million each. The broker would get 5% of this. 150 thousand commission on the three properties. I thought 2% would be my offer. Is 5% justified? 20 thousand or 50 thousand!
Question 2. To round off the figures for convenience. The developer has offered 50 thousand deposit each property...the balance on final closing . The broker says that of our 50 thousand, he would get 25 thousand and we would get 25 thousand. If the deal does not go through, then we both keep our share of the deposit. Is it reasonable for the broker to expect 50% of the deposit when his overall commission is 5% ? Why would he not get 5% of the deposit ($2,500 instead of $25,000). He is getting half of his total potential total commission from the deposit.
The brokers aces in this....the offered price is about 40% above local property values. Our aces...no imperative to move. He needs all three properties for this transaction.
Perhaps this is all the norm. Any thoughts appreciated.
Thank for the feedback.
As stated the final price, legitimacy of the developer, etc. is not my question.
I was wondering what a reasonable amount for the broker should be. 2% on a million is 20 thousand. That's a lot of money for putting a deal together. There isn't anything for the broker to split with another agent, etc. No advertising or other costs other than having pulled a few land titles.
What the broker has done has gone to a major developer in our city. Told them he can possibly get three adjacent residential lots together in an area that has high traffic already been rezoned for a multi residential unit. He offered us all the same ....just over a million each and 5% fee (from seller). So...I'm now leaning to 2% max. And, yes, I'm not naive and won't be signing anything until I go through everything with a fine tooth comb.