What Is the Typical Commission a Real Estate Agent Charges on a Rental?

If you own a rental and use a real estate agent to manage the property, it typically costs you a commission based upon a percentage amount of the rent. Normally, this applies only to the months when the property has a renter, not when it is vacant and the agent is looking for a tenant. In some areas of the country, it is customary to charge the tenant for finding a rental, instead of the property owner. The typical commission amount is a negotiable percentage, which might be 3 to 15 percent, or some other amount.

Antitrust Provisions

Rental commissions are subject to antitrust provisions. This means they are not subject to standardization in the market, but are negotiable between the agent and client. Exchanging information between real estate brokerages regarding the amount of commission they charge, is discouraged within the real estate industry. The practice might lead to accusations of anti-trust law violations and price fixing. When real estate agents, who are members of the Realtor Association, discuss current listings at local Realtor meetings, the discussion typically begins with a statement reminding agents not to mention commission amounts.

Commission

A common method real estate agents use when charging clients for services is by a commission. For a sales agent, this is typically a percentage amount of the final sale price. For example, if the agent charges 6 percent commission, and the property sells for $100,000, the commission amount is $6,000. The real estate agent in property management uses a similar method, yet the commission is based on rent, as opposed to a sale price. Depending on the circumstance, the agent might calculate commission based on annual or monthly rent.

Rental Types

The amount of commission typically charged for rentals can vary, depending on property type. A real estate agent might charge one percentage amount for a vacation or seasonal rental, and another amount for a full time rental. A brokerage might have different percentages for rentals, based on if the property is commercial or residential.

Services

The typical commission a real estate agent might charge can vary, according to the services the agent provides the client. For example, depending on the state’s real estate laws, eviction of tenants might be handled by the property owner or by the real estate agent handling the rental. The more services the agent provides a specific rental client, the higher the possible commission percentage.

Hiring Property Managers

An owner tempted to handle her own rental property, to avoid paying a commission needs to consider local rental laws. For example, in Arizona, property owners who live in another state must assign someone within Arizona to oversee the property. The intention of the law to avoid slumlord situations, where out-of-state landlords neglect rental properties and their tenants. When negotiating commission with a property manager, the property owner should consider what services the commission includes.

References

• "Modern Real Estate Practice"; Fillmore Galaty, et al.; 2006
• Massachusetts Consumer Affairs: Antitrust