Agent commissions: Should a landlord have to pay them every year?

Question: Do I have to pay commissions to my real estate agent every year when my tenant signs a new contract?

— Wondering in Woodside

Dear Wondering:

What does your contract with the agent say?

It would be highly unusual if you had to pay your real estate agent a new commission with each new lease.

Indeed, it’s quite unusual that you are paying your real estate agent at all. New York is unique that way. I know of no other place in the country where this happens. A rental agent’s commission is usually paid by the tenant, not the landlord.

That’s not to say, however, that landlords paying commissions are unheard of, especially in a sluggish rental market like we’re experiencing now. Landlords are offering discounts and other incentives to lure tenants, and one of the most effective could be offering an “OP” deal. That’s real estate slang for “owner pays” the commission.

New York tenants typically pay 15 percent of the first year rent. That’s a lot of money — $5,400 for a $3,000 per month apartment — to someone taking her first job or transferring from a cheaper city (and they all are). An ad that says, “landlord will pay the commission” would be a lot more attractive to a renter than a new TV or an Amazon gift card.

So if you are having trouble keeping your units filled, you might want to consider such an arrangement.

David Crook is a veteran journalist and author of The Complete Wall Street Journal Real-Estate Investing and Homeowner’s Guidebooks. Do you have a question about anything real estate-related in NYC? Write him at For verification purposes, please include your name and a phone number; neither will be published. Note: Nothing in this column should be considered professional legal advice. If you have a legal issue, consult an attorney.

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