New York City is a notoriously difficult place to find attractive, affordable apartments to rent. Many people choose to use a broker. In doing so, it is common for the renter to pay a broker’s fee in New York City. This differs from many other cities, where an agent is not typically used. If the owner feels the need for one, usually the landlord pays the broker’s fee.
The brokerage fees are typically quite substantial. There are certain instances where it makes sense and others where it does not.
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How Much is The Broker’s Fee?
The fee is typically steep. This amount, which renters pay upon signing the lease, is usually one month’s rent or up to 15% of the annual rental amount. The 15% figure is essentially the standard. In Manhattan, the median rent for newly signed leases was approximately $3,500. A 15% fee would amount to a $6,300. Of course, rentals are much higher in certain neighborhoods and buildings, meaning you pay a larger commission.
Why Pay a Broker’s Fee?
It is simply a matter of supply and demand. Historically, in New York City, there are many more people looking for apartment rentals than there are units. This gives the building owners a lot more leverage in setting the rent and determining who pays the commission.
Therefore, if you want an apartment, particularly in a desirable neighborhood, you may wish to pay the brokerage fee. Your agent can help weed out undesirable apartments. This can save you a lot of time and frustration.
When You Should Not Pay
You may not have to pay the brokerage fee in neighborhoods where the competition is less intense. In these areas, you may find an apartment on your own. Alternatively, the brokerage could list the apartment as “no fee.” In some cases, the building is handling the rental internally. It could also mean the landlord is paying the commission.
There are several other reasons the landlord might pay the commission. He or she might feel this is a way to fill the occupancy quicker. In this case, the brokerage commission may outweigh the lost rent. Alternatively, if the owner has had the vacancy for a long time, the apartment may have scared off renters. In this case, you should carefully consider whether you want the apartment.
In a no-fee situation, you should check to make sure the rental amount is not higher than if you paid the commission. Many landlords merely bake the commission into the monthly fee, resulting in no savings for the prospective tenant.
If you are going to try to find an apartment on your own, you need to prepare yourself to do a lot of legwork. You can start online, but many listing will have an agent attached to it. Large apartment buildings, if you are comfortable living in one, may not use an agent.
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