Realtors get paid for rentals through a commission tied to the signed lease, typically equal to one month’s rent or 10% to 15% of the first year’s rent, though flat fees also appear. Whether the landlord or the tenant writes that check depends on the brokerage agreement, local law, and how tight the rental market is. The agent is not paid for showings, for time, or for effort. Payment is triggered by a specific event spelled out in the brokerage contract, almost always the execution of the lease.
How the Commission Is Calculated
Three formulas cover most residential rental deals, and the one that applies is set in the listing or brokerage agreement before the unit is marketed.
- One month’s rent. The most common structure. If rent is $2,500, the commission is $2,500.
- A percentage of the first year’s rent. Usually 10% to 15%. On a $4,000-per-month apartment, 15% of the $48,000 annual rent works out to $7,200.
- A flat fee. A fixed dollar amount that does not move with the rent. Common in corporate housing and standardized placements where the agent’s workload is predictable.
Every one of these numbers is negotiable. Federal antitrust law prohibits any industry-wide fixed rate, so a percentage an agent quotes is a starting point, not a mandatory charge. Commercial leases follow a different structure, generally 4% to 8% of total lease value on a tiered schedule that declines over a multi-year term.
Who Actually Pays the Fee
There is no universal rule on this. In slower markets and many suburban areas, landlords cover the commission to attract tenants quickly and market the unit as “no-fee.” In high-demand cities with low vacancy rates, the cost has traditionally shifted to the tenant, who pays the full fee on top of first month’s rent and a security deposit at move-in.
That default is eroding in some places. New York City’s Fairness in Apartment Rental Expenses (FARE) Act, effective June 2025, prohibits landlords from passing their broker’s fee to prospective tenants and requires disclosure of all fees before a lease is signed. Similar proposals have surfaced in other major metro areas. If you are renting, ask before the first showing who is responsible for the broker fee, and get the answer in writing.
One boundary worth naming: application fees are not the same thing. An application fee covers a background and credit check and is typically capped by state law at a small dollar amount. A broker commission is the agent’s professional fee for placing the tenant, and it is governed by the brokerage agreement rather than by per-applicant caps.
When the Agent Earns the Fee
Showing a property does not earn a commission. Payment becomes a legal obligation only when the trigger event in the brokerage contract actually occurs, and in most residential rental agreements that trigger is lease execution: a qualified tenant signs the lease and delivers the initial funds, typically first month’s rent and the security deposit.
Once the trigger fires, payment moves in one of two ways. The party responsible sends a certified check or wire to the listing brokerage, or the brokerage deducts its fee from the initial rent collected and forwards the balance to the landlord. The second method is common when the same brokerage also manages the property.
What if the tenant signs but never moves in? The agent may still be entitled to payment under the “procuring cause” doctrine, which holds that the broker who brought about the transaction has earned the fee regardless of what the tenant does next. The exact result depends on the wording of the brokerage agreement and on state law, so landlords should read those clauses closely before signing.
The License Requirement
In every state, a person must hold a valid real estate license to legally collect a commission for brokering a rental. An unlicensed individual who arranges a rental and tries to collect a fee generally cannot enforce that fee in court and may face penalties. If someone who is not a licensed broker or agent asks you for a “finder’s fee,” the charge may not be legitimate.
How Two Agents Split One Fee
When the landlord and the tenant each bring their own agent, the total commission is split between the two brokerages in a co-brokerage arrangement. A 50/50 split is most common; 60/40 favoring the listing brokerage also appears.
Individual agents are not paid directly by landlords or tenants. The full commission goes to the listing brokerage, which then sends the cooperating brokerage its share. Each brokerage pays its own agent based on an internal split, commonly ranging from 50/50 to 70/30 between the agent and the firm, after any desk or administrative fees. On a $3,000 commission with a 50/50 co-broke, each brokerage receives $1,500, and each agent’s take-home depends on the deal with their firm.
If a single agent represents both sides of the same deal, that is dual agency, and it comes with its own rules. Under the National Association of REALTORS® Code of Ethics, a REALTOR® may represent both parties only after full disclosure and informed consent from both, and cannot accept compensation from more than one party in the same transaction without disclosing that fact and getting consent from every client involved.1National Association of REALTORS®. 2026 Code of Ethics and Standards of Practice
Renewal Commissions
Placing a tenant does not automatically pay the agent again when that tenant renews. A renewal commission is owed only if the original brokerage agreement or the lease contains an express clause granting it. Agents who want to earn on renewals negotiate that language upfront, often stated as a leasing commission payable annually at the agreed rate during the lease term and any renewals. Landlords reviewing a brokerage agreement should look specifically for renewal language, because it can meaningfully raise the total cost of the engagement over time.
Negotiating the Fee
Because no rate is fixed by law, every rental commission is open to negotiation. Agents may describe a fee as standard, but you can propose a different number or a different structure. A few approaches that carry weight:
- Ask the landlord to absorb the fee. Even in tenant-pays markets, a landlord with a lingering vacancy may agree to cover it to fill the unit.
- Propose a flat fee when a percentage feels high relative to the work involved, particularly on a straightforward placement.
- Reduce the scope. If you found the listing yourself and the agent is only handling paperwork, argue for a lower fee to match the reduced effort.
- Get competing quotes. In markets with inventory, agents will sharpen their pencils to win the listing or the tenant.
Whatever you agree to, put it in writing before the agent starts work. The brokerage agreement should state the fee amount or formula, which party pays, and when payment is due. Verbal understandings about fees are hard to enforce and produce disputes after the lease is signed.
Can the Commission Be Deducted at Tax Time?
For a landlord, a commission paid to place a tenant is generally deductible as a rental expense in the year it is paid, and the property only needs to be available for rent at the time. Mortgage-related commissions are handled differently: those are added to your cost basis in the property rather than deducted as a current expense.2Internal Revenue Service. Publication 527, Residential Rental Property
For a tenant paying a broker fee to find a personal residence, the fee is generally not deductible on a federal return, because the IRS treats it as a personal housing expense. A portion may qualify as a business expense if part of the rental is used for a qualified home office or the lease itself is for business purposes. Talk to a tax professional before claiming any portion of a rental broker fee on mixed personal and business use.