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Would a Landlord Really Kill a Deal Over Broker Fees?

I recently had lunch with a fellow commercial real estate professional who lamented  about how some old-fashioned commercial landlords he's encountered will let a real estate transaction die, or actually kill it themselves, rather than pay a real estate commission on terms that they don't deem...

By Andrew B. Zezas | Updated on May 06, 2010

I recently had lunch with a fellow commercial real estate professional who lamented  about how some old-fashioned commercial landlords he’s encountered will let a real estate transaction die, or actually kill it themselves, rather than pay a real estate commission on terms that they don’t deem appropriate.  I was amazed to learn that there still exists some of those landlords.  I thought they all had died off.  What these landlords, the type to which this real estate broker referred, often consider acceptable is a substantially lesser commission amount than requested by most real estate professionals, and one that they can pay via an extended series of payments over a very long time period.

The idea behind the long-term payment schedule is most often two-fold:  One is purely cost and cashflow management (Some will say it’s merely a way to make life difficult for brokers – I’m not that cynical!) .  The second is a means of sharing with the broker the risk that the tenant may not perform (pay rent!), default, or breach the lease.

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