Rental brokers and charges and other questions

Are we talking Manhattan? The vast majority of decent lodgings have fees paid by the tenant, so as the owner, you shouldn't pay the broker anything.

As far as exclusivity, rental market is pretty hot right now. We "normally" do six-month exclusives (I am focused on sales, so I usually only rep rentals when one of my current clients wants me to) but we would do four because it's a fairly sure bet that the deal gets done.

ali r.
DG Neary Realty

Transactional friction is paid by society. Like tollbooth collectors with $100k/yr pensions.... EZ pass. Bye bye.

An entire class of acceptable 'working class' wiped out with a few RFID transponders.

Zappos to shoe salesman

Expedia for travel agents

Streeteasy for borkers.

Hello Shamrock, I will be happy to provide you with multiple landlord references. Please feel free to PM me to discuss details.

how come that hasnt happened yet west67?

http://frugaltraveler.blogs.nytimes.com/2012/02/14/is-the-best-travel-search-engine-around-the-corner/

Thanks front_porch.
Read your book a year or two ago, very enjoyable.

Any thoughts on using a building designated broker (who therefore has more exposure to the property) compared to a broker who would by implication not be as familiar with the building ? (And the building broker may assist in quicker Board approval process etc ?)

Is this a condo or co-op? If it's a condo then using a broker will either cause your rental unit to linger or you will get less rent. Remember very few renters want to pay a 15% fee to a broker. Think about it if you want to rent out your apt for 4000 per month, how many renters do you think want to pay an additional 6500 in commission.
I would love to see a study on rentals in Manhattan with fees vs non commission fees. I would think rentals with commission fees linger on the market 3 -6 months longer and get lower rent because renters divide the commission fee by 12 and add it to the rent, 6500 in fees equals about 520 dollars extra in rent. The 4000 apt is now in their minds 4520 per month.
list with a broker and expect to lose 6 months in rent for that's how long it will take them to find someone willing to pay their commission fees.

renterjoey, you are a broken fucking record and wrong. brokers get market rents for apartments every day. most clients, while not happy to pay the fee, see it as a cost of doing business. A $4000 unit with a fee doesnt mean that unit would fetch 4500 without it.

and i speak to renters and owners everyday. ive never heard a renter say "my current rent is 3000, but it's really 3450 because i paid a fee"

15% commission is entirely negotiable. Or the buyer (tenant) can walk away. The problem with the buyer-pays commission structure is that the fiduciary relationship SHOULD be with the party that pays the fee -- however, if the buyer is only willing to pay 60% of the fee, the broker could refuse to take the deal to the seller (landlord). There is no contractual fiduciary relationship between tenant and broker. The broker can simply sit on an offer or refuse to take it to the landlord.

If a renter makes an offer that includes price and/or commission concessions, unlike a sales agreement, the rental broker has no obligation to take it to the landlord. The landlord will never know why their unit is sitting empty. The system is broken.

When rents were $2000, then 15% of 1 year could be argued a reasonable fee... the commission model for rentals is broken. If all rental brokers charged a fixed fee for service (still negotiable), the entire industry would thrive and there would be so many more broker transactions. The brokers have priced themselves out of the market. A fee for service model would make the professional brokers richer, and the part-timers would all be out of business.

As a renter, net effective rent for a 24 month lease is the only number that matters. So negotiate... remember the golden rule: the person with the gold makes the rules.

You're going to net less money if the renter pays the fee. I'd estimate that a no-fee apt that gets taken at $5500 is going to need a $5000 price tag as for-fee. Over 3 years, that's $18K compared to just paying a 1-month $5K fee to the broker yourself.

Even worse is if you get a person like me on the other side of the teansaction. I'll go in and dangle the carrot of a one-sided $9K fee at the broker, but it's going to be at $4500. Guess whose side that broker is going to be on? Calls from other brokers with clients wanting to see the apt go unanswered, I become a very solid tenant, one not worth risking losing, the apt may go empty if not for me, etc. That'll lose you another $18K. Won't cost the broker, he's taking in the full fee.

So I suggest you just pay a 1-month fee yourself.

"I'll go in and dangle the carrot of a one-sided $9K fee at the broker, but it's going to be at $4500"

A $4500 rent, that is.

> Guess whose side that broker is going to be on? <

Not always clear or obvious, since a "building broker" in a condo building may control (or try to control) all rental activity. And the long-term relationships between broker and all the owners can be worth more than one deal. So it's not black/white.

As the buyer (renter), you have the $$. Just make a market rate offer. The MARKET will always determine the price. If that price means concessions from both landlord and broker, then that's the market. Else, the market will keep the property vacant. A smart seller will always see the bigger picture. Not sure the brokers are as smart.

Ah... but the seller's are often living on fantasy island, and the snake oil salespeople have a way of convincing the seller that THEY can charm the buyer into spending more than market. Works for some I guess...

If you believe in the market, and everything and everyone has a price, then this is not very complicated.

Apparently we have rental brokers on this site. Look it's not all that difficult to rent your apt. All you have to do is put it on a site like streeteasy. Have an open house on Sunday. Odds are that you will rent it either that day or during the next open house. Certainly you'll have interested parties.

Why will you have interested parties. Well they don't have to pay commission. Always remember 4000 per month rental renter cost 6,500 in commissions. So if the identical next door rents for 4000 a month and has a commission fee of 6500 bucks than why can't you ask for 4300 per month with no fee. You pocket the extra 300 per month and the tenant saves about 250 bucks per month is rent. Win Win.

Am I missing something here or does sound to difficult?

I think "building brokers" represent an even-worse conflict-of-interest issue. I'd avoid them like the plague. For example, they are happy to overprice your rental and have it sit on the market unrented so that it helps sell their listings in the building. "Look at the rent on the unit 2 floors below, this is a great price...."

See, for example, the highest-priced rental listing currently in 111 Fulton. The "building broker" had it as high as $13K. Now asking $8K after a long time on the market, the drop down to reality coming from a new broker who took on the listing, not the "building broker".

Didn't cost the "building broker" a dime.

"> Guess whose side that broker is going to be on? <"

The broker is always going to be on the side that favors themselves. You just have to figure out incentives that line that side up with your own.

I agree. Anyone who lists their apt to rent with a broker is either going to wait several months or get a lower price for their apt.

No one and I mean no one wants to cut a check to pay a commission of 5000 to 10000 for the privilege to rent your apt. Well maybe someone will but you'll have to wait and wait and wait for that sucker to come by.

rental brokers are an impediment to the process of renting--whether one is a LL or a prospective tenant

they will cease to exist shortly, thankfully

Shamrock, thanks for the compliment. I'm working on Book Two but it's going slooowly.

I think one thing the "no-fee" proponents are missing is that many employers will pay a fee for relocating employees. So, depending on the unit you have available for rent, you may not be marketing to renterjoey or inonada, but to someone whose fee is paid as one of their employee benefits.

As far as who should be the broker, an in-building broker can usually close the deal. That's not because of their relationship with the board, it's just that it's usually easy for someone in-house to show the unit and they'll therefore offer a lot of access to it.

That doesn't mean other brokers can't do a good job -- I commute down from the UWS to show in SoHo because that's where a lot my clients live -- but if you're not attached to anyone in particular, the in-building broker is often a safe choice.

ali r.
DG Neary Realty

"one thing the "no-fee" proponents are missing is that many employers will pay a fee for relocating employees. So, depending on the unit you have available for rent"

Lol you'll have a better chance winning the NY powerball lottery than renting to a tenant whose employer will pay their rent. Well almost at least. Now if that's the hook a rental broker wants to use to convince you to list with a broker so be it. A silly hook at best

The fact that you have brokers in your condo unit makes it all that easier for you to get higher rent. Why you ask? Because you are competing against brokers who are charging a fee. Gee, should I rent a unit and pay a fee or should I rent a unit and not pay a bokers fee...duh

And by the way if you list with a broker expect your unit to sit on the market 2-3 months before it's rented. That's 3 months of rental income. Can you really afford to lose 10,000 plus in rental income because you want to be nice to the in house condo brokers?

hype.. the rental market is not that hot.... hype i say all hype

I think some small LL's need brokers, and some renters do too. If you have endless amounts of time to look at/show an apartment and read curbed, SE, etc. - yes you can go it alone. But I COULD clean my apartment but instead I pay for a maid 2X a month. I COULD cook but I order delivery frequently and eat lunch out most days. I think many people value their time more than their money so of course many people will still use brokers despite the internet. Apartments are far more bespoke than airline tickets or stock trading.

BTW, I never would use a rental broker, because as you know I spend endless amounts of time on these sites...

Oh my goodness. Where does the time fly when one is trying to self publish. No deadlines, no editors, no signing parties. Oh my.

Jeremy Lin a Harvard student who had to score 300 pts higher than Ali just to get in. Who would rather sleep on a sofa rather than become a bond tradesman, although in a dream he thought of becoming a re Borker bc the 'chinese were coming!'.

Thank goodness for the Knicks he didn't take the easy way out. Oh I'm sure he'll publish a self written book at some point.

Jason. If you have ever changed the expedia date setting to see if you save $1k by traveling on a tues-friday leg, stfu.

I guess if j Lin basketball career didn't pan out and he became a re Borker, he could be on SE talking about when he was cut from the Knicks.

Smart marketers are always looking for ways to ease customer acquisition. Especially in situations with monthly recurring revenue - think rent or cell phones or cable or netflix or web site hosting - or where a relationship is expected to be long-term, the smart marketer will shell out some upfront cost (eg a free month, free installation, free delivery, 20% off your first month, discount on ancillary products, free sample of other products.
Renter paid broker fee isn't because landlords are stupid but based on a historically hot rental market and information asymmetry. Today we have much better market information available to tenants. And is the market so hot?
If you are a one off landlord, pay the fee, negotiate it at 1 month, and spare an even bigger expense which is time which translates to untested months which have no value.

Darn iphone

Untested months= unrented months unrented=$0.00

i recently offered a reluctant owner the option of exclusive agency, whereby the owner can continue to market and show the apartment themselves. the contingency is that if any other brokerage firm contacted him, he had to send them my way. he posted on streeteasy, ny times, craigslist etc as no fee by owner.

i rented the apartment in 9 days, with a full fee. i guess next time i'll tell my next reluctant owner to offer it a 10% premium to what i do as renterjoey suggests. then they'll probaby rent it direct.

i've done this before, with the same result. most inquiries are broker to broker, as most people do engage the services of an agent. that is where frbo's and fsbo's usually fail.

inonada
about 11 hours ago
stop ignoring this person
report abuse You're going to net less money if the renter pays the fee. I'd estimate that a no-fee apt that gets taken at $5500 is going to need a $5000 price tag as for-fee. Over 3 years, that's $18K compared to just paying a 1-month $5K fee to the broker yourself.

Even worse is if you get a person like me on the other side of the teansaction. I'll go in and dangle the carrot of a one-sided $9K fee at the broker, but it's going to be at $4500. Guess whose side that broker is going to be on? Calls from other brokers with clients wanting to see the apt go unanswered, I become a very solid tenant, one not worth risking losing, the apt may go empty if not for me, etc. That'll lose you another $18K. Won't cost the broker, he's taking in the full fee.

So I suggest you just pay a 1-month fee yourself.

I'd love to see nada on the other side of the table in a negotation. that way i could give him a shit-eating grin and say "i know my owner's bottom line, and you aren't even close. perhaps you should move on to something you can more comfortably afford"

which is about as polite as i can be while saying "go fuck yourself"

So what conclusion should we draw?

mainly that renterjoey and inonada are stupid and full.of shit

"I think one thing the "no-fee" proponents are missing is that many employers will pay a fee for relocating employees. So, depending on the unit you have available for rent, you may not be marketing to renterjoey or inonada, but to someone whose fee is paid as one of their employee benefits."

Some small fraction of potential customers for this apt are going to be relocating. A fraction of those will get a relocation package. A fraction of those will have a "as much as you spend" amount associated with them as opposed to a lump sum "do whatever you want with it". A fraction receiving such a "as much as you spend" amount will not realize that taxes will be owed on the amount spent.

You are suggesting one markets towards these folks? Uh, yeah, OK.

Putting that aside, you're missing the entire point. If someone else is paying my fee, I am even more incentivized to make sure the broker gets a big, fat fee, but then helps push my lower rent.

>Putting that aside, you're missing the entire point. If someone else is paying my fee, I am even more incentivized to make sure the broker gets a big, fat fee, but then helps push my lower rent.

In this example, we are talking about a non-New Yorker. That level of sophistication is too much to expect.

BTW, I am not a proponent of "no-fee". If a LL comes here for advice, I advise them to list as no-fee & pay the broker themselves as it will net them more money. If a renter comes here for advice, I tell them to actively seek for-fee apts, because it will save them money. I don't flip my recommendation based on who's asking. I'm looking out for the best interest of the person seeking advice.

You, on the other hand, seem to always say to do "for-fee" whether a LL or renter is seeking advice. You never tell anyone to do "no-fee". Who's best interest are you looking out for?

"I don't flip my recommendation based on who's asking. I'm looking out for the best interest of the person seeking advice."

Huh?

I think inonada meant to say I tell them to actively seek a no fee apt as opposed to a for-fee apt

no, renterfuckface, he didnt. because you are wrong.

>I think inonada meant to say I tell them to actively seek a no fee apt as opposed to a for-fee apt

What he said was, "I don't flip my recommendation based on who's asking. I'm looking out for the best interest of the person seeking advice."

The second sentence directly contradicts the first.

I'm sure he can correct himself.

"I think inonada meant to say I tell them to actively seek a no fee apt as opposed to a for-fee apt"

Nope, I recommend that renters seek for-fee apts as they are cheaper even with the fee because paying a fee is so despised by the market. The exception is if you are only going to be in the apt for a year, in which case I'd recommend no-fee.

I should have said "I don't flip my position based on who's asking". My position is that in our market no-fee is better for a LL, for-fee is better for a renter.

About three weeks ago I was looking at an apt in the west village. It was a 4 floor walk up. A One bedroom was listed by owner for 3500 and an identical one on the same floor was listed for 3200. I noticed the owner's apt had had several people viewing it. I asked why he was asking 300 more for his apt that was identical to the one listed by a rental broker. He said his had no fee. Needless to say the owners apt has been rented the other apt listed by broker is still on market.

Once again very easy to rent apt if you hold your own open house on Sunday.

These discussions should include price talk.
Renterjoey - thank you.
Shamrock - what's the range you are considering?
Jim - what was the value of the apartment you rented?

Range being considered is 2650-2850. High floor. Great condition. The lower end of scale may "price to rent" quicker.

Shamrock, what location in the city is your apt and what size is it?

Renterjoey
It's a one bed located between 2nd and 3rd on 47th
See this link which has some photos
http://flickr.com/gp/76190521@N03/QwXfu0/

most rental brokers that get exclusive listings from a landlord price the apartment too high probably to justify their fee. Brokers like this are useless just like brokers with sales listings that price the apartment too high. Useless. The apartment will sit longer and cost the owner money.

shamrock, here's your up- or down-stairs neighbor who hasn't been able to get $2600: http://streeteasy.com/nyc/rental/814250-condo-236-east-47th-street-turtle-bay-new-york

No pictures, but the ad mentions stainless-steel appliances. We're always told here that landlords throw away 10-year-old appliances and keep everything new and spiffy, so your mid-grade white stove and building-original black dishwasher aren't going to cut it, serviceable though they are. The bathroom has a tired 1980s look, too.

Thanks NWT for your comments. I understand that the apartment you refer to is not in good condition which would explain why there are no photos posted

Shamrock, Why don't you put this on streeteasy and hold open houses on Sundays. You will get calls from brokers claiming they have a very interested client that wants to rent your apt. Ignore them at all costs for if you sign up with them they'll claim your potential tenants are really theirs.

Streeteasy should provide you with a lot of exposure. It may cost a few bucks but you'll get the coverage and rent you want.

Good luck

Renterjoey,
If I was based in NYC I would do this all myself and not use a broker
Unfortunately I am not based in NYC
Thanks

maybe renterjoey will do it for you since it is so easy.