How to calculate Leasing Commissions
In regard to Leasing Commissions often get asked by landlords, “how do I pay you for leasing my commercial real estate property?” The short answer is a percentage of the rent consideration”. If you’re not sure what that means, I’ll give one simplistic example to explain. Say I rent your property for 5 years for $10,000 a month. To determine the rent consideration, you multiply the total number of months by the amount due per month. In this case it would be 60 months (5 years x 12 months) times $10,000 rent a month which would give us a rent consideration of $600,000. You then take the rent consideration and multiply by the previously agreed to rate in the listing agreement. We’ll use 5% for simplicity’s sake in this example which would give you a total commission of $30,000.00 ($600,000.00 rent consideration x a 5% fee). Typically, then the $30,000 would then be split by the broker representing tenant and the broker representing the landlord or $15,000 to each broker. The fee ...