Tenant's agent asking for commission. California. Is this normal?

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Tenant's agent asking for commission. California. Is this normal?

Alon D.
Member since 2021 · 4 posts · 1 vote

Hi I recently put my property up on zillow. I have my own agent who I think listed on the MLS. Anyways my agent is being taken care of. However the tenant's agent who found the property for their client is asking me for a commission now. He wants me to deduct it from the first month's rent. Is this normal? I am not an agent so I am unsure. What do I do in this situation as we never spoke about commission prior to the lease.

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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
4y

Any commission that the tenant's agent gets should either be paid by the tenant or an agreed upon cut of your agent's commission. This is something that the tenant's agent should have worked out with the tenant or your agent prior to placing the tenant. Sounds like a rookie mistake. 

You owe their agent nothing. 

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  • Michael K GallagherBusiness Member
    Real Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    I'm not sure what is specific about Cali laws but it would depend on your agreement with your agent.  Normally the tenant side comes out of the full commission paid.  But it would depend on what your commission agreement with your agent has in it regarding paying out other brokers.  

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  • Alon D.
    OP
    Member since 2021 · 4 posts · 1 vote
    4y

    Thank you Michael for your response. There was never any agreement. I dont think the tenants agent even found it on the MLS. I think they found it on Zillow. There was no agent who handled the lease

    1Reply
  • Donna M.
    Member since 2020 · 81 posts · 73 votes
    4y

    If your listing agent put it on the MLS then she would have to write in the percentage of commission or flat dollar amount that the selling broker gets. Notice I said her Broker, not agent. The agent gets her split from the broker. If it was never put on MLS then no commission through the MLS. Your listing agent should answer your questions.

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    4y

    @Alon D. this is a rental and you are paying 1 month rent or similiar to your agent for finding the tenant and managing the lease up. The agent who found it for a potential tenant is asking for you to pay her an additional fee for finding the rental for them. It would seem you have no agreement with the renters agent and no obligation to them. I would talk to your agent to see if there was anything in MLS on a commission split but this fee I think it would up to the tenants to pay. I have never had this situation with renting only with sales where it is discussed/agreed upfront.

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  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    Any commission that the tenant's agent gets should either be paid by the tenant or an agreed upon cut of your agent's commission. This is something that the tenant's agent should have worked out with the tenant or your agent prior to placing the tenant. Sounds like a rookie mistake. 

    You owe their agent nothing. 

    4Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    If you are not offering compensation, then you are under no obligation to pay compensation. 

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  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    This can be regional. In my market, real estate agents don't generally handle leasing and properties are not listed for rent on the MLS. It is common in other markets to use real estate agents. In that case you are bound by the agreement with the agents. Most likely one of two situations makes sense here:

    1. Your agent splits commission with the tenants agent.

    2. Your agent gets nothing and the tenants agent gets the money.

    When an agent approaches you with a client to rent, you should be having the discussion around compensation at that time. Of course if an agent is involved, they will want to be paid. The tenants agent should have discussed this with you ahead of time. I would probably talk to my agent and ask them to split the fee. 

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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    4y

    @Alon D. This is really variable. When I was licensed in Massachusetts it generally varied by town. In some, the landlord paid both sides with one month's rent, split 50/50 to both agents. Like any MLS listing, the terms had to be plainly disclosed on MLS as either a percentage of a month's rent or a fixed dollar amount.

    In other towns the landlord paid 1/2 month to his agent and nothing to the renter's agent.  The renter's agent would collect 1/2 month (or whatever else was agreed upon) from the renter.

    When I moved to Maine, I found that rentals aren't listed on MLS and we never even dealt with them.

    However, unless you have signed something that says that you owe the renter's agent a commission, you owe that agent nothing.  Check the listing agreement with your agent to see if there's anything in there about commission, but from the sounds of it, you should tell the tenant's agent to collect his commission from the tenant. 

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  • Alon D.
    OP
    Member since 2021 · 4 posts · 1 vote
    4y

    Copy of his email names redacted: "So the MLS listing has it set at 3%. I would need a form signed (I can forward it to you if you want to look it over) and then my brokerage will forward me a doc that shows you the breakdown between me and my brokerage.
    Let me know how you’d like to go about it, {Redacted} is open to doing multiple checks on his end. But if it’ll mess with your accounting then we can sort it out on your end."

    He wants 3% of first year's lease 

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  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y
    Originally posted by @Alon D.:

    Copy of his email names redacted: "So the MLS listing has it set at 3%. I would need a form signed (I can forward it to you if you want to look it over) and then my brokerage will forward me a doc that shows you the breakdown between me and my brokerage.
    Let me know how you’d like to go about it, {Redacted} is open to doing multiple checks on his end. But if it’ll mess with your accounting then we can sort it out on your end."

    He wants 3% of first year's lease 

    1) You agreed to pay your agent a set amount for finding you a tenant. That's all you need to pay.

    2) Your agent agreed to pay outside agents a 3% commission for finding them a tenant. Your agent needs to pay this out of their cut. Your agent does not get to encumber you to pay for their side deals.

    You pay your agent what you agreed. The other agent will need to get their cut from that agent. If there is any issues, their brokers will speak to each other and clear it up (basically, your agent WILL be paying that cost).

    2Reply
  • Alon D.
    OP
    Member since 2021 · 4 posts · 1 vote
    4y

    @Greg M. This actually puts it all into perspective. Thank you

    0Reply
  • Elvis Occ
    Santa Ana, CA · Member since 2012 · 11 posts · 2 votes
    2d

    The purpose of listing a property in the MLS -besides Zillow- is for another agent to see it. Right? If the tenants agent sees the listing, shows the property and does all the paperwork, he has to get paid. The Landlord pays the listing agent who in turn pays a percentage of his commision to the tenants agent. The landlord does not have to pay a commission to other than the listing agent and the tenant does not have to pay his agent a commission unles specified in the Representation Agreement.

    I hope this helps.

    0Reply
  • Aristotle Kumpis
    Specialist · Long Beach, CA · Member since 2011 · 873 posts · 393 votes
    2d
    It’s typically written up in the listing agreement between you and the broker. It will usually say that the listing agent will pay X amount to another agent if they bring a buyer/tenant. If your agent is not paying a broker commission, then ask your agent what to do. That’s what you are paying them for after all
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