Using a broker to help you find an apartment to rent is standard operating procedure in New York City. But, it’s not free. Renters who use a broker to find an apartment have to pay a broker’s fee.
Difference between fee and no-fee
No-fee: If you rent a “no-fee” apartment, you usually do not pay a fee, which is also known as a “broker’s fee.” The management company or landlord will pay that fee to a broker. The reason we say “usually” is because there is one little gotcha that we cover below, known as CYOF (Collect Your Own Fee).
Fee: If you rent a “fee” apartment, you as the renter will have to pay a broker’s fee and will pay that money directly to the broker. The cost varies by broker and area (e.g., Manhattan is more expensive than Queens, etc.). The broker’s fee is somewhat negotiable, but generally, it is either one month’s rent or anywhere from 8 to 15 percent of the full year’s lease.
Sample cost with a broker’s fee
Here is the cost breakdown for a $3,000/month apartment with a 15 percent broker’s fee (percentage of total annual cost) – before even moving in!
Example of a down payment and fees of a 3,000/month apartment:
|Down payment and fees for $3,000/month apartment|
Broker showing you a no-fee listing: Another thing to be aware of is the broker who will show you a no-fee listing. Yes — this does happen! They will not distinguish which apartment is fee or no-fee. Their only job is to find you a place and at the end of the hunt, they will be expected to be paid. So, you need to be on your toes and ask/do research on apartments that are fee and no-fee. There’s nothing worse than unwittingly being shown a no-fee listing via the broker, and then be expected to pay a fee!
Collect Your Own Fee (COYF): This means the landlord or property manager of a no-fee property will allow outside brokers to bring prospective tenants to see the apartment (see listing below). Even though it might be listed as no-fee, you could still get stuck paying a fee. Again, this is the research and sleuthing you need to do to make sure you are not being shown no-fee listings by a broker. (See example):
Owner Pays (OP): Sometimes a no-fee rental will be advertised as an “OP listing,” which means “owner pays.” In this case, “owner” means the landlord or property manager. When you see OP listings, this means that the landlord will pay brokers and agents to find them tenants. Or, the cost can be picked up by the building’s management company, which has leasing agents on staff. Either way, it means the renter will not pay a fee.
Do no-fees save money?
Good question. There is some debate as to whether no-fee rentals really do save renters money. Many no-fee rentals are in semi-luxury buildings and offer many amenities like in-building gyms, doormen, etc. You may save the fee, but you will find yourself paying a higher monthly rent in exchange for these perks.
To figure it out, you would need to do the math and view comparables between no-fee rentals and rentals with a fee over a year’s time. Plus, once you’re in the market for a while, you will become attuned to the cost and value between fee and no-fee rentals and begin to weigh what’s important to you: the perks that might bump up the cost or a lower-cost apartment without the perks.
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