No-Fee Apartments: How To Rent No-Fee in NYC

No-Fee Rental Apartments Uncovered

New arrivals in NYC are quickly overcome by how complicated the housing market is. There are many twists and turns to it, even if you’re only looking for a rental apartment. Chief among these is the difference between a fee and no-fee apartments. Any quick search on listing websites will turn up apartments for rent listed as “no-fee” while others will make no mention of a fee at all. These are the two types of rentals available in NYC, ones with a broker’s fee and ones without. If you want to rent an apartment in NYC, you’ll need to decide between the two. Just don’t be too quick to assume the no-fee choice is the best one. As you’ll soon see, there are some downsides to it.

What is a fee?

In the real estate rental world, a “fee” is the cash amount you pay to the broker that helped you find an apartment. This is how brokers make their living and what motivates them to find you an apartment once you’ve hired them immediately. In NYC, the broker’s fee can be up to 15% of the full-years lease. This might seem like an easy gig for the broker. All they’re doing is collecting a nice fee for finding a rental apartment you could have located on your own, right? Well, not exactly.

A real estate agent can devote themselves full-time to the task of finding a rental apartment for you. They’ll have access to exclusive listings, landlord relationships, have contacts to rentals, condos, and co-ops that haven’t been listed yet and be able to do all the legwork and hard negotiating. If you don’t have time to search on your own, they make for the most natural choice.

What does no-fee mean?

To attract renters seeking to avoid the broker’s fee, many rental sites are now advertising “no-fee” apartments. So does this mean there’s no money in it for the broker? Not always. It’s just a case of who pays it. Most rental apartments advertised as “no-fee” are represented by a broker unless listed by the in-house marketing team in a rental building. They’re not working for free. The landlord merely has offered to pay the brokers fee out of their pocket. Before you think how great that sounds, it’s worth noting that you will bear the cost of this in the form of higher rent.

The only reason a landlord might do this is that they’re having trouble finding a tenant. They’re losing money every month the apartment sits empty. When you consider that the average cost of a Manhattan apartment is $4,041, that can be a significant loss if it sits empty for months. As such, by agreeing to pay the broker’s fee, they can fill the unit much faster. However, in high demand markets with low inventory, landlords will usually have no trouble finding another tenant quickly. That tends to put highly coveted neighborhoods in Manhattan and Brooklyn out of the no-fee game.

Cons of choosing a no-fee apartment

Getting a rental apartment with no broker’s fee attached sounds like a great deal. That’s the clear advantage of a no-fee apartment. But as with everything, there will be a catch. There are usually good reasons why a broker is willing to pay the brokers fee. And contacting the landlord directly presents a few difficulties and can lead to some disadvantages.

The rent may be higher – No-fee rental apartments typically have higher rents than properties with fees. The landlord does this to cover the cost of the broker’s fee or direct marketing expenses.
It might be in bad shape – No-fee rental apartments are often in poor condition. Being a rental, there will likely be some wear and tear from previous tenants. Having no-fee attached is how the landlord hopes to attract tenants despite the poor condition. Exceptions to this are Related and Glenwood buildings though still not as good as new condos.
You won’t have access to the best apartments – In NYC, the best apartments are always listed by brokers. This is because they are in Condo and co-op buildings. Unless you’ve got a credit score of over 700, have at least two years of tax returns and little to no debt, you’re better off going with a broker. They’ll be able to negotiate better on your behalf.
You need to do all the legwork yourself – Without a broker to do it for you; you’ll have to spend time going out to each apartment you find and inspect it yourself. Most people in New York don’t have time for this. Especially when you’re a grad student that hasn’t yet arrived in the city. You’ll also need to negotiate for the lease and may end up with terms that less than appealing. A broker can devote themselves full-time to the search and know how to negotiate to get you the most favorable lease.

Final thoughts

Going with the no-fee option could end up saving you some money, but it could also mean spending more. It’s certainly a doable option, and there are plenty of websites available to help you find an apartment on your own. Craigslist would be ill-advised as there are scams to watch out. Although far from perfect, the sites mentioned below are the best options. Just know that you’ll need to do all the hard work yourself, and you could end up with a less than a stellar apartment. Also, pro tip, avoid like the plague any listings that don’t include photos.

You’ll find a full list below of management companies that have no-fee apartments. Contact them and see what they have for your budget. You can always do some searching on your own and then contact a broker to see what they can offer you. Chances are they’ll find you a better apartment with a lower rent. Remember, as with everything else; you get what you pay for in NYC real estate.