Real Estate Agent · Member since 2022 · 4 posts · 0 votes
Hello everyone!
I am a realtor based out of Cleveland, OH and I have a client who is looking to lease a commercial space for his business. I don't have much experience with the entire process and want to know what's a typical commission % for this type of transaction? Also, am I paid a commission by my client or by the landlord since I am bringing a prospective tenant? Any help or advice would be great.
I am a realtor based out of Cleveland, OH and I have a client who is looking to lease a commercial space for his business. I don't have much experience with the entire process and want to know what's a typical commission % for this type of transaction? Also, am I paid a commission by my client or by the landlord since I am bringing a prospective tenant? Any help or advice would be great.
Thank you for your assistance in advance!
Have your client pay you. Do not waste your time working with anyone who thinks your services should be free. If he baulks when you tell him how much you'll need him to pay you, punch him in the nuts and move on.
I am a realtor based out of Cleveland, OH and I have a client who is looking to lease a commercial space for his business. I don't have much experience with the entire process and want to know what's a typical commission % for this type of transaction? Also, am I paid a commission by my client or by the landlord since I am bringing a prospective tenant? Any help or advice would be great.
Thank you for your assistance in advance!
Hello!
I have been an agent for the last decade and can help with this question.
You should do a Buyer-Broker Agreement if that is the form they use in your state.
Usually for commercial, the seller pays a finder fee to the tenant's agent. Sometimes it is a flat rate or its a percentage rate. If its a flat rate finder fee, it will just say, $3,000 flat. If it is a percentage, it is a percentage of the entire income of the lease. So if for example, they are offering 3% commission. It means they are offering 3% of the ENTIRE Gross revenue of the lease.
Because many commercial leases are several years long, the commissions can be very high. For example, if the tenant signs a 10 year lease at $2000 a month.
You have to multiply 2000 by 12 = 24,000.
Then multiple 24,000 by 10 = 240,000.
You get a 3% commission on $240,000 which is $7,200.
If the landlord isn't offering any commissions, then the tenant has to pay you and you negotiate that fee directly with them and it can be a flat-rate, a percentage of the lease amount, etc.
This is usually how the commissions are structured, but MAY VARY BY STATE!
@Taylor Nash What Lucas said is correct. If the space is listed, you should be able to see what is being offered on the listing. Otherwise you can call the owner's agent, or call the owner directly if there is no agent. Both the flat fee and the calculated % of the gross lease are common, depending on the size of the property. Sometimes the owner will want to spread out the commission in a gross lease deal, as they don't know if the tenant will remain for the duration, but everything is negotiable.
I am a realtor based out of Cleveland, OH and I have a client who is looking to lease a commercial space for his business. I don't have much experience with the entire process and want to know what's a typical commission % for this type of transaction? Also, am I paid a commission by my client or by the landlord since I am bringing a prospective tenant? Any help or advice would be great.
Thank you for your assistance in advance!
Have your client pay you. Do not waste your time working with anyone who thinks your services should be free. If he baulks when you tell him how much you'll need him to pay you, punch him in the nuts and move on.
Also, what's a standard commission rate that I should charge if I help my client negotiate a 3 years lease agreement with a prospective property?
With buyers, there isn't really a standard.
Just charge what you think your time is worth, flat-fee or percentage.
With flat-fee, then everything is WAAAY simpler as you don't have to calculate anything and the buyer knows exactly what you charge and will always know what you charge so no surprises and having to explain to them why one deal owes you more money than another. I'd go with a flat to keep things simple. For calculating this, there is a bunch of methods, first months rent is easiest to understand and execute, but might not represent how much work you put into the deal especially if the tenant is very picky or gets denied. I used to do mobile home sales and I used to charge a rate of $3000 flat because the purchase amounts are so low. But if its a specialty area, you should get way more due to expertise.
If you really want to do percentage, you have to be careful as they might get mad about you getting paid more on longer deals and you have to explain all this to them. Usually percentage works better when representing landlords and not tenants.
I always go with what is easier to explain to the client.