Glossary / Commissions and splits
Also known as: Co-brokerage, co-brokering, co-op
To co-broke is to share a commission with another brokerage on the same deal. In commercial leasing it usually means the landlord's listing broker shares the leasing commission with the broker representing the tenant, on terms set in a written agreement.
Hauseit puts it simply: "To co-broke means to split commission with another broker." Janover describes co-brokering in commercial real estate as two brokers collaborating on a transaction and sharing the resulting commission. In the leasing structure described by Wikipedia, the landlord pays the listing broker, who splits the fee with the tenant's broker. The terms come from the Listing agreement and any separate co-brokerage agreement.
A co-broke determines the share of the fee that reaches your side. Janover says a 50/50 split is common practice but varies with the circumstances. More important is whether you are owed anything at all. Writing in the New York Real Estate Journal, broker and instructor Edward Smith Jr. warns: "Unless expressly indicated in offers to cooperate, cooperating brokers may not assume that the offer of cooperation includes an offer of compensation." He advises never introducing a client to a property until a brokerage agreement or acknowledgment is signed.
The payment chain also affects timing. Under one option in the New York City Bar's model office brokerage agreement, the listing broker is "solely responsible" for paying outside brokers, so the tenant broker's money depends on the landlord paying the listing broker and then on the listing broker passing it on. Janover recommends that the co-broke agreement spell out payment timing, along with each broker's role and how disputes will be resolved. If the agreement is silent on when the outside broker is paid, you may wait on a step you do not control.
Get the co-broke terms, including your percentage and when you will be paid, in writing before you show the space.
