How Do Commercial Real Estate Agents Get Paid?

commercial real estate commissionsCommercial real estate agents are paid commissions only after commercial real estate properties and spaces are leased or sold.

Commercial real estate commissions get paid in almost all transactions. Investors and landlords who don't want to be involved in the minutiae of searching for property for sale, listing space for lease or sale, fielding phone calls, finding tenants, touring spaces, negotiating deals, etc are going to hire commercial real estate agents for assistance. 

Who Gets Paid Commissions?

In the majority of commercial property transactions commissions are paid to at least 1 or 2 commercial real estate agents.

  1. Commercial Listing Agent – This is the commercial real estate agent that represents the best interests of a property owner, landlord or seller in leasing and selling their properties. They market the properties and field all the inquiries.
  2. Tenant Representative / Buyers Agent – This is the commercial realtor that represents the best interest of tenants and buyers (e.g. investors or owner occupiers) in locating and renting or buying commercial real estate space. 

Who Pays Commission in a Commercial Real Estate Transaction?

In most cases commercial real estate commissions are paid by the property owner (seller) and/or landlord (Lessor).

  • Investors hire agents to find, acquire, and sell investment properties.
  • Landlords and property owners need help to lease up the commercial space they own and/or manage.

Commercial Real Estate Sales Commission Rates

Typical commercial sales commission rates are based on market conditions in your area and/or are negotiated by the listing agent and the seller, however in most cases rates will fall somewhere between 3% and 6%. Property owners are typically responsible for paying all commissions upon closing.

If the buyer was procured only by the listing agent and there was not any other agent involved the commission rate might be 3-4% depending on the agreement that was made between seller and listing agent. In many cases the seller pays 6% regardless.

If the buyer was procured by the buyer agent the commission rate will most likely be 6% of the final sales price where the listing agent and buyers agent split 50/50.  

Commercial Real Estate Lease Commission Rates

The typical commercial real estate lease commission depends on market conditions in your city and also negotiated between the listing agent and property owner and/or landlord, however in most cases the commission rate will range from 4% to 6% of the total lease amount.

If a tenant representative helped the Tenant find commercial space for rent and introduced them to the property the commission rate would be 6% of the total lease amount over the lease term where the commercial real estate commission split would be 4% for the tenant representative and 2% for the landlord agent. 

If the tenant was procured only by the listing agent and no other broker was involved their commission rate might be 2% to 4% depending on what they negotiated with the property owner. In many cases they get paid the full 6% regardless if another agent was involved or not.

How Much Do Commercial Real Estate Agents Make?

It depends.

According to the National Association of Realtors random survey the median gross income is about $85,000 to $100,000 per year. 

However if they are worth one's salt there are those that average $200,000 to over $500,000 per year.

Commercial Real Estate Commission Calculator

To make it easier to calculate total commission and commission splits we have created a commercial real estate commission calculator.

 

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