The real estate agent represents either side of a transaction, whether it is the Tenant or Landlord or the Buyer or Seller in a commercial, industrial, or multi family real estate transaction. The issue of compensation and the value of the services performed sooner or later may come up as an issue. It is a general principal that the Seller of real estate assumes the obligation for compensation in a sale and the Landlord assumes the obligation for compensation in a lease.
What is more often a question is, what is the value of the agent to the transaction that merits that much compensation? As a general principal, an agent will spend no less than three years of work in the profession before he fully understands the markets and the process of doing a real estate transactions. An average agent will review one hundred real estate potential transactions for either general knowledge or for a specific client in an average week. Of those potentials, he will discard at least half initially. From the remaining half he will look at about thirty five more closely. From those thirty five, he must then find fifteen to work on and cull from that fifteen FIVE viable alternatives to pursue and/or negotiate on. An experienced agent will succeed, at most, with twenty per cent of those five alternatives. In other words, A GOOD AGENT WILL FAIL 98% OF THE TIME in his pursuit of making all of the elements come together to serve the needs of his client.
It is this degree of professionalism and knowledge that is what the consumer is paying for with a real estate professional. It is not the successful conclusion, but the work, time, effort and knowledge that put the agent in the position of serving the needs of the client that merits the compensation.