This topic is quite a simple one, but it’s important to know! There are tons of questions in the real estate world about who pays what. We can go in to details on the buy/sell side, but for this article, we’ll discuss leasing and renting, both commercial and residential.
In a nutshell, the renter/tenant doesn’t pay any commission, the landlord does. When someone leases a house, apartment, office, retail center, etc, they pay a “deposit”. This deposit is held by the landlord to, for lack of a better analogy, secure the property while the tenant is there. Once the tenant’s lease has expired and the property is returned to the landlord in good condition, they will generally return the refund to the tenant. The deposit, incidentally, is also how the landlord pays the commission for the brokers involved.
Indirectly, the tenant *is* paying the commission, but the tenant is NOT paying anyone directly, and they do NOT pay any money on top of the deposit, aside from other incidental deposits, like pet deposits, etc (see below). Plus, since the tenant will get the deposit back, the indirect commission payment is negated.
For a residential property, let’s use an example of $1,500/mo for a home. Some fees you can expect to pay up front: Deposit ($1500). Application Fee (per adult, regardless of whether they are financially responsible – think safety, not money) $30-$75/person. First month’s rent ($1500). Pet Deposit ($300-$400/pet). So, out of pocket, you’ll need roughly $3,100-$3,500 up front to get in the door (that does include your first month).
Other things to consider are your credit worthiness, background, leasing/rental history, employment/income, pets, etc. All of these things will be considered before being accepted for a lease. To save time, discuss this with your real estate agent so they can help advise and navigate this cumbersome and stressful process.
In summary, don’t be afraid to hire a Realtor® or Broker to help you in your property search, it’s not going to save you (the tenant) any money, if anything you’re only saving the landlord money, and it is a lot more difficult without an agent/broker on your side!