Updated 2/10
The New York Supreme Court issued a temporary restraining order halting the ban on landlord-hired brokers charging tenants a commission, per Gothamist.
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Making headlines last evening: "Surprise for New York Renters: No More Broker Fees."
From The New York Times:
In an unexpected addendum to last year’s rent laws, state regulators said renters can no longer be charged broker fees, potentially upending the market and delivering the latest blow to an industry already reeling from new regulations and sweeping tenant protections.
Brokers can still collect a fee, the state said in the revised rules, but it must be paid by the landlord unless a prospective tenant hired them to help find an apartment.
This action caught many people off guard, chief among them the Real Estate Board of New York (REBNY), who is exploring legal action.
A REBNY spokesperson told The Real Deal that the new cost of landlords paying brokers fees instead of tenants would lead to an increase in rent.
25 comments:
Fuck yes! Finally. Having been a resident of this city for twenty years now, I paid a few broker fees along the way along with hefty application fees. I am so happy both are no longer a barrier in getting an apartment. Most, not all landlords are greedy. There are some whom are really cool and amenable. This new law though will keep the rest in check. What great news.
so, the landlords will figure out another way to
get the money, like a higher rent
Broker fee was not necessary before this law passed if a tenant chose to do the apartment search themselves and dealt directly with the landlord.
If you want help in the real estate jungle called NYC some still will hire a broker and pay a brokers fee. I don’t think anything will Significantly change. A broker now will not even talk to a client unless they agree to pay a fee. The pressure is really on the landlords to either pay the brokers or to advertise and show the apartments themselves.
Landlords will hire so called showers For minimum wage that aren’t even licensed by NYS to do this to save cost.
As far as application fees Coops and Condo rentals are still allowed to charge more
The landlords will probably add that fee to the rent to recoup costs, and then continue collecting the increase when the lease renews. Big whoop.
there are scenarios where the landlord can't add the fee to the rent (rent-stablized, e.g.) that make this more of a win than the simple analysis above would suggest
Landlords do not charge a brokers fee. This addendum to the law is targeting real estate agents and brokers. FYI average agent makes about $30k per year. There is a myth out there created by reality TV that real estate agents are making exuberant amounts of money. This cannot be further from the truth. This is hard work and only about 2% of people who get licensed still work as agents 2 years later. Some landlords used brokers to market their properties and some landlords already offered to pay the brokers fee but some do not pay brokers anything that’s when the broker collects the fee from the tenant. Now landlords are no longer allowed to use brokers to market their properties through a broker without paying the fee. The rent stabilized apartments still need to be marketed. Who will do this now? The landlord? Even before this latest addendum the application fees were basically eliminated unless you’re renting a coop or a condo. Big loser here is the struggling agent trying to get by.
there's no such thing as a free lunch. Eventually you'll pay.
Agents and brokers know the market and are needed. It’s actually hard work if it was easy everyone would do it. The tenant is the one that will pay.
The EVGrumps are at it again! If you are a renter, this can't possibly be perceived as bad news. Broker fees in NYC are exorbitant by any measure. The "standard broker fee" in most other cities is one month's rent -- so about 8% of your yearly rent. In NYC it's 15% which is ludicrous (rents are higher here than almost anywhere else as it is).
Today, the vast majority of landlords use brokers because it's easier for them and they don't have to pay the fee. Trying to find no-broker-fee apartments is a huge undertaking because of that. Now landlords will be forced to decide if they want to pay the fee themselves, or if they want to take on the work themselves, they can keep the rent lower, thus making their apartment look more attractive to renters.
Yet the EVGrumps still complain!
This will stop landlords from working with broker's for non-commercial leases. The only time you really want/need a broker is for commercial because the contracts are a mile long and complex so it's a good idea to have someone familiar go to bat for you. Residential leases are very short and can be read and negotiated by anyone. Residential brokers are a scam and always have been. You should always go through the management company and avoid the brokerage firm.
Residential contracts can be long it all depends on the landlord or the management company. 45% of listing on street Easy had a brokers fee associated with it 55% didn’t. Most apartments are no fee. I still don’t believe this will fly because some due benefit from the use of the broker that knows the market. It’s not free money there is a lot of work involved.
Anyone who has tried to go through no-broker-fee or for-sale-by-owner listings knows that often times (most times?) there's a broker on the other end, being shady. As someone who has found a few no-fee apartments in NYC, it is a chore to say the least. And even when you go through a broker, they're always playing the same game: "sorry, that apartment just got rented... but I do have this other apartment right down the street that I could show you". Gross.
Brokers add little and take much. An 8% commission is reasonable, a 15% commission simply is not, it's scammy. This is great news for renters, any way you look at it. But of course the EVGrumps will find something to complain about!
Let's be real here, due to supply and demand, NYC apartments pretty much sell themselves. Any experienced landlord would be able to do the due diligence and get an accurate assessment of market rate without having to pay a rental broker. I am all for everyone earning a living, but rental brokers never added any real value besides tacking on additional costs to renters, where 15% actually makes a big difference to their bottom line.
Years ago I saw an ad for an apartment on 23rd Street. Looked legit. It was a brokerage office, no mention of that in the ad. The fee was equivalent to about three months rent. Took the time to look at the apartment and got the hard sell when I said that I couldn't afford the broker's fee. They said that my parents could front the money, I could get relatives to loan me the money, etc, etc. What a scam.
This is a mirage. It has nothing to do with stabilized apartments. If you want 5,000 people lined up, put a free listing in streeteasy that you have a stabilized apartment in prime Manhattan for rent. For everyone else, it is money in one pocket or the other.
Wow what a day was yesterday with the news as I have been a real estate salesperson for 30 years.Thank you anonymous for telling the truth regarding how much the average agent makes a year.Very hard work believe it or not you who thinks we just open a door and collect a fee.My fees are rarely 15% except when the apt. is a truly good deal.What about standing in the rain and snow getting stood up by clients who dont even call to let you know they are not coming? What about train fare sometimes over 20 trips to show an apt you dont even rent? What about the high price street easy charges for ads?Personally i have always felt one should not have to pay a fee to find a place to live but NYC is very competitive and sometime clients need guidance to secure an apt so the landlord will accept them due to their high demands.This law will raise rents on non stabilized apts. if the landlord agrees to pay the fee.Perhaps fees should be capped at 1 months rent.
The fee will ultimately be borne by the non-stabilized tenant as landlords adjust, take on the work, and increase rents to offset the added cost. While the old "this apartment just got rented, but I've got a few more to show you (that are out of your budget and likely include an exorbitant fee)" bait-and-switch tactic may subside, you as the tenant are going to bear the cost in the form of increased rents. Brokers don't care about you, landlords don't care about you, and property management offices especially don't care about you. It's NYC where the demand is high (despite the news that people are flocking to Florida, etc.) and the supply is finite. Adjust your budgets accordingly.
So who will show the apts now?The supers will be worked to death when most make very little money as it is. Dont think landlords will schlep up 6 flights of stairs 4 times a day and take them out of their office.Brokers will go out of business with many people losing their jobs.There should be some kind of compromise to this mess.
Well now it seems that a fee can be charged if the apt is on street easy due to the fact the landlord has given an exclusive if and open listing and one is representing the client/tenant broker can charge a fee.No one wants to advertise on street easy anymore too expensive and their monopoly on advertising has something to do with this.Go back to Craigslist
Being a real estate agent in 95% of cases is a shit job. Working in fast food will earn you more money. It’s a lifestyle business that does allow you to have a flexible schedule and pursue other interest. I’ve met agents that have been in the business for three month and didnt do a single deal and this is very common in the industry. There is a lot of upfront cost just to get going license fees advertising cost add up to several thousand $ before you’re even have a chance to start working. It’s a myth that there are easy money out there. If you sell a million $ house for example an average agent will collect $5000 when it’s all said and done and that’s many months of work and any deal can fall through before parties even get to the closing table. If you want to be a successful agent it takes commitment and you need to approach this like a full time job and than some. You’ll be working every day and anytime your client is available. And if you make $70k per year you’re way above average. It also takes a very thick skin and a ability to kiss a lot of frogs with a smile on your face before you even get a chance at a prince. The new law made a difficult job even harder. There probably will be fewer agents and people will have to do most of the work themselves to find a place unless they hire you and they probably will.
A great thanks to our new pro-tenant Democratic Majority legislature which is finally turning back all the pro-greed laws that have ruined this city!
retraction if apt is advertised on street easy there is no fee landlord has to pay otherwise if advertised elsewhere tenant has to pay so there! us agents who work sooo hard and have to put up with a lot of st from clients and landlords need to be paid how would you like to work for nothing?
if you look on street easy expect a higher rent kind of comes out the same if you pay a fee or not look on craigslist like the old days
I never understood why so many brokers that showed me 350sf studios back in the day rocked the bimmer and a huge gucci belt buckle. No need to impress me my dude, I know you probably ain't making that car payment off 15% of my measly annual rent.
I don't blame the brokers trying to earn a living but more so the leeching companies they work for and their shady tactics.
Commercial landlords should be forced by the state to pay their own real estate taxes as well instead of foisting them on the renter.
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