Tara King, Home Buyer in Staten Island, NY

How do agents divvy up rental commissions?

Asked by Tara King, Staten Island, NY Wed Jun 24, 2009

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6
Jessica Taccetta’s answer
Hi Tara. For me, the rental commission is set by the broker, as is the commission split. There is alot more involved in doing rentals then it seems and when co-broking, there is not much that can be offered out on them. Basically they are split among however many agents are involved in the rental, so the more people involved, the less that can be offered. But as Joe has stated here, I too have found that renters are a good investment because if we find a good fit for them when they are looking for an apartment, they will come back to us when they are ready to purchase. So the rental commission may not be alot to work with someone else on, but it is good to incorporate rentals into the list of services a company provides. It makes for well versed, more knowledgeable agents.
1 vote Thank Flag Link Thu Oct 15, 2009
The compensation of a salesperson is set by agreement between the broker and the salesperson. According to a recent Real Deal article most Manhattan brokerages charge apartment seekers 15 percent of the first years rent in commission. So the fee on a $3,000-a-month rental would be $5,400. That fee is usually split 50-50 between the agent and the brokerage. At some firms, more experienced and higher producing agents earn more in the form of a higher percentage of the fee or bonuses. In rental buildings that still feature owner-paid commissions, those commissions typically amount to one month's rent, or about 8 percent of the first years rent, and the apartment seeker pays the difference between that 8 percent and the 15 percent commission. Commissions are negotiable.
Web Reference: http://www.clovelake.com
3 votes Thank Flag Link Wed Jun 24, 2009
Many agents, however, do not provide rental services and those who do are not always knowledgeable about rental details such as floor plans, building management and seasonal fluctuations in pricing. Some agents choose not to do rentals for a variety of reasons--one reason is that, after the numbers are calculated, the hourly compensation can be low. However, many agents incorporate rentals in their core business with the hope that rental customers will eventually seek their services to buy or sell a property. Rental services are also provided by some agents who don’t generally provide them as a courtesy to loyal customers.

What is the advantage of choosing an agent that does rentals as part of his or her business services?

* Investors can benefit from working with an agent who can find them a great rental property by putting their detailed knowledge of both the local real estate market and the local rental property market to use.
* Renters can access an agent’s true work style and determine whether they would feel comfortable employing that agent for a sales transaction at a future date.
* Rental research adds to an agent’s knowledge base about all properties in a specific market. Agents familiar with all residential properties (those that are income producing and those that are non-income producing) generally know how these properties impact and are impacted by the local economic conditions and trends such as new jobs, demographic shifts, attraction of corporate relocation clients, etc.
* Knowledge of rental prices is essential to pricing and selling residential investment property, specifically condominiums. Rental income impacts that value and demand for condos much more significantly than for houses.
* Ability to save time and close: Agents aware of the various layouts and options in a community are more likely to match the right renters with the right properties. Agents who are ignorant of the rental inventory can spend many hours touring clients without closing a deal. This is frustrating for the agent and the customer.
Web Reference: http://www.clovelake.com
2 votes Thank Flag Link Thu Oct 15, 2009
Commissions can be paid by the landlord or the tenant. Investors and renters should research the standards in their town or county. For example, in New York City, commissions are called fees and are generally paid by the tenant. In Connecticut, on the other hand, commissions are generally paid by the landlord.

If an investor is moving into a new area with plans to buy a rental property, it is important for them to call several agents and ask who pays the fee and what the fee is. They should also inquire about the MLS that exists in the area. If much of the property is unlisted, then they might have to agree to pay a fee to the brokerage they employ, even if they find and subsequently lease an unlisted property. Investors should make sure they know under what circumstances they will pay a fee and when no fee would be due.
Web Reference: http://www.clovelake.com
2 votes Thank Flag Link Thu Oct 15, 2009
Hello Tara, the regular way of doing it is to divvy it up 50/50. Usually there's one agent with the rental and the other with the tenant, which sums up to an equal split after you pay your office.

Going half will keep agents showing your rental units or finding tenants for you. It pays to be generous in this business because we all need each other some time or another.

I hope my answer helped you.

Rhonda Holt
Full Time Top Sales Agent
Co-ops and Home Sales
Weichert Realtors, H.P Greenfield
1712 Utica Avenue, Brooklyn, NY 11234
Email: HelpMeRhonda1919@yahoo.com
My Site: http://www.KandHhomes.com
Web Reference: http://www.KandHhomes.com
0 votes Thank Flag Link Thu Oct 15, 2009
Tara,

The basic formula to remember regarding any commissioin is that the person having to pay it (buyers if they're hiring a buyers agent or seller hiring a sellers agent) is totally up to the individual paying it. Though a company has an option to agree to it, in the end all commissions are negoitable and up to the payee.

Good Luck to you.

Cathy Cataletto
0 votes Thank Flag Link Thu Oct 15, 2009
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