Commission Agreement Lease
One of the “nice” things about the individual leasing agreement is that they avoid all the questions: “how much effort will be exercised,” “what would demonstrate that effort,” who pays for marketing, “how long the task will last,” “how any commission will be distributed among cooperating brokers,” and other “What if” questions. Over the years, I have offered to be paid in installments, because a landlord receives rent… over the duration of the lease. The trade-off is that my rate plan is higher because the 100% payment on the rental or occupancy is discounted on the present value of the payment plan. In 37 years of practice, I have never had to pay a Choos owner over the lifetime. I think it`s due to Eric`s comments… Homeowners incorporate tenants` credit risk into their overall property calculation. They also have the opportunity to assess the financial situation of a particular tenant and to negotiate, if necessary, expanded credits (letters of credit, personal guarantees, etc.). If the commission is to be paid on a percentage rent basis, what is “rent”? Is it a “net rent” or a “gross rent,” and what do they mean? Ruminations believes that percentage commissions should be based on “aggregate net rent, based solely on net rents paid in the tenancy agreement (with the exception of free rent for tenants and payment of additional rents that include taxes, general maintenance and incidental costs, but are not limited to these).” To make a commission a “tax on a tax” is simply not correct.
Additional rental items are pass-throughs. The owners are actually collection offices. If these items can be ordered, collect them from the real beneficiaries. If a gross or modified gross rent is calculated (i.e. property taxes, CAFs, etc.) are incorporated into the base rent), an appropriate adjustment can be made when setting the commission rate or setting the rent. The agreement may include a safeguard clause known as brokerage compensation, with both parties indicating that no other broker is eligible. If the brokerage commission is not paid, the broker can place a pawn on the property. We have compiled a research/commission fee agreement that is specifically designed for homeowners or homeowners who need the marketing services of a real estate agent, but not the subsequent real estate management contract with the full range of services usually offered.