How is a Commercial Real Estate Agent Paid?

  • August 28, 2017
  • CRE

Commercial real estate agents can be hired by landlords and tenants, both used in different ways. CRE agents help commercial real estate transactions go smoothly from start to finish. These agents can be hired for a number of reasons, whether it’s to ensure an investor picks the best place or a tenant looking to lease doesn’t get stiffed on rent. Our friends at SVN | Southgate Realty, LLC discuss how a commercial real estate agent gets paid.

How a CRE Agent Gets Paid

Investors who have commercial properties they wish to acquire or dispose, landlords seeking tenants to lease space in the commercial properties they own, and tenants seeking to lease space in a commercial property, all hire a commercial real estate Agent. So, how does a commercial real estate Agent get paid…and who pays them?

Commercial Real Estate Agents Get Paid on Commission

All commercial real estate agents get paid on commission based on the representation of the two parties in a transaction. In a sale transaction this would be the buyer and seller, and in a lease transaction this would be the landlord/owner and the tenant.

The amount a commercial real estate Agent receives on a commission is calculated as a percentage of the total commercial property sale price or lease value. While it’s illegal due to anti-trust laws to set a market- or industry-wide standard for commission percentages, most Agents earn anywhere from 4% to 8%.

The manner in which a CRE Agent is paid, and who is responsible for the payment, depends on whether the commercial transaction is a sale or a lease.

Commission on Commercial Real Estate Sales

Commercial real estate Agents receive a commission on the sale of a commercial property by representing an owner, a buyer, or both. The amount of the commission is calculated as a percentage of the final sale amount. If there are two different Agents involved in the transaction they will split the commission 50/50.

For example, say the negotiated commission rate on a commercial property is 6%…