Argus Certification Practice Test

Leasing commissions are typically calculated as a percentage of the total rent paid by the tenant throughout the lease term. This is because leasing agents and brokers are compensated for their efforts in procuring tenants and negotiating lease agreements based on the financial commitment the tenant makes to the landlord. The total rent reflects the overall income that the landlord will receive from the lease, making it the most logical basis for calculating commissions.

The total rent provides a clear measure of the lease transaction’s value, aligning the interests of the leasing agents with the financial outcomes for the property owners. By using the total rent amount, it ensures that the commission is proportionate to the revenue generated from the leasing activity. Other options like operating costs, property market prices, or tax rates do not directly measure the tenancy income, which is central to the reason for the commission in leasing arrangements.