LA multifamily broker commissions are negotiated as part of the listing engagement, not set by regulation or by a fixed schedule. Commission structures vary by deal size, complexity, and the specific engagement. The seller typically pays the commission as part of closing costs. On most transactions, the commission covers both the listing broker and the buyer's broker — split under terms defined in the listing agreement. What matters more than the specific rate is what you get for it. A commission that funds a competent, well-connected, properly prepared transaction is worth more than a lower commission that delivers a weaker process.
Percentage of sale price. The most common structure. The commission is calculated as a percentage of the final sale price, paid at close. Rates vary.
Split between listing and buyer brokers. The total commission typically covers both sides. How the total is split between listing and buyer brokers is defined in the listing agreement and in the co-broker arrangement.
Co-broker arrangement. The listing broker typically allocates a portion to the buyer's broker. Standard LA multifamily co-broker splits are defined in the listing agreement.
Flat-fee or hybrid structures. Occasionally used, particularly on larger transactions or specific engagements. Less common on standard LA multifamily deals.
Deal size. Larger deals typically carry lower percentage rates but higher absolute dollars. The broker's effort scales but not linearly with deal size.
Transaction complexity. Complex transactions (multi-party ownership, 1031 coordination, entity-level sales, pre-sale tenant strategies) warrant higher effort and often higher rates.
Marketing scope. Broader marketing efforts (full institutional listing campaigns) carry higher effort cost than targeted off-market processes. Commission structure may reflect this.
Exclusive vs. open listing. Exclusive listings (only one broker represents the seller) typically carry standard commission structures. Open listings (multiple brokers can bring buyers) are rare in LA multifamily and operate under different structures.
Seller's prior relationship with the broker. Repeat clients sometimes negotiate different structures than first-time clients.
For a seller paying broker commission, the fee covers:
Pre-listing preparation. Rent roll review, operating statement analysis, compliance check, marketing package creation, pricing strategy.
Active marketing. Listing distribution, pre-marketing outreach to likely buyers, targeted off-market processes where appropriate.
Buyer coordination. Managing buyer inquiries, qualifying buyers, scheduling showings and inspections, coordinating diligence.
Negotiation and transaction management. Negotiating the purchase agreement, managing escrow, coordinating with the buyer's broker, resolving diligence issues.
Market intelligence. Ongoing advice through escrow based on the broker's knowledge of comparables, buyer behavior, and market trajectory. The fee is not for "putting the building on Crexi." That is a small piece of what the commission actually covers.
Marketing effectiveness matters more than commission rate. A lower commission on a poorly-marketed building produces worse net outcomes than a higher commission on a well-marketed one. The marketing package, the buyer outreach, and the negotiation skill drive more dollars than the commission percentage saves.
Preparation quality correlates with commission value. A broker who invests significantly in pre-listing preparation (reconciling the rent roll, identifying compliance issues, positioning the building correctly) earns the commission through work that happens before marketing begins. This work directly affects the sale price.
Buyer-side broker representation matters. If the buyer is represented by their own broker, the commission typically covers both sides. If the buyer is unrepresented, commission structure may differ. Either way, the seller is usually paying for both sides under a standard LA multifamily engagement.
Negotiable topics in a typical listing engagement:
The commission rate itself. The percentage or flat fee structure.
Termination and protection period. Under what circumstances the seller can end the engagement, and whether the listing broker is entitled to commission on specific post-engagement deals.
Specific services included. Marketing scope, types of outreach, dedicated broker time.
Performance conditions. Some engagements tie portions of commission to performance milestones. Commission negotiation is standard and appropriate. What is not useful is selecting a broker primarily on commission rate — the cost of a mediocre broker exceeds any commission savings on the typical deal.
Interview two or three brokers who actively transact in your submarket. Compare their approach, their comparables, their buyer network, and their preparation plan. Negotiate the commission as one of several variables. Choose the broker who produces the best expected net outcome, not the lowest commission rate. For most LA multifamily sellers, this approach produces better results than commission-minimizing.
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Do I pay the buyer's broker commission?
In the customary LA multifamily structure, yes — the seller pays the total commission, which the listing broker allocates to the buyer's broker under the co-broker arrangement.
Are commissions lower on off-market deals?
Sometimes, because the marketing effort is smaller. Off-market commission structures are negotiated specifically.
Can I sell without a broker?
Legally yes, but uncommon on LA multifamily. The broker's role includes market intelligence, buyer network access, and negotiation support that sellers without broker representation often find difficult to replicate.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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