Many renters moving to New York for the first time don’t realize that they will typically have to pay their agent a hefty commission to rent an apartment. Here is a look at NYC broker fees and what you should know before hiring an agent.
A broker fee is a commission a real estate broker is paid to provide their services, including finding tenants on behalf of a landlord and overseeing the closing. This fee can vary depending on the market conditions, but a 15% brokers fee is normal in NYC. With a typical 15% fee, that means you'd pay a $7,200 NYC brokers fee on a $4,000 apartment. The fee may be closer to one month’s rent if the market is slow or if you're renting in a less popular NYC neighborhood.
While in many other places, the landlord is responsible for paying the broker fee, the demand for rentals is so high in NYC that the tenant is often required to pay the fee.
The tenant typically pays the broker fee when renting in New York City, but not always. In some instances, the landlord may decide to pay the fee to get the unit rented faster or provide an additional incentive to renters. If you see a unit advertised as No Fee, this typically means the landlord is paying the fee unless they are listing it themselves without a broker.
Real estate agents are not salaried employees, and the only way they get paid is by collecting a commission on the deal. So, if a broker is listing the unit, you can assume that someone is paying them a fee.
While it’s not too difficult to find No Fee apartments in New York, especially if you’re flexible with your requirements, it’s more common that the tenant will pay the fee. Real estate is so precious in New York, especially in desirable neighborhoods, that most landlords know that someone will be willing to pay the fee. So, they often won’t pay it unless the unit has been sitting on the market for a long time.
No, there is no law that states that you have to pay a broker fee in New York. You can choose to look exclusively for no-fee apartments or contact the landlord directly. But if you have strict requirements and you’re looking in a hot neighborhood, chances are you’ll be compelled to pay the fee to find the perfect unit.
Many brokers sign exclusive agreements with the landlord to rent the unit. This means that they have the sole right to market the apartment and deal with tenants. Unless the landlord agrees to pay the fee, whoever rents the apartment will be obligated to pay it.
So, even if the broker does little more than open the door and connect you with the owner, you will still have the pay them a fee. If you don’t want to pay it, you always have the right to look elsewhere. But this type of situation is common in New York, so you may have a difficult time avoiding paying a broker fee unless you’re willing to be patient and lower your expectations.
Yes, the good news is that NYC broker fees are negotiable. They are always negotiable, and you can often get a better deal by making a counteroffer. Many brokers set the fee at 15% because they know many people will pay it. But the truth is that they will accept less if you are willing to move quickly.
Some brokers will gladly accept 10-12% if you have your paperwork ready and you’re prepared to make a deposit. That is unless they already have other interested parties that are willing to pay the full fee. It helps to do your research and do your best to gauge how much competition there is.
If the unit has been sitting on the market for more than 30 days, you likely have room to negotiate. However, if you attend an open house and there are 2 or 3 other parties ready to submit an application, you may have to take what you can get. But be aware that it’s always possible to negotiate, no matter what the broker may tell you.
Yes, broker fees are legal in NYC, but there has been an attempt to regulate them. They were briefly banned in early 2020 until a lawsuit from a powerful real estate lobbying group reversed the decision.
In 2019, the New York Department of State passed a series of rent protection laws that banned a certain type of broker fees. The law made it illegal for brokers to charge a fee unless the tenant solicited their services directly. So, if you reached out to help you find an apartment, you would still have to pay the fee. But if you simply responded to a real estate ad, the broker could not charge you a fee just for showing you a single unit.
The law went into effect for a brief period in February 2020. But the Real Estate Board of New York, a powerful lobbying group, filed a lawsuit. They argued that a significant amount of time and resources went into marketing properties, and the new law would significantly hurt broker income. A state judge halted the ban while the lawsuit was in progress. REBNY ended up winning the lawsuit, and the state updated this policy in May 2021.
So, it seems like broker fees are here to stay. But there are plenty of ways you can get around paying them if you are working with a tight budget.
Yes, you can get around paying broker fees, but you'll need to find a no fee rental to avoid paying a broker fee. The easiest way to do this is to contact the landlord or property management company directly. Even if the unit is being listed by brokers, that doesn’t mean they have an exclusive right to rent that apartment.
Some units are open listings, which means the owner allows various brokers to show their property but hasn’t committed to using an agency to handle the transaction. Sometimes if you contact the owner directly, you can sign a lease without a middleman, eliminating the need to pay a fee. This may be difficult to do, but sometimes you can find the name of an owner or property manager by searching google or public records.
The other way to avoid paying a broker fee is to look exclusively for no-fee listings. You can even do this by contacting a broker and being direct with them about the fact that you don’t want to pay a fee. Brokers don’t care who pays their fee, so as long as they have access to no-fee listings, they will gladly show you the units they have available. You will have to be open-minded if you want to use this strategy because many listings are No Fee because the owner is having trouble renting them. But if you are flexible and would rather save money, this is a smart strategy.