The rental commission is the payment made to a brokerage for bringing a client who signs a lease. Rental commissions are often expressed as months of rent or the percentage of the annual rent.
The average rental commission is 5-15%. Rental commissions are often somewhere between half a month of rent to two months of rent. But commissions vary significantly by market. In some markets where rental commissions are less common, properties only offer small flat fees as low as $250. In other markets with highly competitive agent ecosystems, properties can offer four months of rent or more.
In most markets, the landlord pays the rental commission. In many cases the commission is split between a seller’s agent representing the owner and the buyer’s agent who finds the renter. In other cases, the landlord will act as the seller’s agent and only pay a commission to the buyer’s agent.
In some markets, like New York City, renters sometimes pay the commission. This is less common.
OP is an acronym for “owner pays” and indicates that the landlord is paying the commission. This is a common designation in markets where renters pay the rental commission. Many “no-fee” properties are actually “owner pays”. This means there is no fee to the renter but the landlord is still paying a rental commission to an agent.
For renters, there is less upfront cash required when the landlord is paying the rental commission. Once the lease is signed, the renter only has to pay any upfront fees to the property. But sometimes a landlord will be willing to negotiate a lower rent for customers who come to the property without an agent. This is usually viewed as bad business by agents and can damage relationships with agents who frequently work with a property.
While renters hate paying rental commissions, it does typically mean that the rent on the property is lower than when the owner pays the commission. This is because the owner is typically pricing in the cost of the commission into the rent. This can be beneficial to renters who plan on staying in a rental for some time. The rent each year might be lower than it would be otherwise, but the renter only pays the commission fee once.
Unlike sales, it is not standard in all markets to offer rental commissions. Many properties employ their own leasing staff and market online. These properties and owners may not find it necessary to rely on outside agents to help market their property.