Apartment hunting in New York City can be complicated thanks to real estate-specific jargon. And one such term you’ve likely come across is a no-fee apartment. What does that mean? Well, using a broker to help you find a rental is standard. But, it’s not free. Typically, someone has to pay for their time, as the following explains.

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    What Is a No-Fee Apartment Listing?

    When searching for a place, you will likely come across apartment listings that loudly declare “no-fee!” You will also encounter many listings that don’t. So what’s the difference? 

    In very basic terms, a no-fee apartment is an apartment where the tenant doesn’t pay a commission or broker’s fee. But, like so many things in NYC real estate, there’s more to know.

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    What Is the Difference Between Broker’s Fees and Commissions?

    “The terms’ broker’s fee’ and ‘commission’ are interchangeable,” says Becki Danchik of Warburg Realty. “It’s the fee a broker earns on completing a transaction in which they match the right person with the right property. A no-fee apartment is typically when the landlord has agreed to pay that fee to the exclusive listing agent on behalf of the tenant.” A landlord will usually do this in the hope of securing a tenant quickly, she explains.

    Landlords Have Brokers

    Keep in mind, though, that “no fee” applies only to the landlord’s broker, also known as the listing agent, and landlords are not required to cover that cost. More on that shortly. Here’s how it works: If you approach an apartment’s listing agent directly and secure the no-fee apartment on your own, then great — you don’t pay a fee! But if you enlisted the services of a broker (who is not the listing agent), and you found that apartment through that broker, you owe them their commission, whether the apartment says “no fee” or not.

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    What Is a Broker’s Fee?

    Now that you understand the definition of a no-fee apartment, you’d probably like to know how units with fees work. In short, renters who use a broker to find an apartment have to pay a broker’s fee. How does it work? If you hire a broker who successfully finds you an apartment, they will earn an agreed-upon commission on the deal.

    How Much Are Broker Fees for Renters?

    The cost varies by broker and area. For instance, fees charged for Manhattan rentals may be more expensive than units in Queens, which has a lower median asking rent. (That said, here are seven affordable Queens neighborhoods for renters.) The broker’s fee is somewhat negotiable, but generally, it’s either one month’s rent or up to 15% of the entire year’s lease. That’s on top of paying your first month’s rent and security deposit. FYI, landlords can no longer ask tenants for last month’s rent plus a security deposit.

    Wait, Weren’t Brokers’ Fee Abolished?

    Last year the state changed the broker fee regulations with the Statewide Housing Security & Tenant Protection Act of 2019. The guidance issued states that a prospective tenant can’t compensate a landlord’s agent (aka listing agent). It would have been substantial cost savings for future renters. But a judge ruled in April 2021 that the state misinterpreted the act. 

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    How to Find a No-Fee Apartment in NYC 

    You’ve decided not to use a broker and pay the fee. Now, you’re probably wondering how to find a no-fee apartment. Here are a few options:

    • Contact a building’s management company directly: A management rep is essentially an in-house broker — their goal is to find ideal tenants for their apartments. So, if you contact them directly, there shouldn’t be a fee. Just remember, property management companies rent apartments only in their specific buildings. Brokers, on the other hand, can have access to rentals in a variety of places.
    • Walk around the neighborhood: If you know the neighborhood you’re interested in, walk around it to see if buildings have posted listing signs. They will have the landlord or management company’s contact information. Call them and see if there are apartments available or if any are coming up.
    • Use the No-Fee Apartment Filter on StreetEasy: You can easily check the “no-fee only” box during your StreetEasy search to yield only no-fee apartment options. It will narrow your search to only those units.

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    Do No-Fee Apartments Save Money?

    Surface level, it seems fee units would be more expensive to rent than no-fee apartments. But there is some debate as to whether no-fee rentals save renters money — particularly luxury rentals. Many buildings like these are no-fee but cost much more per month because of desirable amenities such as doormen, gym, and shared outdoor space.

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