How Leasing Commissions Paid By The Landlord Are Determined


20 Jul
20Jul

I often get asked by landlords, “how do I pay you for leasing my commercial real estate property?”  The short answer is a percentage of the rent consideration”.  If you’re not sure what that means, I’ll give one simplistic example to explain

Say I rent your property for 5 years for $10,000 a month.  To determine the rent consideration, you multiply the total number of months by the amount due per month.  In this case it would be 60 months (5 years x 12 months) times $10,000 rent a month which would give us a rent consideration of $600,000.  You then take the rent consideration and multiply by the previously agreed to rate in the listing agreement.  We’ll use 5% for simplicity sake in this example which would give you a total commission of $30,000.00 ($600,000.00 rent consideration x a 5% fee).

Typically, then the $30,000 would then be split by the broker representing tenant and the broker representing the landlord or $15,000 to each broker.  The fee is an important sales tool as a low fee can discourage tenant brokers from presenting and encouraging your property as an option for their clients.

A good broker should also list your property on all the major listing services including here in Southern California, AIR, CoStar and LoopNet Premium.  Additionally, marketing efforts should include mailers, cold calling, canvassing, email blasts, broker meetings, company website listing, intercompany communication systems blast, social media, the web, signs and 3D Virtual Tours because of COVID-19 concerns right now.

Contact me if you have further questions.

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