MASTERCLASS: LEASES
with Keith Hairrington
For internal use only
Mastering Lease Transactions: What Every Keller Williams Agent Needs to Know in 2025
Summary
With the evolving real estate landscape, leasing has become a crucial opportunity for agents at Keller Williams Realty. The increasing demand for rentals—driven by economic shifts and natural disasters—has made it essential for agents to understand lease transactions. From new leasing laws to commission structures and compliance requirements, this guide breaks down what every KW agent needs to know to navigate the leasing market efficiently.
Why Leasing is More Important Than Ever
Gone are the days when leases were a secondary focus for real estate agents. With many buyers priced out of homeownership, more individuals are turning to rentals, making leasing a powerful way to generate income, build client relationships, and establish future buyer leads.
Additionally, recent wildfires and other natural disasters have displaced thousands of residents, creating an urgent need for lease assistance. In markets like Pasadena, La Cañada, and beyond, agents who are prepared to handle lease transactions will stand out as trusted advisors in a competitive market.
New Laws Affecting Leases in 2025
As of this year, several new regulations impact landlords and tenants, including:
🔹 Tenant Screening Fees – Landlords can charge up to $62.02, but if they don’t select a tenant, they must refund any unused portion within seven days.
🔹 Security Deposit Photo Documentation – Landlords must take before-and-after photos of rental units to ensure transparency during move-ins and move-outs.
🔹 Tenant Representation Agreement (TRBC) – Similar to the Buyer Broker Agreement, this contract must be signed before showing lease properties.
🔹 Price Gouging Rules – Rent increases are capped at 10% for properties that were rented in the last 12 months before an emergency declaration. If the property was unrented for a year, landlords can charge up to 160% of HUD’s Fair Market Rent.
For Keller Williams agents, staying informed about these changes is essential to protecting clients and ensuring legal compliance.
How to Get Paid for Lease Transactions
While lease commissions aren’t as high as sales commissions, they provide steady income and future buyer opportunities. Here’s how lease commissions work:
✔️ Formula: (Monthly rent) × (12 months) × (Negotiated commission percentage)
✔️ Example: A $3,000/month lease = $36,000/year. At 6% commission, total earnings = $2,160 (split if another agent is involved).
✔️ Flat Fees: Some landlords only offer a set commission (e.g., $300 per lease), so always confirm before showing a listing.
💡 Pro Tip: Use KW Command to track your lease pipeline and follow up with tenants, ensuring they become your future buyers.
Guide to Completing a Lease Transaction
Whether you're a new or experienced agent, follow these nine steps for a smooth lease transaction:
1️⃣ Pre-Screen the Tenant – Confirm credit score (620+ preferred), income, and move-in needs.
2️⃣ Find Lease Listings – Use MLS, Zillow, and KW Command Internal Listings.
3️⃣ Sign the TRBC Agreement – Required before showing properties.
4️⃣ Schedule Showings & Submit Applications – Move quickly; rentals go fast!
5️⃣ Negotiate Lease Terms – Ensure compliance with new price gouging laws.
6️⃣ Sign the Lease & Collect Deposits – Follow the "Three Check Rule" to speed up payment processing.
7️⃣ Submit Compliance Paperwork – Use KW Pasadena’s Residential Lease Checklist.
8️⃣ Conduct Move-In Inspections – Photos required for security deposit protection.
9️⃣ Follow Up for Reviews & Referrals – Lease clients often become future buyers!
By following these steps, you’ll stay compliant, close leases faster, and build long-term client relationships.
Keller Williams Resources for Leasing Agents
At Keller Williams Realty, agents have access to powerful tools and training to support lease transactions:
📌 KW Command – Use KW’s CRM to track lease clients, set up SmartPlans, and send automated follow-ups.
📌 KWRI Training & Webinars – Stay up to date with new leasing laws and best practices through KWU courses.
📌 Market Center Support – Work with Noel and compliance teams to ensure smooth transactions.
📌 KW Profit Share Program – Leases may not be your biggest paycheck today, but introducing agents to KW Pasadena can build passive income through profit share.
Need more hands-on training?
Reach out to Keith Harrington for questions. Also, Apex90, KW Pasadena’s new agent launch program, covers essential skills like leasing, compliance, and building your real estate business from day one.
Final Thoughts
Leases are not just a short-term solution—they're a long-term strategy. By focusing on helping renters today, you’re building your buyer pipeline for tomorrow. As a Keller Williams Realty agent, you have access to unmatched resources to navigate lease transactions and turn them into lasting client relationships.
🚀 Are you ready to level up your leasing business? Log in to KW Command, connect with your ALC leaders, and start closing more leases today!
Take Aways
Maximize efficiency with group showings
Keith recommends organizing group showings instead of individual appointments. This approach allows you to connect with multiple interested parties at once, making the most of your time and ensuring those who are truly interested can attend.
Streamline transactions with separate checks
For smooth compliance, request tenants provide three separate checks—one for the commission, one for the landlord deposit, and one for the rent. This ensures a clear and straightforward process, avoiding any administrative delays.
Embrace the potential of lease opportunities
Leases may offer more than just immediate income. They open doors to new relationships, generate valuable referrals, and can lead to significant future business, as demonstrated by Keith’s success story of turning a lease into a $5.2 million sale.
Leases are a long-term play
While leases may not provide immediate large commissions, they are valuable for building relationships. Renters can turn into buyers in the future, and leases often lead to valuable referrals over time.
Know the local rental market and tenant qualifications
Be familiar with the credit score and income requirements in your area. For example, Pasadena generally requires a 620 or higher credit score and some listings even demand a 700+ score or higher income multiples. Setting realistic expectations with tenants upfront is key.
Be prepared for compliance requirements
Make sure you understand and follow the compliance rules for leases, including submitting the right forms, ensuring the landlord's contact information is included on the lease, and following the three-check rule to avoid any delays in receiving your commission.
FAQs
Here are the FAQs from Keith Harrington’s lease workshop:
Why should I do leases if I’m not focused on rentals?
Leases allow you to build relationships, grow your database, and gain referrals. Renters often turn into buyers, and leases are a great way to meet people with significant incomes.
How is compensation for leases typically structured?
Compensation is usually based on a percentage of the first year’s rent, often around 6%, but all commissions are negotiable.
Is it worth doing leases if the compensation isn’t high?
While lease commissions might not seem significant individually, handling multiple leases can lead to substantial earnings over time.
What is the “three check rule” for leases?
Tenants must provide three separate checks: one for commission to Keller Williams, one for the other brokerage, and one for the landlord (for rent or deposit). This prevents compliance issues.
How do I submit lease documentation for compliance?
Submit only the applicable forms, focusing on those highlighted as required. Ensure the landlord’s name, address, and phone number are listed on the lease to avoid file rejection.
Do renters really turn into buyers?
Yes, Keith shared examples of renters who later bought homes, proving that leases can lead to future business.
How do I handle flaky tenants during showings?
Keith suggests scheduling group showings instead of individual appointments to save time and avoid no-shows.
What credit score do tenants need to rent in Pasadena?
Typically, tenants need at least a 620 credit score, and in some cases, a 700+ score may be is required by the landlord.
How should I handle clients with pets or low budgets?
Be transparent that pets may limit rental options and may have fewer rentals available for low budgets in that area.
Do I need to use RentSpree for background checks?
Keith prefers opting for a more hands-on approach to collecting and reviewing tenant applications. However, he recommends landlords conduct background checks themselves.
How do I get compensated if a listing isn’t on the MLS?
Keith advises having an upfront conversation with clients, explaining that there may be properties where the agent cannot get paid, and the client could persue the opportunity on their own.
How should I approach clients interested in listings on Zillow or similar sites?
Keith advises being upfront with clients that some listings on platforms like Zillow may not offer compensation for agents, and the clients may need to handle those rentals independently.
