In the Chicago commercial market, on a commercial lease we will take, i.e., 7% of the 1st year and 4% for each year thereafter up to the option. Of course, due to anti-trust, these commission rates are negotiable. This is just an example as the rates can be whatever is agreed upon between Broker and Lessor.
So, to simplify on a $1,000 a month lease (I know real low---but hypothetical) the commission for year one would be $840, year 2 and 3 would be $480-----------formula is the yearly rent x the % divided by 12. We then take the 3 products of $840, $480, and $480 for a total of $1800 and divide by 3. So annually the commission rate would be $600. Due to the small amount of commission in this example, the commission would be paid in full at lease signing.
Larger commissions could be paid annually, and even larger commissions, monthly.
Nov 28, 2012