How do brokers get paid when selling or leasing commercial real estate?
Brokers are typically paid a percentage of the total purchase price or a percentage of the total future rents paid during the lease term. Broker commissions are usually paid by the property owner, not the tenant or buyer. Sale Commission Example: A commercial agent representing a buyer is paid 2.5% of the total purchase price of $1,000,000 totaling $25,000. This commission is paid by the property owner at closing. The commission amount is split between the commercial agent and the brokerage they work for. Lease Commission Example: A commercial agent representing a tenant is paid 2.5% of the total rents paid during a 5 year lease term. If the yearly rent is $50,000 per year, the agent is paid $6,250. If the lease rate increases per year (standard), the agent is paid on the increases as well. Usually, lease commissions are paid to commercial agents by property owners in 2 payments, the first upon lease signing (execution), the second upon rent commencement. The commission amount is split
