How to handle realtors bring prospective tenants (commission/fee)

12 Replies

I have been a DIY landlord for 7 yrs now, and recently I have put up a unit for rent and had an real estate agent working on behalf of a prospective tenant.  This is the first time this has happened, but thanks to the power of the internet, I am betting this is bound to start happening more and more.  My units are listed with Postlets (which syndicates to lots of sites) and Craigslist.

How should I handle compensating the agent if there client is the best qualified tenant.  I am not against compensating them, just not sure how to handle it or how much to pay.

I do know the costs of using an agent to list, qualify, show and get to a rental agreement (i.e. the agent handles the rental listing), but this is different.  This would be basically a finders fee.  I do offer my other tenants a $250 finders fee if they bring me a tenant (which I have yet have any current tenants bring me a new tenant).

I get a ton of referrals for tenants, but I am the one doing the showings, screening, putting them under contract, etc. So all the agent has done is give them my contact information. I don't see that as worthy of compensation. I refer people to restaurants, mechanics, and lots of other places and never expect compensation.

Now there is a large percentage of property managers that will pay a referral. However, they usually charge owners a "Leasing Fee" of up to one month's rent and then they use that money to compensate agents that bring them renters. And those agents probably have some increased responsibilities like pre-screening the applicant, showing the property, explaining policies, etc.

As a private Landlord, I would consider sending them a small gift card of $25 to Starbucks or Amazon. Maybe after X referrals you can give them something substantial like $100. Keep in mind, individual agents are NOT supposed to collect any compensation. All compensation is supposed to go to their Broker and then it is passed on to the Agent based on their compensation agreement with the Broker. Small amounts can go right to the Agent, but anything over $50 and you should probably ask the Agent if payment needs to go through the Broker.

I would expect 1/2 the typical listing fee would be the expected amount.  

If the agent places a good tenant, you may want to give them a heads up on prospective vacancies.  Some agents may try to argue for a whole commission, but I would question who they are representing in that case.

I should have been more clear. The agent is making all the contact, and accompaning the tenant to the showing. She is clearly working with them. So I was thinking it would be more than a small gift.

I understand the 1 month fee for agents that do it all, and that is not what this is. 

But thanks for your insight.

If a property owner doesn't compensate a realtor for a referred tenant, the realtor probably has a contract stating the tenant must pay the realtor a finder's fee.

When I was a property manager, my building offered $500 to realtors who brought a tenant who qualified and signed a lease.

Thanks, that helps.

I have yet to see if this agent has a qualified tenant, or if the tenant will even chose the place.  But I will use this info in the future. 

I definitely would not be interested in anything more than 1/2 a months rent (which would be $438), since all they are doing is bring the tenant.

I am paying a finders fee of $400 ( I asked agent what their fee should be) on a $1300 rental. 

the person looking for an apartment gets a realtor to find them a place. Thus the prospective tenant is or should be on the hook for compensating the agent unless you solicited the agent for the business. If you wouldn't have found a tenant otherwise sure give em something as a thank you. This is common sense/goodwill.

I fuzzy on your relationship to agents, so I'll create an outline:

you've been a DIY landlord for 7 yrs now.

  • agent not working for you
  1. so the tenants go to them and you do the showing and vet the prospects
  2. (suggest the agent is getting fee from the tenants and you own nothing as you still do all the real work).
  • agent has relationship with you
  1. and you pay the agent for a placement, not each application.  The agent does all the work, vets the prospects and you only show and approve/deny the agent's work

In 18yrs, I've never had an agent bring me a prospect and I self manage my 6-units.  Event if they did, I still had to perform my own due diligence - - so I would opt-out of the 'appreciation gift' idea.

It's a first for me.  

Here's how the process has gone so far.  This agent has a tenant that they are working with to find a rental.  For what ever reason, the prospective tenant has choosen to use an agent.  The agent contacted me and has setup the showing, was upfront about being an agent, and brought the prospective tenant to the showing. That's what has happened to date.

I have not meet the agent before this.

I know from other agents, one month is standard when they lost, show, qualify, etc.

I think if they bring the most qualified tenant, I would be fine with a commission/fee. 

But all things bring equal between propective tenants, I will select the tenant that is not represented.

1/2 first month rent and 1/2 move in deposit as compensation for agent delivering you a tenant.


I pay finders fees to people that bring me new owners. not people that bring me new tenants. How much action was this property getting was the Real Estate agent even going to be needed if so $250 is more than fair If not I would give $125.

So this turned out to be a non-issue, as the applicant never submitted an application.  I guess next time (if it ever happens again), I will just advise the agent that we are not interested.

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