How does it work when you use a Commercial Realtor when signing a lease, how do they get paid?

In Leasing Property - Asked by Tara S. - Oct 28, 2010
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Answer(s)

Patrick S.
Broker/Agent
San Antonio, TX

Landlords typically pay the commission for the Tenant's broker. And while you may think that you may get a better deal without a broker (after all the Landlord is saving money, right?) a good Tenant rep broker will almost always get you a better deal.

Oct 28, 2010
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I D P.
Corporate Investor
Texarkana, TX

When Landlord sign a contract with Commercial Realtor, i.e to look for leasee for 5 years terms. He agrees to pay commission typically from 3% to 7%., every time leasee pay Landlord the agreed rent, agent gets paid the persentage agreed.
Best to go through Agents and not directly from Landlord. You have better chance to negociate the Lease.

Oct 28, 2010
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Jim T.
Owner/Investor
Abilene, TX

A Tenants Broker gets paid a percentage of the expected rent obligations by the landlord. Example, a lease that will cost $100,000 over 5 years with a 3% commission, the landlord pays the agent $3,000.
Often times, a landlord will charge a higher rate if a tenant uses a broker than if they don't. Brokers know this and are glad because they then get a slightly higher commission. In other words, no matter who signs the check, the tenant is paying for the broker. So it is usually best to go directly to the landlord so that you can get a lower rate.

Oct 29, 2010
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Rob B.
Chandler, AZ

Tara....
The first two answers were on target. The third answer will guide you the wrong direction. As a peson who leased space for myself in my early years and has been representing both landlords and tenants for the past 30 years, I can tell you that a good leasing agent is worth his or her weight in gold (and the price of gold is going up these days).
A good leasing agent will know what the landlord's circumstances are, will know the market place, will know how to present a lease with rental, TI concessions and other deal creating considerations. He or she will further know how to measure and present the results of the lease to the landlord in terms of what it means to the landlord in cash income over the term of the lease after all costs, including commissions and conscessions are deducted. He or she will further know how to show the increased value of the property to the owner from having this lease in place, through the application of a meaningful cap-rate to the increased bottom-line NOI.
Please tke my advice and always strongly consider using an agesnt if you are the lessee. If you are going to be in the business, learn how to apply the skills of presenting value to both the landlord and the tenant. If you do, you will become very successful in this industry.
Good Luck.......
Rob Baird, CA RE Lic. #544165 (One of the oldest, active licenses in CA)
951 515-5855

Oct 29, 2010
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Bob M.
Half Moon Bay, CA

Landlords pay broker commissions. Tenants pay the landlords, so indirectly they are the one paying. That said, not using a QUALIFIED commercial leasing agent is foolish. It would be a professional vs amateur match up. There is so much more than the rent and term to be considered and negotiated that we cannot even begin to explore the topic fully here. Leasing specialists are exceedingly valuable to the market, on both sides of the transaction. If they were not, the LL's would be paying them as robustly as they do. Bob McComb Author of Navigating Commercial Property Leases, A Tenant's Guide to Leasing C.P.

Oct 29, 2010
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Nancy G.
Broker/Agent
Rochester, NY

I see some good advice from my colleagues here. You should also know that if the Landlord does not pay, you can pay the Commercial Realtor yourself for his/her services. I also recommend that you have representation for your side by hiring a Tenant Rep...representing soley your interests.

Oct 31, 2010
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Stephanie S.
Broker/Agent
Malibu, CA

Customers for real estate would do themselves a favor to remember they are not Clients until they make an agreement with a Broker! Making an agreement with a Broker puts a tiger in your tank! I always get the best deals for my Clients! (Especially when they give me incentives/consultation fees/etc).

Nov 2, 2010
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