Is free rent given to tenant in lease not included in the commission for brokers?

Have had a lot of push back lately from a regular client and it seems to be no clear cut answer and varies, but for example if a lease is executed for 36 months and 3 of those months are free, is it standard for commission to only be paid on the 33 actual months? Obviously it's ideal to add those 3 months to the back end of lease so it's still a 36-month lease.......
In Leasing Property - Asked by J. Craig C. - May 28, 2013
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Answer(s)

Michael E.
Broker/Agent
Houston, TX

I have only seen commissions paid on actual total consideration as opposed to potential consideration. The landlord is only receiving rent for 33 months so it would seem logical that the broker only receive a commission for that time as well.

May 28, 2013
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Jose S.
Broker/Agent
San Antonio, TX

A percentage of zero is zero.

May 29, 2013
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Rob B.
Chandler, AZ

Craig....
It is my impulse to simply say, "use your head man". Would you pay somebody something if you received nothing? Not many of us would, unless we called it a present!
At least you stimulate some juice by asking the question. As a wise professor said to the class one time," there are no stupid questions; there are only stupid answers". Thanks for asking the question!
Onward and Upward....
Rob Baird
rob@capratecommercial.com
AZ DRE Broker's License #641305000
CA DRE Broker's License #544165

May 31, 2013
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Robert D.
Broker/Agent
New York, NY

In New York City, free rent or rent abatement are usually factored into the aggregate rental formula used to calculate the commission payment (i.e. - a 10 year lease with a starting base rental of $10,000 per month with3 months free rent would be factored in as 3months free rent = $30,000 divided by 120 months = the net rent credit $250 which you subtract from the base rent of $10,000 which gives you the adjusted base rental = $9,750 month or $117,000 per annum. At a a commission rate of 32%, the commission would be $37,440. Hope this helps. Rob Dalton RMD Realty Associates

Jun 13, 2013
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Timothy C.
Broker/Agent
Chesapeake, VA

Commissions are almost always paid on "total rents received" (i.e. actual money to be received). Never hurts to ask though!

Jun 14, 2013
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