Rental Broker Fee

Landlords today will have to pay the broker's fee; they have no leverage to insist otherwise. If your income is good and your credit is healthy you have the leverage: tell the landlord that he will pay the broker's fee. He'll come back at you and insist that you pay it; remind him that this market gives you other offers. He will capitulate or he is a fool; you do not want a fool as a landlord.

reprinted -

AVOID BROKERS AND THEIR FEES - GO DIRECTLY TO THE SOURCE OF YOUR RENTAL NEEDS. BROKERS TEND TO TAKE YOU TO SEE THESE NO-FEE APARTMENTS FIRST AS THEY EARN 100% OF YOUR 15% BROKER'S FEE. HUSH...HUSH... THEY WILL NOT TELL YOU IT'S A NO-FEE RENTAL PROPERTY :( NOR WILL THEY REPRESENT THAT PRIOR TO SEEING THE APARTMENT. SO IF YOU NEED TO RENT, CHECK OUT THE RENTAL PROPERTY MANAGEMENT WEBSITES AND CALL THEM FOR UPDATED LISTINGS. SAVE YOURSELF THAT 15% TO BUY YOURSELF NEW FURNITURE OR HAVE A MOVE-IN WELCOME PARTY FOR FRIENDS AND FAMILY.

Excellent “BIG-TIME” Manhattan Rental Property Management:

Rose (www rosenyc com)
Related Rentals (www relatedrentals com)
Equity Residental (www eqr com)
Rockrose Management (www rockrosenyc com) [mostly chelsea, village, financial district, downtown condos]
Sky Management (www skymanagement com)
Glenwood Managment (www glenwoodnyc com)
BLDG Management Co. 115 E 92nd St New York, NY 10128 (212) 722-4931
Brodsky Management, Inc (www brodskyorg com)
Maclowe Management (www macklowe com) [condos below 60th street]
Urban Associates – 400 W 59th St # 3, New York, NY (212) 245-1870

Above average property management (mostly prewar lowrise to a few postwar)
ATA Enterprise (www ataenterprises com)

Below Average no-fee properties [aka slumlord]:

Jakobson Properties (www nofeerentals com)

I'd add Sol Goldman Investments to the "no fee" management companies.

Great feedback - thanks a lot!!

The sad fact is that most "good" brokers don't do rentals because even though 15% is a fortune to the renter (I know, I've rented too) it never ends up being much per hour to a rental broker, given the amount of work it takes to do a "good" job with a rental client.

That said, I do some rental business. Here's what makes me cut my fees:

First, a situation where I can cut fees and still make money. Examples:

*) I don't have to pay 7.5% to the broker on the other side of the deal;

and/or

*) It's a quick deal -- I show you fewer than five apartments, you've done lots of work on your application, the board of the building is easy, etc.

The other fee cut possibility is a situation where the deal is a loss leader for my long-term business. Examples:

*) a situation where the renter helps me "get into" a building I've been dying to see or work in (for example, I focus somewhat on Tribeca, so I could go lower on fees to say I'd done a deal in 200 Chambers or 101 Warren, both big target buildings for me;

and/or

*) I suspect you have a big mouth and might refer me to friends who will use me -- other relos or just other friends of yours. It helps if I think your friends are going to need a broker urgently, or live in my target buildings (see above) or are rich. My last big fee cut was to someone who was on my favorite TV show. I don't know yet if the deal will generate referrals or not, but I wanted to make every attempt to open that pipeline of business.

ali r.
{downtown broker}

Thanks front_porch; that's very helpful.

add Ogden Cap Properties and Manhattan skyline who use http://www.cantorpecorella.com/availability.html to market their properties

Toronto--are you talking about moving into another unit in the building you're currently renting in? If so, then you should NOT have to pay any additional fee.

The other thing you can do is pray to the Lord above that this recession leads to the extinction of this ridiculous broker system in NYC. We can no longer afford to pay people for doing nothing. We will now embrace Craigslist and the Internet, which will no longer be littered with scams from brokers.

Nice front_porch. As an owner, trying to avoid having the tenant pay 15% broker fee, my options to get a broad audience are pretty limited though right?

ManhattanFox posts some good sites, but a huge bulk of your tenants would go to a citihabitats or corcoran to see what's out there. Posting only to no-fee rental sites, and craigslist might end up hurting you despite the lower price, if you are trying to rent it out quickly, no?

OK I sound like a fake broker with my post, but am just a new homeowner trying to see what fits best, thanks.

I suspect if you go directly to the broker who has an exclusive listing, you can negotiate to 7.5% fee. That is the fee they would have gotten anyway if they had to co-broke. You can search for exclusive listings via streeteasy rentals - they are the ones with complete address.

hol4

I don't think craigslist would hurt you. I would post something like a $25 credit check fee or application fee just to weed out the lowest common denominator, but then I think it would be fine. For Fair Housing reasons, remember to treat everyone exactly equally.

I also think nytimes.com is still a destination site for renters -- I don't know what an individual ad is since my firm buys advertising in bulk, but really, can it be more than a hundred bucks?

ali r.
{downtown broker}

yes front_porch. i think in an ideal world, renters would be smart enough to go to streeteasy, no-broker deals on nytimes, and craigslist. but i think that's such a small percentage in comparison to the co-broke community (especially international tenants who "need" brokers).

i WANT that i don't use a broker so i can expedite a tenant with a lower price, and we both win out. however the audience, though smarter, is much much smaller than had i not listed with a broker.

now if there is a way for me to list to co-broking community/MLS without me having to get a selling broker, that would be perfect conditions. actually if i get a real estate certificate, couldn't i? i read somewhere ny laws prohibit something like that.

Oddly - my apartment does not come up when I search no fee - however it is a no fee apartment if I go to the company that listed it. Something maybe wrong with the streeteasy search engine. I would not have found it if I didn't do the footwork

Well, hol4, if you're an attorney I think you can pretty easily get a salesperson's license, I think it's just a form -- if you're not the class at REI used to 45 hours, but I think it has been upped to 60 or so.

then there's an exam, but it's no big shakes.

ali r.
{downtown broker}

why would you pay one unless you are an out of towner seeking special help or renting something luxury and specialized?

I'm seeing a lot of flexibility at 1 month barely with pushing, but I'm looking for the owner to pick up which I'm seeing in about 20% of the rentals in condos.

If you are paying broker fees in the next couple years you are a sucker. No fee + 1 month rent is the new standard.

I've seen 2 months free rent in several places, especially newer places with inventory during the slow winter months (now).

99% of rental brokers in NYC are scum/con artists...Time for this economy to send these people into a different unskilled profession. They charge people who actually work for a living 15% of the annual rent for <1 hour of work. Please....

Hi Toronto, welcome to NYC.

Check out this list of no-fee rental buildings from Wired New York. Save your cash, don't pay a broker fee!

http://wirednewyork.com/forum/showthread.php?p=157847

I am on record as being pretty adamantly anti-broker, but I have to say that in our current search, our two best options are through brokers (better than Glenwood, Milford, Rose & Associates, Metro, and all others we saw). One is a condo listed for rent with a broker. The other is a rental building, but not advertised anywhere except through a broker.

So I would say even if you don't use a broker to help you look, there can still be some good deals on broker listings.

And jgr, money is money. All I care about is my effective rent. Every owner/landlord has a different MO - I know of some who are slashing the price, but absolutely refuse to pay the broker fee. Fine with me, as long as the overall math works for me.

Be careful with incentives vs. broker fees. The longer you plan on staying, the better off you are with an upfront fee of some sorts which does not continue vs. an upfront discount (free rent).

TheWorks - I had the exact same thought. If we rent anything with significant upftont incentives, we will make sure to protect ourselves for the potential second year. The one thing I will say, though, is that if 2009 in NYC is as bad as it's looking like now, we ought to be able to negotiate a good deal to stay.

same like newbuyer, I am anti broker too. but the condo that i was looking to rent, i couldnt avoid the broker. the deal was good but with the broker in the picture, it wasnt as good. So i negotiated the brokers fees to 11% and got a free month rent. I was able to stay within my budget.

if only one broker, you should easily get 1 month max (8.3%) which frankly is a tad better than sharing 15%

Yeah, I've had the same experience. Every broker I've talked to has volunteered to "cut" their fee to 1 month without being asked, including a couple that have to share it.

coverdrive, you got a month free, too, well done.

Newbuyer, when are you looking to move and how do you find the market now in terms of availability?
Thanks

We're hopefully moving at the end of the month. We have pretty specific requirements, while still being very price-conscious, so have done a pretty intensive search. I mentioned what we are looking for here:

http://www.streeteasy.com/nyc/talk/discussion/6404-looking-for-rental-ideas

Given our requirements, there was not a ton of inventory, with the exception of the Rivergate (which was a very different location than we wanted, but still tempting because of the size, quality and price of the apartments), and a couple of the Glenwood buildings we visited.

Of what we did see (in various areas, conditions and situations (i.e. rentals, condos and even coops), it certainly appeared like most everything is sitting, even apartments we thought were pretty compelling.

If you're looking for something similar to what we are, I would be happy to share our experience more specifically, here or offline.

Actually, things I'm looking at are owner pays in condos, but maybe I'm missing a good deal at a lower rent where I would pay? Probably not as I think you have realistic owners and unrealistic owners in this market, and the realistic owners are doing what it takes to get some cash flow out of their property and the unrealistic owners are paired with more aggressive, more tone-deaf brokers.

All great feedback; thank you. I'm going to now admit our severe stupidity: We did all of our own research online prior to moving down here. We found an apartment on elliman.com; broker showed it to us - it was a little too small. The Elliman broker showed us another unit in the same building a few days later and we took it. We had to pay 15% fee; I believe the renter's broker took half and our broker took half. Without exaggerating, I feel our broker maybe spent an hour total on us. The renter's broker maybe spent 10 minutes on us. I'm beginning to feel like we got hosed. Big time.

I posted this on the outer boro rental discussion topic.

It sounds though From_Toronto that you did use the services of a broker, regardless of the amount of time and if it was worth it - you could have said no to Elliman showing you another unit and found it yourself, but you didn't.

Anyway, here was my post:

I haven't figured out is how the broker fee becomes my obligation. Like I said, I'm looking on my own, so I go to streeteasy or I go to the broker's web site (sometimes through the link on streeteasy) and I contact the broker representing the property and check it out. The listings don't say broker fee: 1 month or broker fee: 15%. Why would a normal person assume that the broker, who is acting on behalf of the owner, would get paid by me if it doesn't state as such.

Certainly if that broker represented the owner for sale, then the broker gets paid by the owner's proceeds. Why is renting different, but more important, how is it explicit that renting is different?

Also, if I say to a broker I'm not interested in paying a fee, or I'm not looking to pay more than 1 month fee, or I'm not coming with my own broker so I'll pay you 7.5%, who am I negotiating with - the broker or the owner? What if the broker says no but the owner (who isn't informed) would have paid the owner's fair share (1 month or 7.5% or whatever).

Also, I don't mean to make this a theoretical discussion or have someone discuss the misaligned incentives - I've seen too many pontificators on streeteasy. I'm looking for some practical responses.

Thanks all

Newbuyer, are you cutting it close if you are still looking but want to move at the end of December?

From Toronto - yes, you probably did get hosed, but in my experience it happens to pretty much everyone who moves to NYC for the first time. Think of it as an annoyance, move on, and make sure not to repeat the mistake.

BklynRenter - good question. To rent in a condo, yes, we're cutting it close because of board approval, but still doable. For renting in a rental building, I actually think we'd get a better deal in 1-2 weeks, because owners/landlords are getting more desperate by the day, which has become blatantly obvious from our search. I was tempted to play this game of chicken with them into december 15-20, but I have a family and decided it wasn't worth the risk/headache/stress to save a few bucks.

Hopefully we'll be signing a lease in the next day or two, can then plan the move and figure out New Year's plans.

I'm a real estate agent with this to say. While everyone is considering how outrageous the broker fee is, remember a few things. The demand for our services will always be there because we live in a service economy. The fee for service in my opinion, covers the opportunity costs of all the flaky, non-serious renters that we often spend so much wasted time with, just so you can disown us for the next available agent. Lastly, there is a great amount of work that goes into providing an exceptional real estate experience. Specialization and Comparative Advantage, dictate that it is more efficient for you to enlist the services of a (good) broker because of the opportunity costs of not using a broker. Remember a good agent gets you the best exposure (demand or supply side) as a part of their job description.

Gregsinitiative -- Are you kidding? "The fee for service in my opinion, covers the opportunity costs of all the flaky, non-serrious renters"....

So focused, reliable renters should pay you for the time you waste on others????? We are all dumber for having read your commentary...

VWear May I ask you to share the locations of the apartments that offer the 2 months free rents as an incentive? Thanks

I am not VWear, but Metro on 53rd and 8th is one example.

http://newyork.craigslist.org/mnh/abo/953745766.html

We've seen the apartments, they're actually very nice, although small.

Gregsinitiative
3 days ago
ignore this person
report abuse I'm a real estate agent with this to say. While everyone is considering how outrageous the broker fee is, remember a few things. The demand for our services will always be there because we live in a service economy.

Greg - it is one thing if a broker is working with a buyer, and entirely a different thing if a broker is working with an owner. If working with an owner, then the owner should pay. The broker provides really no convenience to the renter at all, and forcing the renter to pay, and therefore the owner not to pay, means that there is no properly aligned arms-length negotiation that would allow for efficient pricing of services.

Samename thank you for your commentary. Renters have the option of doing most of the leg work on their own and ultimately paying a discounted fee. Or, enlisting the services of a broker and still paying a fee. It has been established and it works. You should work the system and put a solid agent to work as you will still end up paying anyway. Brokers have all the good listings anyway! Everyone knows that...

yes, but the point is you can still go to corcoran or elliman or halstead who are hired by the owners, right? so anyone has access to these listings, right?

you really shouldn't be paying. even good brokers will just do rentals as a courtesy.

Gregsinitiative: People here respect the brokers' desire to make a living and appreciate the contributions of some brokers to this board.

However, your post above makes very little sense. "Brokers have all the good listings anyway!". Um, if it's your listing, I will see it and contact you directly. If it's anyone else's listing, I don't need you to find it for me, since I'll see it elsewhere myself. The fewer middlemen involved, the better for the principals.

We just rented from a management company, and got a month free rent. I know for a fact that people who come through a broker don't get that month free. Pretty big difference.

As an aside, having dealt with all kinds of RE brokers, I have to say that the ones that try to "represent" renters and "help" them find apartments are consistently the sleaziest, least honest, and least pleasant to deal with. I hope you're not one of those.

newbuyer99 Thank you

newbuyer, aren't most offering 2 months now?

"newbuyer, aren't most offering 2 months now?"

Not that I saw. One month is pretty standard, but some give none, and the truly desperate ones give two and/or other stupid incentives.

For brokers rentals, are you seeing more no fee/one month free, just one month free or something else?

E70 - not sure I understand your question. Most rental buildings will pay the broker's fee or offer a month free. Some will do both, but not all. For condo rentals, it's all over the board - i.e. everything is a negotiation.

SORRY nb99- For private rentals with a broker, what type of incentives are you seeing?

Honestly hard to tell, because it's not a "market" in the same sense. Really case by case. Some price chops, some paying broker fee, some offering free month. I think the prices are much more negotiable, because (1) the private owners are much more desperate to rent than the management companies (2) they don't care about setting a precedent, and (3) they don't know the market, so asking prices are more frequently way too high to begin with. I saw several apartments in the $5-6K range where I got the impression than an offer $1000 below ask would be considered. We ended up renting in a rental building, so I never tested my theory.

I will also say that of the condos we saw, every single broker was all over me afterwards, trying to convince us to rent their listing, suggesting that everything was negotiable, etc.

Please advise me on how to select a brokerage to handle the rental of my condo. What should I look for and what questions should I ask before giving them my listing?

ouch, where and what are you renting? im in market and maybe we can avoid broker fee

Really important to find a tenant who is easy to deal with. Really not so important to get the last $200 per month. You pay the broker fee of 1 month and put that in the listing. Remember, every 1 month that it sits on the market is the most waste.

Jenny, no time frame firmed yet for renting my East Village studio. I'm still in my research phase, but it sounds like most landlords are paying the broker's fees in this down-market. If you tell your broker that you "want the apratment" but insist the landlord pay the broker fee, I bet the landlord will agree to pay.

Jenny: I own an upper E. Side Studio for rent.

ouch and E70, I would try without a broker first (just one opinion). A lot of people looking for rentals check out craig's list and choose "by owners only". If you put a lot of pics, floorplan, list the address, and make it very explicit you are not a broker, I bet you get some inquiries.

You could also do NYT, but I don't know the details/costs.

Finally, you could post a bunch of flyers in your building, neighborhood, etc., plus email all your friends/family for word of mouth. Obviously a fair amount of work, as well as showing the apartment, but may be worth it to save the broker fee if you have the time/inclination.

Thanks NB99.