Renters in New York City face the highest housing costs in the country, driven by a severe lack of available homes. Compounding this problem are the highest upfront costs in the nation for renters when moving to – or even within – the city.
As New Yorkers know all too well, renters often need to have a lot of cash – over $10,454 – just to move into a median-priced apartment. This is more than six times the median balance that renters had in cash accounts in 2022. This upfront cash includes the first month’s rent, security deposit, and a broker fee that can be as high as 15%. The reality is that only 1 out of 5 renters have the cash on hand to make a move. And the system isn’t just hurting renters.
With the current system, brokers aren’t guaranteed compensation for their labor — a rental agent’s best chance at getting paid for an open listing is to bring in the one renter who signs the lease, while there may be many other agents who are simultaneously working to do the same.
This system hurts New York renters and real estate agents. We want to help change that.
Renters should know their rights when working with an agent, including whom the agent represents, the fees they will pay, and their right to negotiate. Brokers and agents provide immense value to landlords and deserve to be paid for their work by the party they are assisting.
That’s why Zillow and StreetEasy are working with lawmakers and advocates to improve New York’s housing market by supporting a proposal in the New York State Assembly that will increase access, transparency and affordability. Addressing broker fees has the potential to open doors – literally and figuratively – for renters trying to get home. We believe in:
- Requiring the hiring party to pay in a rental transaction. Agents should always be compensated for their work. If someone is hiring them to market their listing and find a tenant, that person should pay them for their service. Renters should only have to pay if they hire an agent. If a renter does not hire a broker, paying a broker fee should not be a condition to signing a lease.
- Banning single agent dual agency. A single agent should only represent one side of a rental or sales transaction, preventing what is known as “single agent dual agency,” which the state already discourages. Consumers should have a dedicated real estate professional in their corner representing their interests. The practice of a single-agent representing both the renter and the landlord harms consumers — it’s similar to hiring the opposing party’s attorney to represent you in court. This practice is banned in many other states. New York should do the same.
- Requiring written agreements. If an agent is representing a renter, there should be a written contract reflective of this relationship in advance of fees being paid. All fees should be transparent and negotiable.
- Prohibiting discrimination against those who are not represented. A buyer or renter is not required to obtain representation from an agent as a condition of a real estate transaction.
A written agreement between a renter, buyer, agent, and broker is not only a good practice, it provides much-needed transparency to help consumers understand what services are provided as they decide how to engage with a broker. It’s also a good opportunity for the broker to articulate all the ways they can help a renter or buyer through the process if they need it. Specifically, buyer agreements are being adopted nationwide after a series of consumer-led lawsuits challenged the way consumers are represented and pay for services in real estate. New York’s rental market is unique, and setting out a requirement for both a renter agreement and buyer agreement, protects consumers and moves the industry forward.
What is good for consumers is good for agents and the industry overall. The proposed legislation would reform the rental system for the benefit of all New Yorkers by prohibiting single-agent dual agency, requiring representation agreements, and empowering people to negotiate lower fees. This will give consumers choice in agent representation and transparency in understanding their upfront costs when renting in New York, while ensuring real estate agents are fairly compensated for their work. It’s one step forward in helping to mitigate the affordability crisis in New York, but it’s the right one.
StreetEasy and Zillow are deeply committed to creating a market that is more fair and equitable for all New Yorkers, agents included. Through efforts such as championing increased housing supply, supporting reforms to upfront costs like broker fees and security deposits, combating housing discrimination, and bridging disparities in homeownership, we aim to bring about tangible solutions to alleviate the crisis.
Learn more about Zillow’s advocacy efforts here. See StreetEasy specific efforts (including around broker fee reform) here.
About Zillow and StreetEasy’s advocacy
Zillow® and StreetEasy®, Zillow’s brand dedicated to New York City, are committed to increasing housing affordability in New York and across the nation. Our brands have become trusted sources for reliable New York City housing data and national research. And we have a long track record of advocating for housing affordability, fair housing, and access. Read more about Zillow’s consumer advocacy efforts here.
StreetEasy is an assumed name of Zillow, Inc. and registered trademark of MFTB Holdco, Inc. a Zillow affiliate, which has a real estate brokerage license in all 50 states and D.C. See real estate licenses. StreetEasy does not intend to interfere with any agency agreement you may have with a real estate professional or solicit your business if you are already under contract to purchase or sell property. The contents of this article are intended for informational purposes only and not intended as a complete recitation of the market.
Copyright © 2024 by Zillow, Inc. and/or its affiliates. All rights reserved. All data for uncited sources in this post have been sourced from Zillow data.
