ow common is it for a credit tenant to expect a commercial broker to return a portion of a leasing commission?

When contracted to negotiate a lease renewal, how common is it for a credit tenant to expect a commercial broker to return a portion of a leasing commission retained from a property owner? If common what percentage would you consider reasonable?
In Leasing Property - Asked by Michael A. - Jun 15, 2011
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Answer(s)

Rob B.
Chandler, AZ

Michael...
I have always questioned the ethics of the person who wants to "get into my pocket". It seems that one should be respected for the talent and knowledge that he or she brings to the profession being practiced.
However, it is not uncommon for those who bring something to the party to expect a bit in return. With the "party" we call leasing, I have always followed a simple rule. I treat everything as a referral. In providing fees for qualified opportunities, I never give more than 20% of my commission to anyone for a referral.

It then depends on what the value of the referral is. In most cases the person must make a contribution to the complete development of a completed transaction. The value of "a name" has no value to me. However, if it is a well qualified name it has great value. Also, if the individual is helping to do something to ease the transaction through the process, it has maximum value.
In answer to your specific question, the credit tenant is bringing itself to you as a referral. It would then be a matter of the length of the lease renewal and the amount of negotiating that I had to undertake to get the very best lease terms for the client. It is likely with a lease renewal of three years of more that I would give a 20% "referral" fee to the credit tenant. Particularly if in the event we could not negotiate a good renewal package for it that the credit tenant would allow me to take him to a different location.
Onward and upward Michael... Rob Baird

Jun 17, 2011
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Aurelio M.
Broker/Agent
Torrance, CA

The question is, do you ask your doctor for a portion of what they get if you choose to visit them? I've been asked before for a protion of my commission and my answer is always the same. "Only if you give me a portion of your sales". Don't touch what I work for and I won't touch yours. It's only fair that you keep what you have earned. Just Say NO :)

Jun 18, 2011
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Alan M.
Broker/Agent
Morristown, NJ

It is not common and I would be cautious in dealing with a company - or individual - who asks for a portion of a commission. Such a request would compel me to be extra careful in my dealings and documentation with them. A straight referrel fee to a colleague or legitimate source for a lead that results in a commission is one thing, but a customer or client essentially asking for a kick-back is another. Not to mention licensing laws about commission sharing...

Jun 23, 2011
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Chris R.
Broker/Agent
Denton, TX

Not sure what state you are. In Texas - anything beyond a nominal non-cash "gift" of $50 or less would require the recipient to be a licensed real estate agent and any such compensation would be required to be paid to the broker of record and a 1099 issued. I was aksed that question the other day and I advised sure if the individual asking was a licensed agent - which he was not. I do not see this as a common practice in commercial real estate in Texas. If you are representing the credit tenant - the commission is not costing him anything as it is paid by the landlord. I would find the question improper and would not agree to it - unless they are licensed - and then a 20 - 25% referral might be in the discussion.

Jul 3, 2011
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