How much commission is paid on commercial leases?

Asked by Jonn B, Fort Worth, TX Fri Feb 6, 2009

How much commission is paid on commercial leases? For example, if a retail space gets $20psf, how much of that goes to the agent?

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David Dorfman’s answer
David Dorfman, Agent, Neptune, NJ
Fri Dec 3, 2010
The rate is one thing. How you pay out on sale is simple - at the closing.

For leasing, MOST commercial agents expect to get paid for the FULL TERM of the lease (like 10 years as example) - with no idea if the tenant will even be there for 10 years. It may be a better argument for a top tier tenant however....

1. From a broker whose been around for 40 years, I have learned to work with clients by getting paid on the anniversary of the lease - as long the tenant remains - whatever rate we agreed to last year, 3, 5 or 10 years ago. It works for us and the landlord.

2. Do you want to prepay a commission to a real estate agent if the tenant leaves after 1 2, or 5 years on a ten year deal?? Will the agent return the "unearned" commission? Doubtful.

Our method works the best for all and builds a relationship of trust. "If you still have a tenant I found for you 10 years later....I expect to get paid and to get a big kiss on the cheek..."

In NJ - call me,
0 votes
Its up to the Landlord to underwrite the tenant. The realtor is not a partner in the real estate therefore, should not have to share the risk of the tenant leaving. Will the landlord share his ROI if the tenant stays for the full term? (commission is paid for the service not ROI)The landlord is the one ultimately making the decision to lease to the prospective tenant or not. The lease should also contain language to protect the landlord by having the tenant reimburse early termination expenses, to include commissions paid. - Ive been offered to be paid on a monthly basis by landlord broker and i response the above - the landlord brokers always ask me if they can use my argument to get the landlord to pay them 100% up front. - a 5 year contract is for 5 years! not a month to month.
Flag Sat Jan 16, 2016
I think you are reasonable for saying that get paid by on the anniversary of the lease. Do you know is a lot of agent willing to do this? What do you think it's reasonable for both agent to split (50/50) the commission on commercial property? I have heard that landlord have to pay total 150% commission to both agents if there is cooperating agent involved.
Flag Wed Dec 9, 2015
W.g.martin3, Home Buyer, Fort Worth, TX
Thu Mar 23, 2017
Always negotiable but typical purchase is 3% but can scale down for big boy deals. On a lease to a credit tenant you're looking at first month rent + 3% total rent in initial term. A broker may choose to take his/her commission as roll up equity if the LL chooses, in which case the broker would share in the ability of the tenant to fulfill its obligations. Otherwise, on a straight cash commission deal, the broker either gets paid at close or at lease commencement. The brokers services are rendered by handling calls, marketing the property, and securing an end user for a parcel. The LL is responsible for due diligence and ultimately the performance of the property, not the broker.
0 votes
Bruce Ailion, Agent, Marietta, GA
Tue Nov 23, 2010
Commercial commissions are negotiable. Most areas have a typical or market rate although competing owners, brokers, or trade assocations are prohibited by by anti-trust laws from setting market wide pricing. Although an owner or broker may offer a particular commission, it may be possible to negotiate a higher rate, continuing commisions if the tenant renews, or a cash out. If you are having difficulty with the commission rate, you probably cannot adequately represent the client. I would recommend you refer the transaction to a commercial professional and allow them to get the best deal for you and your client.

Bruce Ailion,
RE/MAX Greater Atlanta
Certified Residential Specialist
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Accredited Buyers Agent
MS Real Estate and Urban Affairs
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2050 Roswell Road
Marietta GA 30062
770-973-9700 Office
404-978-2281 Direct
0 votes
Leticia Hixs…, Agent, Chino, CA
Tue Nov 23, 2010
It varies since commissions are negotiable however the standard id 10%. I have seen anywhere from 6-10% in todays market.
0 votes
Debbie Scri…, Agent, Weatherford, TX
Tue Nov 23, 2010
Commissions are negotiable and on occasion they are calculated on the term of the lease and paid monthly or there is a lesser "cash out" fee. Years ago I got 6% as a cash out or 10% for the monthly fee. I have no idea what others are doing at this time. I prefer residential even though commercial is much more exciting.
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0 votes
Tonya Brobeck, , Everett, WA
Tue Mar 16, 2010
Jonn all commissions in real estate are negotiable. You would be best served to interview a few local agents, disclose your needs and wants. Verify their reputation, you can do part of this by googling every agent you have an interest in. In fact there are even agent review sites now online. There online presence and blogs should give you a good feel of how they operate and what they specialize in i.e. commercial, residential, property management etc. Perhaps contact a few of their references as well. Make sure you understand what and how they get paid, and if you feel the need to negotiate, ask. The worst they can say is no. Many agents are worth their pay and some are not. Through research you should be able to make a sound decision on who to hire and use as your realtor/agent.

Good luck Jonn, I wish you the best;-)
0 votes
Nycstorebrok…, , New York, NY
Tue Mar 16, 2010
In NY, where I work, commissions are different on each deal, but are usually around 3% or in this scenario $0.60
0 votes
Ok thats what i know the case to be . But its interesting to know that agent in other parts of the country are collecting residual income off of commercial leasing.
Flag Mon Aug 1, 2016
3% of what?

of 1 years rent?
Flag Fri Mar 25, 2016
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