A: Leased Property The majority of the time brokers are paid in the form of a commission by the owner or landlord of the property. Office buildings have brokers hired by the landlord to lease vacant space. When a lease is signed, the landlord's broker is paid a commission for representing the landlord. The landlord's broker does not represent the tenant! If the tenant does not have its own broker, the landlord's broker is paid the entire commission. However, if the tenant is represented by its own broker, the commission is split between the landlord’s broker and the tenant’s broker. Even though the landlord pays the tenant’s broker, the tenant's broker still represents the tenant. A: Buying Property Just as in leased space, property owners hire brokers to market properties they want to sell. They sign engagement agreements with a broker where a commission amount is specified and included in the total price of the property. The owner’s broker gets the entire commission if the buyer is not represented by their own broker. When the buyer has a broker, their broker splits the commission with the owner’s broker. Just like with leasing, the buyer incurs no out-of-pocket costs for the services performed by their broker. A: Selling Property The owner of the property almost always pays the brokers commissions to both the broker representing the owner and the broker representing the buyer. There is no standard commission fee structure for selling property. Fees typically vary depending on the gross sales price and are paid at closing. It is important that the owner sign a listing agreement with the broker that details the listing price, commission, fee structure, marketing costs and term.
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