Hi All, My girlfriend and I have found a spacious 1-bedroom condo rental in our first choice neighborhood. The price is within our budget (4200 is the max of what we'd pay); however, we were told by the owner's broker that the broker's fee is %15. I understand the days of paying one month's rent as a broker's fee may be over, but how much flexibility is there in today's market for negotiating the... [more]
Hi All,
My girlfriend and I have found a spacious 1-bedroom condo rental in our first choice neighborhood. The price is within our budget (4200 is the max of what we'd pay); however, we were told by the owner's broker that the broker's fee is %15. I understand the days of paying one month's rent as a broker's fee may be over, but how much flexibility is there in today's market for negotiating the broker's fee? I told the broker that we were interested in the apartment and were ready to move quickly should we reach an agreement on the rental price and broker's fee (we have our paperwork together, our combined incomes enable us to avoid needing any guarantors, we both have strong credit histories, etc.). The broker said there was "a little" flexibility in the broker's fee and would go down to %13 if we made a serious offer. The broker also said the owner could drop the rent price down about $100 per month if we made a serious offer.
We really like this apartment, but this strikes me as still being too high of a broker's fee to pay. We have looked at some no-fee rental buildings (where we dealt directly with management and did not go through a broker), but the rent on those for similar space was high enough that there is not much difference in price if we calculate what we'd pay in the condo rental vs. the no-fee building (especially if we were to stay in this condo rental building for over a year, as is our plan). All in all, given the location, we'd prefer the condo rental to the no-fee apartments we've seen; however, we want to get a good deal that accurately reflects fair market value.
In the similar condo buildings we had viewed previously, we were told nothing less than a %15 broker's fee was acceptable (one broker even had us sign a paper saying we agreed to this condition before she would let us see the apartment). This is the first sign of flexibility we've encountered and I want to make a serious first offer, one that, even if rejected, would keep us negotiating and eligible for the apartment. My question to you all is how much flexibility is there in broker fees in this market? It would help if I were able to provide the broker with documentation that similar condo rentals are being rented with a %12 broker's fee or lower. That would make a big difference for us (if, that is, indeed, occurring). Thanks for your help and candor in your responses.
Best,
A
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Response by tina24hour
about 15 years ago
Posts: 720
Member since: Jun 2008
Is this for a one- or a two-year lease?
In either case, multiply the rent times the number of months in the lease term, add the fee, then divide by # of months again. This is your net effective rent. Does that number still work for you? If not, talk to the broker and tell him/her what you need your net effective rent to be, and ask the best way to arrive at that number. If there are no other applicants, the broker will work with you to make it happen. If there are, you're probably out of luck.
Looking at it strictly in terms of numbers will get you to the same conclusion (it's either too expensive or it isn't) without all the hand-wringing.
Tina Fallon
Realty Collective, LLC
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Response by NYC10007
about 15 years ago
Posts: 432
Member since: Nov 2009
I think you answered your own question with the second paragraph. Go in with the 12% request with your firm offer, if you have competition, you're probably going to lose out. If you don't and the rent offer is right, then you might strike a deal.
Honestly, if it's a desirable neighborhood and a good, well-known building, you better make up your mind fast because someone else is going to make a decision without hesitating like you are right now...
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Response by vslse65
about 15 years ago
Posts: 226
Member since: Feb 2011
It's negotiable depending on how hungry the agent is.
Tina is right, calculate your # and if it works, then you might have to pay (how much do you love the apt?). If it doesn't work, walk away and find something that does. You could also try other brokers and see if yours missed any properties. Plenty of agents here so look around and email them.
Note: Don't forget to ask about other fees - move in, move out, application/processing fees, credit check fees...they can add up if it's a full service building. In one of my family's condos, just the processing fee is several hundred dollars and the move in and move out fees are over $2,500 (though they are refundable).
Good luck.
vlee@ccrny.com
City Connections Realty Inc.
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Response by cranberry
about 15 years ago
Posts: 32
Member since: Aug 2010
Sales are definitely moving as they are over the 51% mark. The entire project has also been Fannie Mae approved, so there are more financing options. Each time I walk by the sales office, it's busy.
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Response by cranberry
about 15 years ago
Posts: 32
Member since: Aug 2010
sorry wrong discussion..
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Response by inonada
about 15 years ago
Posts: 8085
Member since: Oct 2008
You're being penny wise, pound foolish. Each 1% of broker fee is worth $500. If you stay there 3 years, each $100 of lower rent is worth $3600. So, you should use the carrot of a 15% one-sided fee as leverage to have the broker put pressure on the owner to accept a lower price from you. Should you try to knock the fee down to 12%? Maybe, but it should be a little nibble at the end of the negotiations when everything is almost finished, not brought up now.
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Response by inonada
about 15 years ago
Posts: 8085
Member since: Oct 2008
As for the 12% fee, just ask them if they could extend you the standard corporate rate of 12% because it's one sided. They don't need approval for a 12% fee as I understand it.
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Response by patient09
about 15 years ago
Posts: 1571
Member since: Nov 2008
Or, let the apt stay vacant for another month and maybe the owner will say, damn, maybe I should have paid the fee instead of trying to stuff the renter with the fee.
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Response by a256
about 15 years ago
Posts: 5
Member since: May 2011
Thanks for your feedback, everyone. To answer your questions, this is for a one-year lease with a possibility to renew (the owner has had it for a long time, but the building will not offer two-year or more leases; we are interested in staying for more than a year though if things were to work out well.
The net effective rent is still under our budget which is why we thought it was a particularly good deal. Where the hand-wringing comes in is that we'd like to get the apartment for the best deal we can, especially if it means we can save some money in the long term, but we don't want to be put out of the running in the process since we really like it.
I am interested in references to "the standard corporate rate of %12." If our offer is accepted, but with a higher broker fee, are there any tried and true methods for getting down to %12 before we close the transaction? Apologies for my naivete; am new to this process. Thanks again.
Is this for a one- or a two-year lease?
In either case, multiply the rent times the number of months in the lease term, add the fee, then divide by # of months again. This is your net effective rent. Does that number still work for you? If not, talk to the broker and tell him/her what you need your net effective rent to be, and ask the best way to arrive at that number. If there are no other applicants, the broker will work with you to make it happen. If there are, you're probably out of luck.
Looking at it strictly in terms of numbers will get you to the same conclusion (it's either too expensive or it isn't) without all the hand-wringing.
Tina Fallon
Realty Collective, LLC
I think you answered your own question with the second paragraph. Go in with the 12% request with your firm offer, if you have competition, you're probably going to lose out. If you don't and the rent offer is right, then you might strike a deal.
Honestly, if it's a desirable neighborhood and a good, well-known building, you better make up your mind fast because someone else is going to make a decision without hesitating like you are right now...
It's negotiable depending on how hungry the agent is.
Tina is right, calculate your # and if it works, then you might have to pay (how much do you love the apt?). If it doesn't work, walk away and find something that does. You could also try other brokers and see if yours missed any properties. Plenty of agents here so look around and email them.
Note: Don't forget to ask about other fees - move in, move out, application/processing fees, credit check fees...they can add up if it's a full service building. In one of my family's condos, just the processing fee is several hundred dollars and the move in and move out fees are over $2,500 (though they are refundable).
Good luck.
vlee@ccrny.com
City Connections Realty Inc.
Sales are definitely moving as they are over the 51% mark. The entire project has also been Fannie Mae approved, so there are more financing options. Each time I walk by the sales office, it's busy.
sorry wrong discussion..
You're being penny wise, pound foolish. Each 1% of broker fee is worth $500. If you stay there 3 years, each $100 of lower rent is worth $3600. So, you should use the carrot of a 15% one-sided fee as leverage to have the broker put pressure on the owner to accept a lower price from you. Should you try to knock the fee down to 12%? Maybe, but it should be a little nibble at the end of the negotiations when everything is almost finished, not brought up now.
As for the 12% fee, just ask them if they could extend you the standard corporate rate of 12% because it's one sided. They don't need approval for a 12% fee as I understand it.
Or, let the apt stay vacant for another month and maybe the owner will say, damn, maybe I should have paid the fee instead of trying to stuff the renter with the fee.
Thanks for your feedback, everyone. To answer your questions, this is for a one-year lease with a possibility to renew (the owner has had it for a long time, but the building will not offer two-year or more leases; we are interested in staying for more than a year though if things were to work out well.
The net effective rent is still under our budget which is why we thought it was a particularly good deal. Where the hand-wringing comes in is that we'd like to get the apartment for the best deal we can, especially if it means we can save some money in the long term, but we don't want to be put out of the running in the process since we really like it.
I am interested in references to "the standard corporate rate of %12." If our offer is accepted, but with a higher broker fee, are there any tried and true methods for getting down to %12 before we close the transaction? Apologies for my naivete; am new to this process. Thanks again.