How Are Commissions Paid?

Landlords usually pay all agent commissions. Agents receive one-half of the commission when the lease is signed and the other half when the tenant moves in. Commissions are normally 4% to 6% of the lease’s overall value, which is based on the space’s square footage, the price per square foot, and the duration of the lease. It is not common for a tenant to pay a lease commission directly out of their pocket.

One of the most common pitfalls a tenant makes is to tour properties without having decided on a brokerage relationship. If you plan on hiring a tenant rep, do so in advance of going on a property tour. In most cases, all an agent has to do is to bring the tenant to a property and he/she is legally entitled to a portion of the leasing commission as the “procuring” broker. A tenant may never see the agent again, but since that agent showed them the property, that agent will be paid a commission. These situations can also get real messy. For example, if later on that tenant hires a tenant rep, a commission dispute will likely occur if the tenant enters into a lease on a property that was shown to them by another agent.

Content is provided by SwiftLease leasing agents.

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