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Commercial Real Estate Investment/Real Estate Broker Commission on a Personal Lease

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Expert: - 6/17/2008


Question
is there a standard broker compensation on a commercial real estate lease in Maryland.

Answer
Kim -

No. Most owners and lessors in a specific market area of Maryland will commonly offer the same compensation being paid to brokers in that area at the time for transactions of similar property type i.e.; office buildings, warehouses, retail stores, etc.

Note that there is no regulatory body or government authority that requires a property owner or lessor to pay a specific, "standard", commission or other compensation.  If someone wants to offer more or less compensation to secure a lease, that is their own personal decision.  

Sometimes an owner will offer and pay a higher than market compensation to get greater attention from the agents working in the market area in hopes of leasing his/her property quickly or at a premium rental.  There are also some that believe their property is special/unique in some way and will be in such demand that there is no reason for them to offer as much commission or fee as other similar properties to secure a lease.

Additionally, an owner may also offer a lower than "standard" fee to another agent if he believes that the agents' lease propect is not strong financially and is a great risk to go out of business before the lease is completed and the full term rent is paid.

Real estate boards set amd control the procedures and practices of real estate practitioners in a geographic area, however they do not regulate the amount of commission or other compensation an owner or lessor offers to lease their property.

-Jim

Commercial Real Estate Investment

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Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

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