Landlords must pay rental broker fees

This essentially means all listings must be "No Fee" when a broker takes an exclusive. What could get interesting is if some potential tenant argues that they answered a Real Estate Broker's ad on an apartment, so obviously that Broker was working for the Landlord and shouldn't be allowed to collect a fee from the tenant.

Based on what I'm reading, I as a tenant no longer am obligated to pay any broker fee for any apartment I take because it is now the landlord's responsibility, as long as I didn't hire the broker myself. Is this correct? Everything I'm reading says it is, and I am in the midst of searching for a new rental apartment now so this is immediately relevant to me.

Seems like a small claims and/or DOS nightmare, even for a knowledgable agent disclosing as a Tenant's Agent for Pinnacle/Bronstein/Beach Lane. Just another disclosure line in the ads/registration? Procuring cause might convince an owner to block an application submitted behind an agents back but after it's done there's no recourse?

BTW as I think I have posted before this was the case for as long as I can remember (i.e. if you went to a building and they told you that you had to use their broker, then that broker couldn't charge you a fee) and then at some point that changed, although I don't even remember seeing any announcements about it. So this concept isn't entirely new and it flows from the restrengthening of the Rent Laws because (at least before) the intent was to prevent landlords of below market units from forcing prospective tenants to use a broker who would charge an outrageously high fee and then kick back to landlord/managing agent.

This is a game changer. In many instances brokers will not get paid. Suspect that only in a fraction of cases will they be successful in getting the owner of the apartment to pay the fee. There's a difference between telling the renter his cost will be $3,000 a month and he'll have to fork over 15% to a broker versus a higher rate with with the fee built in. Brokers won't work for free though so in more cases the owner will have to rent themselves or avail themselves to lower cost options to advertise and get renters to sign a lease. The bigger property owners already have their own staff handling tenants.

^^ I don't buy this sob story for one second. If the landlord wants to hire a broker, the landlord can pay the broker, and the broker can demand terms of payment (e.g. upfront, upon delivering a signed lease, etc.) The broker could even demand a renewal commission if the tenant stays.

What brokers are really concerned about is that their fee will be negotiated downward by landlords - which is as it should be. Tenants are still free to hire their own brokers to arrange visits, help negotiate the lease, etc.

I'm both a broker and a landlord, and I hate this.

In my case, the effects will be:

a) I stop working rentals (which I had pretty much done anyway). I can afford to do that, since I can do sales business. I suspect some other brokers who do sales business can too... collectively that will magnify the effect that the brokers who work rentals will be people who aren't experienced enough to do sales... leaving renters with a pool of service people who are bottom-of-the-barrel. Sorry, renters.

b) when my apartment is between tenants, I won't offer it to try to get possible relocating tenants. ((Because the idea of the broker fee being tenant-paid is that companies (remember companies? remember jobs?) could pay it as an employee benefit when they relocated their staff.)) Instead, it will stay off the open market.

This clips my wings a little bit in terms of the rent I'll get, but not much. But to prospective renters, it takes one more "good" apartment off the market. How that serves either those renters (who are presumably who these laws are intended to serve) or the cause of Fair Housing (which used to be an American ideal until this administration started gutting it) is a mystery to me.

ali r.
Upstairs Realty

Or landlords will hire freelance managers to show apts etc and pay by job.

I've personally always thought the owner of the property should be responsible for paying the fee. When I started TBG, I was only doing rentals and charging discounted fees, basically half a month to a month commission. I can tell you it was very successful and clients were very happy, there was no anger or bitterness about paying that amount of money for the service rendered.

@30 I'm no longer involved in rentals, but curious, if a client hires their own rental agent who shows them various apartments around the city, can that agent collect a fee from the client?

I also think this opens up a lot of opportunity for creative, independent agents to better serve renters with lower fees. The rental brokerage business in New York is a disaster for consumers. 15% of the first years rent is outrageous, this is why rental agents for the most part are viewed as a scourge.

but what also doesn't help is when you work for a brokerage that wants 50% of your commission. As an agent you could work independently for a flat fee brokerage. and then happily collect half a month or maybe even a month fee for leasing an apartment from an owner. This would also be a lot less stressful for the agent that can figure out how to create a successful business that also serves the best interests of the consumer.

The greatest reward I've had since creating my company, with a consumer-friendly model; the relationship dynamic I now share with my client. Sure, financially it's been good, but having extremely happy and fully satisfied clients, who feel the model is financially aligned with their expectations, priceless, as they say. The last 11 years, I have been exponentially happier than I ever have as a real estate broker. Optionality is a good thing, competition is a good thing.

I believe this change is something that in five years one will look back and say "how did that system last so long?"
But for now, I wonder what will happen about all the fees paid from passage of the law until yesterday.

"Leaving renters with a pool of service people who are bottom-of-the-barrel". Already the case. BTDT. Streeteasy helped to clean up the rental business by requiring real addresses, eliminating the bait-and-switch used previously. Brokers howled and then got used to it. Had they cleaned up their act sooner, SE would never have existed. Now the landlord will pay, and I suspect they will force commissions down. Nothing wrong with that.

let's say i own a 1 bedroom that i rent out at $3,500 per month. 15% commission is $6,300. due to this new law, i will now pass this cost onto tenants, which reflects a new rent of $4,025 per month. so how it this better for tenants?

further to my point above, if landlords need to factor 15% commissions into cap rate calculations property values are going to plummet even further.

Landlords don't have to pay 15%. A standard owner paid commission (OP) is 1 months rent. And if agents that are only doing rentals get smart, hang their license with a flat fee brokerage, they could easily accept half a month op. This doesn't end the game it changes it.

take my example above and apply a 10% OP then. it raises a $3,500 rent to $3,850. still impacts cap rate calculations and valuations. you're right it doesn't end the game. it just changes it in a negative way. everyone loses, landlord, rental broker and tenant. who does this benefit?

On below-market RS units, the commission was basically "key money", with rental agents able to extract some of the value from the landlord (unless the landlord hired his brother as the agent). Can't raise the rent, so landlords will go without a broker. Not that hard to rent out a below-market unit.

On free-market units, small landlords probably didn't realize how much they were really giving away to the agent. The renter would be willing to pay a higher rent if they didn't have to cut a check for two months' rent to the agent. Many will skip the broker, pay streeteasy the $6 a day, and raise the rent. Their apts will suddenly become great deals because they won't raise the rent as much as any landlord that keeps brokers and increases rent to pay for the broker.

Will it make renters move more often now that there is a much lower fixed cost to moving? Will landlords offer better terms on lease renewal to keep good tenants from moving?

Tenants won't get their own broker because suddenly it's actual cost they will bear, rather than just transferring half the commission from landlord's broker to tenant's broker. Landlords should be able to negotiate lower commissions because cobroking will be less frequent.

Clearest of all this decreases demand for rental agents. They were overpaid (supported essentially by price-fixing), thus oversupplied anyway.

1 month=$3791 just to stick to my real world example.
With tenant paying the fee assuming a non-negotiated 15%=$4025. I also believe brokerage commissions paid by landlord would be tax deductible. Wouldn't this fall under the IRS category professional fees? Check with your CPA.

I don't know if there are any hard data points, but I've got to imagine a large percentage of renters are finding apartments on their own considering all their options? Depending on the market, many landlords already pay a one month OP.

@bpc do you really think a renter of a $3,500 apartment paying a $6,300 fee is an efficient business model for anyone? People from other cities I think we're insane!

Renter wins.
Landlord losses a little.
Rental brokers lose a lot.

Landlords generally have pricing power over brokers, whereas renters do not. Standard owner pays commission is 1 month= 8%. Standard renter pays commission =12-15%.

With the old system renter would pay $3500 per month plus $6300 broker fee= $48,300 in year one.
With the new system renter would pay $3500 per month and landlord will increase the rent to cover broker fee of $3500. So new rent would be $3,792. Renter pays total $45,500 in year one. Renter wins!

If landlord does not want to lose they need to list the apartment themselves or increase rent to cover broker fee. Increasing rent to cover broker fee may be difficult.

>>
let's say i own a 1 bedroom that i rent out at $3,500 per month. 15% commission is $6,300. due to this new law, i will now pass this cost onto tenants, which reflects a new rent of $4,025 per month. so how it this better for tenants?
<<

I have a hard time believing that if a landlord thought they could get $4,025/month they would only be asking $3,500/month.

I love how all of you are assuming the price of using a rental broker is some kind of invisible cost that can simply be taken out of the system. Rental brokerage may have been overpriced (and that really depends on the deal ... I have done some rentals where I think I've been overpaid, and some where I've been underpaid) but it does, at some level, represent the value of the labor of making the market. It doesn't just go poof.

To wear my small landlord hat, when there's a vacancy, someone has to manage the repairs and then someone has to show the apartment and then someone has to get the application through the board. Maybe landlords will manage to drive down the costs they pay for that labor, but driving labor costs closer to zero is not, as we've seen in so many other industries, a happy economic solution.

I think if there's a winner here it's sales brokers, because over time rents will go up and drive people into the sales market. That will take awhile though.

Rents may go up. But total cost of renting (rent plus fees) will likely come down. I don't see how this change will drive up the total cost of renting. If the market is efficient and rental brokers deserve their fees then total cost of renting will stay flat- but not go up!

With efficiency, dynamic competing business models, costs should go down. I'm not saying they go to zero, but they should go down. Most people who own a single condominium and are renting it out, already are taking a loss. Many Rental agents will feel some more pain, however the smart ones Will thrive and survive.

It's hard to get too worked up about the potential effects of a change that aligns NY with the rest of the world.

@30 what kind of effect do you think this will have on brokerages that primarily handle rentals?

"@30 I'm no longer involved in rentals, but curious, if a client hires their own rental agent who shows them various apartments around the city, can that agent collect a fee from the client?"

As far as I know, absolutely yes. So there is a distinct possibility in my mind that something will happen that no one is talking about: landlords who don't want to pay an OP will stop giving exclusive listings and go back to the old model of giving their listings to any/every broker they feel like working with (personally I always had an objection to the concept of owners giving an exclusive to a broker but not paying that broker but instead forcing the tenant to pay both brokers). If that happens, you will see a lot of these listings disappear from websites like Streeteasy. It is potentially a huge boon to large rental agencies or small agencies which specialize in a neighborhood or type of apartment, because they would be able to show potential tenants units which they couldn't find using the internet. And since these would all be 1 broker deals, these could be done at discount commissions since they would be getting split 4 ways (2 agents and 2 brokerages).
What isn't clear to me is what REBNY will do if member brokers want to co-broke non-exclusive listings.

And you know, in just about every other place besides NYC, landlords have been the ones who pay the brokers since forever and the world is still spinning.

This also probably is an advantage to large landlords who A) are more likely to already be in an OP program (I'm sure Keith remembers back in the 1980s when you opened the Sunday NY Times Real Estate Section and there were these huge NO FEE!! ads that took up the top half of most of the columns which were all the Sopher On-Site buildings), and B) will have a much easier time dealing with multiple Brokers distributing open listings (they can both make deals with Real-Plus and other companies to put listings on their broker facing platforms and send out an email list directly to brokers every day with the click of a button).
While an individual condo or 2/3 family house owner could do this as well, the amount of effort it would take vs the payoff....

Have not gone through all the comments (apologies), but I think I'm getting the drift. Has anyone considered the HUGE up-front fees that tenants will no longer have to pay? Someone up above in this thread said something like "what's the diff between paying a fee with a $3,000 rent and not paying a fee with $4,000 rent?" The difference is (1) transparency, and (2) not needing to put out your entire life savings just to rent an apartment for a year. If landlords need to raise the rent to compensate, so be it. At least you'll know the real rent ahead of time..

I have to wonder if Corcoran finally merging/absorbing Citi Habitats has anything to do with being tipped off to this.
https://nypost.com/2020/01/28/corcoran-absorbs-sibling-agency-citi-habitats/
Even though they purchased them over 15 years ago.
https://www.corcoran.com/nyc/PressMention/Display/2336

While both agencies do both sales and rentals, Citi Habitats was known as mainly a rental agency (22,000 per year?) and Corcoran mainly a sales outfit (5,000 per year?)

Although before this announcement my suspicion was that it had to do with the meteoric growth of Compass and wanting to maintain a "Biggest in NYC" status, as well as cost cutting by closing some very expensive retail office spaces (which is why I've wondered in the past why they had not done it already - although there was a time when companies seemed to want as many sub-brands under their umbrella as possible).

Aside to Keith:
Re:"but what also doesn't help is when you work for a brokerage that wants 50% of your commission. "

Maybe I'm getting senile with my 60th coming up next month, but I thought I remembered Sopher taking 70% and leaving agents with 30% (although the had some confusing calculation to try and convince agents they were getting higher splits, when you actually got your check it was that much of the gross commission written to Sopher). Plus you had to have to have your own personal land line installed at your desk in order to call out. I remember when Chris Poussaint got the first cell phone of any Real Estate agent. Lol.

When the next set of market reports come out, it will be interesting to see what happens with the "percentage of units with concessions" numbers.

It could also throw a monkey wrench into whole reporting process because there will probably be a lot of units which no longer show up in anything like a single database anymore.

Yes, I certainly remember having to pay for my own wonky landline! That phone system was outdated even by 1990 standards! Chris Poussaint, he was the Rockstar agent at the time.

As an owner, as long as you don't give an exclusive and your listing is considered open, any agent can show it and charge a fee? That doesn't seem to change much then. though there are a few companies who were only sharing their listings with a handful of the brokerages, I believe pan Am equities and manocherian brothers are two of the bigger players.

The elephant in the room has always been most NYC listings are no fee. Hence, why Sopher used to make clients sign a fee agreement. The rental game has always been a little dirty in that sense, clients feel duped when they get a bill for 15% of the first year's rent, and their colleague tells them it's a 'no fee building'. Of course it's only no fee if

Perhaps a new business idea, you start a brokerage that specializes in rentals, and pay the agents an 80% split. Never charged clients more than 1/2 a month, and also have no fee units where landlords are paying you half a month. DM me...;)

Ultimately I don't like any laws that legislate how businesses need to be paid or what they can be paid. For the most part in my experience, New York landlords don't want to pay commissions unless the market absolutely forces them to.

Better and transparent business will be fixed retainer buyer’s agent which covers say 5-10 showings accompanied by buyer’s agent. Plus success fee. See it yourself and call the seller’s agent yourself. Negotiation and advice by the agent.

This basically addresses the freeloader renter problem where they do not end up renting from the broker who showed them various apartments.

After the financial crisis, laws were passed that limited how much a mortgage broker could earn. Also passed were laws limiting how much loan originators who work for banks (and brokers also)could be paid. Many originators left their jobs rather than taking a pay cut. This was strictly for residential lending. It’s only gotten worse over the years with more audits, more fines, etc. it’s surprising that there is virtually no pushback on these issues even though we supposedly have a tough president who is against regulation.
This year I will probably stop doing any kind of residential lending. It seems that business regulation will get even worse.
Now the mayor is talking about doing away with security deposits.

I don't really understand how this changes anything. If a tenant finds an apartment via a direct listing and the landlord utilizes an exclusive broker --ok, they can no longer collect a fee from the tenant. In a lot of these cases, the landlord doesn't even charge a fee and just uses staff to manage the listing (cost already baked into rent).

But the majority of listings are broker listings. When the tenant contacts the broker and prior to showing, you always sign a fee agreement in the case they decide to rent the apartment. So the tenant has "hired" the broker and the fee can be collected from the tenant, even under the new guidelines. What am I missing?

I just got a broker newsletter (that I didn't subscribe to and I've never heard or interacted with the agent, but I digress) breaking down the new rental fee laws. About 10 bullet points including these two:
- A Landlord's Agent can still be compensated by the tenant
- Brokers are able to collect a Broker’s Fee on Open Listings (rental listings that are marketed by multiple brokers) and Exclusive Rental Listing of other brokerages.

Can you help me understand what this means? We are looking at two rentals. One is a no fee (and not proportionately higher in price than comparable fee buildings) and another that we like better, but the 15% fee is prohibitive for us. One month, I get, but the 15% seems excessive. TIA

I'm glad my tenants just renewed so I don't have to deal with this. Rental market remains very strong despite sales market weakness.

The new guidance is strictly for properties represented by exclusive agents, those agents can't collect from tenants. If you are working with a broker as your tenant rep, then you pay him/her a fee. The LL agent will collect from LL.

itesfai, thank you for the explanation.

I am seeing lots of responses from landlords, some will do open listings so no more exclusives and some will pay 1mo OP to their agents, so it becomes CYOF to tenant agents. We will see next week/month after dust settles.

Under the same general principle it used to be against DOS rules for Managing Agents to charge brokerage fees to tenants to rent units in buildings which they managed. I wonder if this will be reinstated as well.

A lot of history is being ignored. The reason tenants paid fees in NYC and no where else is that landlords were barred from building it into the rent because of Rent Stabilization. Landlords couldn't give an exclusive to a broker who would charge a fee to incoming tenants. Managing Agents couldn't charge fees to rent units in buildings which they managed. Then 1993 came along and not only did the Rent Stabilization regs get largely gutted, but around the same time DOS started taking the position that it wanted to see 2 brokers on every deal, with both parties being represented. Although I don't remember seeing any announcements, DOS apparently stopped enforcement of those prior prohibitions.
Last year a lot of the Rent Stabilization regs got reinstated and I think that's why we are seeing the reinstatement of this prohibition as well, because once again RS has created a situation where owners are being forced to rent out some units at below market rates.

However, I don't think they have addressed the issue of having 2 brokers on every deal, and I think the concept is fundamentally at odds with the complaints of fees being too high. I don't see how you have 2 brokerages/2 agents involved in most rental deals and charge low/"reasonable" fees while supplying competent guidance.

30, an early happy birthday and soon to be welcome to the over 60 club!

https://gothamist.com/news/real-estate-brokers-are-still-seeking-hefty-fees-nyc-tenants-despite-state-ban

"A text message shared with Gothamist by a different tenant shows one broker explaining: "agents/brokers will now have prospective tenants sign forms before showing apartments. Brokers are entitled to a fee from the tenant under hire (the form confirms that you are hiring us). We won't be showing any of our apartments unless the form is signed." When the tenant pointed out that they'd found the apartment themselves online, the appointment was cancelled."

^^ This is why NY realtors simply cannot be trusted. They work first for themselves, then for the owner/landlord. You as the tenant/buyer *will* be screwed. The world will be better when everything is on Streeteasy and realtors are paid by the hour not by the sale.

But this latest turn of events will remove thousands of rental listings from Streeteasy. Since you can't put a listing on Streeteasy unless you have an exclusive, and now you can't take an exclusive unless the owner is paying the fee, every SE listing by a broker which had the tenant paying the fee is now illegal. So how are renters going to find these units? I think the concept that thousands of small owners will list, show, handle paperwork, etc all on their own without any assistance is Utopian.

This is also going to result in thousands of unscrupulous tenants (who never can be trusted because all of them are crooks) engaging brokers to find "tenant pays" units and then going around them and trying to contact owners to avoid paying the fees which these brokers rightfully earned by being the ones who introduced these crooked tenants to the units.

Consumers should be able to find these listings on nakedapartments.com as well as Nybits.com for the most part.
There still seems to be quite a bit of confusion around these changes.

They will also be encouraged by their celebrity role models who are notorious for engaging brokers to do work for them, going around them, and then using technicalities to get around paying them. And then these same shysters will complain when brokers refuse to show or even discuss anything before they sign a formal written contract.

https://therealdeal.com/2019/09/06/streeteasy-is-trying-to-steal-our-landlord-clients-brokerage-execs/

I don't think anyone has mentioned:
Renting Single family houses owners are exempt from the Fair Housing Act.
Apartments in buildings four units or less are also exempt if the owner lives in one of the units.
BUT BROKERS CAN'T BE INVOLVED BECAUSE THEY CAN'T DISCRIMINATE NO MATTER WHAT.
So congratulations: there are now thousands of units which have been taken out of conditions which prevented discrimination because Brokers can't be involved in any transaction where that is occurring and pushed into a situation where discrimination is perfectly legal.

Keith,
I'm not an expert on Nakedapartments, but every listing I have ever seen on that website was an agent listing. How does that solve the issue?

As far as NYBits goes, as far as I can tell they are an aggregator and there is no mechanism for a small owner (like a Coop, Condo or small building) to list their units their directly. I just went on the website and tried to find a way to list a unit the I might own there and couldn't find one.

In addition they specifically state:
"Renting in condo and even more so, co-op buildings usually presupposes a broker (unless you came upon a listing posted by the owner of the unit). This market is much more fragmented and erratic than the "mainstream" rental market, but the upside is that you can find a unique place to live. Be aware, however, that renting in some co-op and condo buildings may require going through the board approval process. Your (presumably knowledgeable) broker should be able to guide you."

Either landlords will pay say one month or less of rent as fee for the work needed to show the apartment (a big percentage of listings are already there) and eventually some brokerage is going to offer fixed fee plus success fee when helping renters find a place. Many rental brokers will find alternative work opportunities as overall commissions will reduce.

What do you think would happen if some brokerage said to renters "You have to pay us $1,000 up front for us to start showing you apartments and then if you take one you have to pay us 1 month's rent in addition"?

As far as "a big percentage of listings are already there" Miller Samuel charts show Landlord Concession Market Share at between 30% and 40% for 2019 in both Manhattan and Brooklyn (they don't even chart those numbers for the other Boroughs, but historically the percentages there have been much less). So city wide I think it's fair to say that 70% or more (and in many areas close to 100%) of listings require fees paid by tenants. Do you have different figures you are basing your statement on or is 30% to 40% the "big percent" you were alluding to?

To your first one- What do think think of this model?
https://londonrelocation.com/

Appx 4200 of 6300 rentals are no fee on streeteasy search. 2/3 is a certainly a big percentage.

You've mentioned this before 300, an initial retainer so to speak. I'm going to have to side with 30s sentiment here,(most) New Yorkers are not going to pay a fixed fee up front before they've actually found something.

If all you're doing is rentals as an agent you shouldn't be at a big firm. You should be paying a fixed low fee to a brokerage and keeping 100% of your commission, then you could make a good living without having to knock people over the head!

I thought New York bits or naked apartments would be a place that landlords could openly advertise their apartments. Then consumers could either find them there directly. Or if they need some assistance could hire their own agent, pay them a reasonable commission. I've done this in the past as an independent broker, charge between half a month and one month and nobody blinked an eye. I coupled this with transparent and knowledgeable service just as I do with my current sales model.

It's the overall traditional brokerage model that's inefficient . Ask yourself what they really do? the most important thing an agent needs is a centralized listing database where consumers can find properties with a back-end where brokers can find properties and information about showing etc. Essentially this is called an MLS.

But it's not only difficult to change agents and brokers minds about how to do business, it can be difficult to change consumers. Although it's been easier on the buy side and that part of our business is thriving. It's more difficult to get an owner to give you a listing when you don't have a big brand. I'm charging 3.75%(2.5% to buy-side) maximum commission on a sales listing, I've sold every property I've listed efficiently and below the New York City average time frame. our clients have been thrilled with the level of service and transparency we provided along with the savings. And there's nothing any other broker does differently than we do from a strategic point, quite frankly I think we do a lot of things much better. But it can still be difficult for people to think outside the box and act on it.

So after all of that my point is it's not about who's paying the commission. It really comes down to what's a fair commission to pay for the work done? What will somebody reasonably write a check for and not feel like they just got screwed? You can't lower commissions when a large portion of the fee is going to a brokerage firm. 30 has pointed this out, in many traditional deals the fee is getting split four ways.

there are already some big teams transitioning over to these progressive disruptive brokerage models. And if I was a younger man, I'd use the Burkhardt group as a platform to drive this change due to our successfully implenting this model.

Keith Burkhardt
TBG

Keith, Many wouldn’t pay upfront as they are not used to it but regulations have changed which makes it ripe for disruption. But economically, it seems fairer as it eliminates free-loader renter issue who will use an agent to get market information and then go directly.

I hear what you're saying 300, I just don't think it would work quite yet. And as a salesperson that is worked on commission for 30 years, I like the risk reward of the commission model and the flexibility that comes with being an independent contractor.

I know going into it when a client calls it may not translate into a deal, I'm good with that. And after many years of building up a business, the majority do translate into a transaction completed. I never looked at renters or buyers as 'freeloaders', as they say don't hate the player hate the game :)

Of course you certainly have those clients that engage a broker, and then don't want to pay when the relationship has led them to an apartment they want. I think part of that rests on the agent side as well, I think there needs to be total transparency in what engaging in agent will mean strategically and financially.

And perhaps a document should be signed by both parties. Making it clear did some of the listings they will say potentially could have been found directly without a commission involved. If a client is not comfortable with that they should not engage an agent. And to beat that drum yet again, the way to reduce overall condition is by getting away from the traditional brokerage model.

Keith

Apologies for not proof reading that! It's a busy morning and I'll be signing out of Street easy for the rest of the day!

If the current websites don't work, someone will come up with one that does work pretty quickly and charge a listing fee to the landlord, who will hire someone by the hour to show the apt.

FWIW, I get daily emails from StreetEasy on rental listings with my parameters. This weekend nearly all of the listings in the emails were No Fee, even one I seem to get regularly that switched to No Fee. I wonder if a search had been done before re: No Fee to Fee what the numbers would have been. Would have been an interesting comparison.

Keith, your energy and your vision are a nice addition to the big tent of the NYC real estate market, but you might want to soften the claim that you've sold *everything* you've ever listed. I can't think of a single experienced broker for whom that is the case. Also, I disagree with you that there's nothing any other broker does differently from a strategic point of view. I truly think that there are properties where if you pulled in five different experienced brokers, you'd get five different marketing strategies. That's why we pitch against each other, so the customer can pick an approach as well as a personality as well as a price point. It's an art, not a science, no matter how much science we bring to service it.

Whats the real story ... is Streeteasy is allowing exclusive brokers to list listings with a fee , if so isnt Zillow also liable for breaking the law ?

For context I am only speaking about my 11 years running the Burkhardt group, however that was still a miss statement. There have been two listings we were unable to sell, technically one, since one was a board turn down. The other one we will be relisting soon.

However we'll have to agree to disagree, regarding strategies and what different brokerage companies bring to the table. I could talk about this for hours, but I'll spare you all. though I do agree with you it's important to find somebody you're going to enjoy working with. I would agree on listings above 10 million dollars, there is a subset of brokers with a deep 'Rolodex' that could be helpful.

Otherwise, get the price right from an honest and reputable broker who won't try to 'buy the listing' , make sure it's staged correctly, in the RLS/streeteasy and have a broker that does thorough due diligence to make sure they've got all the necessary information to answer immediate questions and then to complete a deal. There's a little bit more to it than that, but not much more. Nobody has some secret sauce to make an overpriced apartment sell.

We've been doing between 60 and 90 million dollars a year in business. Typically over 40 deals a year, so I'd say we have some experience.

Unfortunately most sellers I've spoken to tell me they've typically gone with the broker who told them they'd get them the most money, assuming all the large firms are basically doing the same thing. then when it doesn't sell they all have only one solution, lower the price. and quite frankly that is usually the correct approach! It just doesn't sit well with many sellers when they were promised something else. That's why when a listing expires and hasn't sold, in many cases they relist with another broker. However if you've been completely transparent with the seller, and you've built up a good deal of trust, they will relist with you and make necessary adjustments. Since most of my business is on the buy side, we are very selective with the listings we take.

I've always said this, listing agents are more like conductors orchestrating the presentation of the home. The buy-side agents are the ones that more or less do the heavy lifting, the 'selling' so to speak...Many listing agents don't even run their own open houses, very little contact with the actual buyers. Perhaps a few minutes of chit-chat at an open house or private showing? The buyer's agent will be the one running comps, providing an opinion on valuation and comments on the building and neighborhood etc.

We do all this business with a Google Chromebook, pixel 4 phone and an internet connection.

Keith

I will add there are a lot of very competent real estate agents and teams out there across the gamut of firms. However, in a profession where the barrier to entry is so low, you're going to get a lot of duds, well meaning or not.

I'm happy to say we now have quite a bit of healthy competition, in some cases from some well-funded startups. The choice shouldn't be between similar big-name firms, there needs to be dynamic choices!

The irony is a big percentage of large firm agent's listing pitches are about their firm's website and how great it is, but something like 90% of deals are cobrokered.

I think this is a decent example of the results of this advisory ruling for relatively large building free market listings.
https://streeteasy.com/building/170-west-74-street-new_york/rental/2977348

Let me add that big brokers actually do a poor job as they never show most listings themselves. Some assistant who does not know the apartment well shows it. A person showing the apartment has to be very knowledgeable about the finishes, quality and function of the apartment. Otherwise they are a “shopkeeper” rather than salesperson. I saw a $7mm plus listing for fun where the shower (top 5 brokers by volume and fame) was clueless about the apartment and could have done so much better job in explaining features to others who were there (I didn’t need any help) and how to use it for a family.

https://ny.curbed.com/2020/2/10/21131862/nyc-real-estate-broker-fee-lawsuit-rebny-brokerage

300,
I'll not only agree with that but add that a lot of buy side agents are glorified waiters because they neither suggest listings to buyers or even go on showings but simply step in after the fact and act like the are some huge advantage to the buyer when they don't even know how to read a Coop/Condo Annual Financial Statement or properly present the buyer's financial qualifications.

We were just talking in the office last week about brokers not doing their own showings. An experienced broker is an expert on reading all the body language, verbal and non-verbal cues during a showing, and therefore knowing when to push and when to back off, ass well as what to show that buyer next as a result.

I am more of a believer in sales being explaining the product and use as a seller’s agent. Traditional sales process - Body cues, pushing the sale etc I personally do not care that much and to some extent view that as negative but that is just me. With internet enabling transparency of square footage, floor plan, historical recorded sales, and potentially pricing, a big percentage of local buyers are well educated about this type of info and do the looking in Streeteasy themselves. There are indeed people who need a lot of handholding and have no idea where to even start. These people do need a traditional non-rebate buyer’s agent.

I just received word that the broker's fee ban has been lifted until March 13th.

300,
But a good Salesperson's role has always included getting buyers to look outside what they think their parameters were, but were actually limiting their options. Computers and the internet only compound this because they only return EXACTLY what you ask for. If there is a unit $1,000 more, 50 feet outside the boundaries, $1 more a month maintenance, 1 square foot less, etc you will never know about it. Any you can't ask if a seller is negotiable so you can look at a higher asking price. On Streeteasy it's hard to look for private outdoor space, much less a specific type or size of it.

I can't tell you how many times I dealt with buyers who insisted they only wanted to look at prewar one bedrooms in doorman buildings between University Place and 6th Avenue and the agent who got the deal done was the one who convinced them to look at a 2 BR walk-up on 29th Street between 8th Avenue and 9th Avenue. Today, unless they were working with an "old school" Buyer's Broker that option would never even cross their plate, no matter how much they educated themselves on deals within what they thought there parameters were.

I think it's one of the reasons why we are seeing the boom in Brooklyn - up until a few years ago buyers would never do a search there on their own. They needed media articles telling them they needed to live there before they adjusted their search parameters. Of course everyone who used a Buyer's Broker like Keith probably got a few years jump on them and bought in at half the price.

BTW it's also why we have actually see an increase in brokers misrepresenting things like square footage: because rather than looking at the floorplans and seeing the actual apartment size, buyers go straight to the $/SF entry and reward whichever brokers lie the most.

Last year I pitched a foreclosure to someone which was at a very attractive price, but they refused to see it because it was "too small." A few months later they went to look at an identical house on the same block because the broker exaggerated the square footage by 20-25%. They liked it so much they made an offer on it, which the owner turned down because it was "too low."

In the end it was too late to go back and see the house I had pitched them because as I had advised them it would, it sold quickly; the sales price was lower than the offer they had made on the other house; the other house is still on the market and should have taken their offer.

Buyers choose what they want from a broker. They do not want to change their mind just because their agent said so. It takes time and losing a couple of deals to change the mind as NY is full of genuinely smart but know it all people. I have had experience when I was advising a friend on Reno and the wife asked me to justify my suggestion of either Miele or Bosch dishwasher - essentially she can’t help but spend 10 hours researching the dishwasher.

After that I do not help people with Reno if I feel they are the second guessing type. Just helped my wife’s friend and she got done with her simple move-in changes in three days and no second guessing and she is uber-smart. So there are all type of people - some who need and want a traditional broker, some who only want broker to be involved after they have done plenty of window shopping, some who think they will get a better deal if they do not use a broker and in between.

I'm happy to say, we are definitely not 'old school' brokers : ) But to each his own said the farmer who kissed the cow...

https://commercialobserver.com/2020/02/broker-fees-commercial-rent-control-retail-vacancy-rebny/

https://www.nytimes.com/2020/03/04/nyregion/nyc-rent-laws-broker-fees.html