How Do Commercial Real Estate Brokers Get Paid? 

By |Published On: February 15th, 2020|Categories: Blog, Consulting|

Commercial real estate brokers get paid a commission on the deals they close. These commissions are paid for by the landlord or seller, no money comes out of your pocket.  

The commission fee is built into the deal and the full amount will get paid to all brokers involved. That means if you do not have someone representing you, the entire commission amount will go to the broker representing the landlord or seller. Do not think that you will get a better deal if you don’t have a broker, because you won’t. The entire commission amount will be paid, it will just go to the landlord or seller’s broker. It would be in your best interest to have your own representation.

Commission rates are negotiated and it is illegal to set an industry standard, but can range from 2-8%. For leases, it is based on the total rent over the term. Sales are based on the final sale price. Typically, the higher the sales price, the lower the percentage. For example:

Deal Structure Consideration Commission Total Commission*
Lease

5-year lease x 2,000 SF x $12.00 per SF 

$120,000 6% $7,200
Sale Price: $4,000,000 n/a 6% $240,000
Sale Price: $15,000,000 n/a 3% $450,000

* split between tenant/buyer and landlord/seller representatives

It is very important to understand that it will not save you money to be your own representative. In fact, you will more than likely rely on the landlord’s representative for some guidance during the process, but their fiduciary duty is with the landlord, not you. You will probably end up paying more in rent and have fewer concessions if you do not have your own representative looking out for your best interest. 

Let’s look at a couple of scenarios:

You have a tenant rep broker

Your tenant rep broker finds you the space, guides you through the process, and negotiates with the landlord for the best deal. For leases, the landlord pays the broker the first half when the lease is signed and the second half when you move in. Sales commissions are paid 100% at the time of closing. 

You do not have a tenant rep broker

You may have thought you would save some money by going directly to the landlord. You have spent your own time doing some research, but probably not enough to know what a fair market rate would be or what concessions you should ask for. You will be dealing directly with the landlord’s broker. As mentioned above, their loyalty is to the landlord and the deal will be in their favor. You will not get the best deal going this route. At the end of the day, the landlord’s broker will be earning the commission your own broker could have earned. 

Regent Real Estate are experts in their field and would welcome the opportunity to talk to you about your real estate needs. Contact them today.

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Brian is the owner and Broker-in-Charge of Regent Commercial Real Estate, based in Charlotte, NC. He has successfully helped secure nearly one thousand leases and sales transactions during his career as a Commercial Real Estate Broker. As a certified member of the Society of Industrial and Office Realtors® (SIOR), Brian ranks among the world's foremost experts in commercial real estate brokerage, boasting extensive experience and a track record of success. He looks forward to getting to know you and your company and learning how he can partner with you to achieve your objectives in the Charlotte Commercial Real Estate sector.

What our clients are saying

Mario Interiano
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Brian was incredibly easy to work with. Our project together went extremely smooth and I look forward to continue our working partnership!
Evan Brandt
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Brian is an upstanding guy and incredibly easy to work with. His strong communication and positive attitude are an immense asset and I look forward to working with him further!
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We had a wonderful experience working with a very forward-thinking team. Look forward to doing a lot more business together in the future!
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Great company and very nice people to talk too!
Charlie Grooff
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Amazing service with a friendly staff, could not recommend a better group
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Brian Smith is very professional, he gave great advice and reassurance. Regent Commercial Real Estate is very efficient and exceeded my expectations. I would highly recommend them.
kary kim
kary kim
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Rain is very easy to work with and pays attention to details which results in efficiency!
Brian is easy to communicate with. He’s very professional and knowledgeable. I highly recommend him if you have any commercial real estate needs.
Susie Paiser
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I very impressed with Brian Smith’s personality, perspective and professionalism. He was easy to communicate with. Answered questions putting me at ease. Thanks Brian
Dillon Gary
Dillon Gary
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I have thoroughly enjoyed working with Brian! He is so pleasant to work with and has made the whole process so easy.
John Malpeli
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Faisal Padela
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Brian is incredibly professional wish all agents handle there clients like Brian here’s hoping to build a long professional relationship with your team
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Dave Yarnes
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I have worked with Brian in different capacities over a several year period. No matter the size or complexity of the task Brian has been consistent in making sure that the project gets completed, and the results exceed expectations. I recommend reaching out to him for any of your commercial real estate needs.
David Henderson
David Henderson
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I have worked with Brain Smith off & on for the last 15 years. Alway proactive and thorough. I look forward to continuing the relationship with RCRE on our commercial property leases.
R.A. A.
R.A. A.
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I have met and interviewed many commercial real estate brokers, and Brian Smith strikes me as one of the best. He genuinely cares about his clients and takes a personal interest in their success.
Avidan Baum
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Highly recommend for all your commercial Real Estate needs
Brent Spitzer
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My wife and I are real estate professionals who have known Brian for over 15 years. Brian has a wealth of experience in retail office and Industrial sectors and a very thorough knowledge of the North anf South Carolina markets. For those interested in potentially working with him, you should know that the CCIM and SIOR designations separate Brian from others. Not only from a level of experience, but also education. When you work with Brian you'll better understand what I mean. I would highly recommend him to anyone seeking commercial real estate guidance in the Carolinas.
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Prompt service with an attention to detail!! Very professional, highly recommended.
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