How to find a low- or no-fee apartment in NYC: Brick Underground's best advice
Brokers will tell you that their services are worth it, but that doesn't lessen the sting of having to fork over the fee.
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In a rental market as expensive and competitive as New York City, having to pay a broker fee can seem like the final insult at the end of a long, painful search. The fee is usually 12 to 15 percent of the annual rent and when stacked on top of the first month's rent and a security deposit, not to mention moving costs, it can make getting in the door of a NYC apartment feel exorbitant indeed.
Keep in mind that there are two ways you may end up paying a broker fee: If you sign an agreement with broker and they show you around to different apartments, you will owe that broker a fee. But here's where it gets really aggravating: Let's say you're doing the legwork yourself, and you find an apartment on your own. If the landlord of that apartment has hired a broker, you will also owe a fee, even if it seems like all the broker did for you is unlock the door and collect your paperwork.
It happened to me. I found an apartment thanks to friends who told me about a family that was moving away, but the apartment had a broker attached to it. We had to pay a fee, thousands of dollars for what felt like 20 minutes worth of showing us the place. It hurt, but what helped me get over it was the realization that this is what we needed to do to get the apartment that we really, really wanted.
Of course, it doesn't help that there was brief moment when it looked like renters would no longer be on the hook for the fee for brokers who hired by landlords—but the Department of State has since clarified that all broker fees remain a renter's responsibility.
Want to avoid having to pay a broker fee or pay a little less for one? Here is some of Brick Underground's best advice on how to find a no-fee apartment, how to negotiate down the fee if you must pay one, and why brokers argue that it's worth it to suck it up and fork it over.
Why a broker's fee?
First, the rationale. Brokers work entirely on commission, and not every inquiry and apartment tour will pan out. That means that you, the tenant paying the fee, are covering the labor the broker provides to all those other prospective renters who didn't follow through. Another way to look at it: It is compensation to your broker for his or her diligence in finding you a great place to live in one of the most complicated and expensive real estate markets in the world.
Brokers often point out that they'll find you apartments you wouldn't have otherwise seen, deal with the management company for you, and save you a lot of other legwork. Need more convincing? Here are five brokers on why it's worth it to pay a fee to get an apartment.
Dealing with opportunists
Sometime building supers or property managers will try to get in on the transaction and demand their own fee to rent you the apartment. Under New York law, anyone can charge you a fee if you agree to it, but only a licensed real estate agent can sue you for refusing to pay. Here's more on what to do when property managers demand broker's fees, and when you can refuse to pay them.
Similarly, a real estate agent may demand a fee even if she simply sent you a listing by email and never showed you the place in person. Whether or not you owe her for this depends on your broker fee agreement. To figure out how to address this before it becomes an issue, see this guide.
The best no-fee sites on the web
No fee apartments come in two types: Apartments you can rent directly from a landlord or management company and apartments where the landlord pays the broker’s fee for you as a concession. To find them online, check out Brick Underground's guide to the 8 best websites for finding a no-fee apartment in New York City.
The real story behind no-fee units
When a landlord covers the broker's fee, they're doing this to get renters in the door. Often landlords will do this in less-than-desirable neighborhoods and buildings, but it's also common in new developments where there are a lot of similar apartments nearby and building owners are trying to fill the building up quickly.
Another tip about big, new developments—they're likely to have even more apartments available than what appears because landlords don't put all their empty units on the market at the same time. This “shadow inventory" may mean a landlord is more willing to give you a deal in order to fill the apartment. Here's a tip: If you're searching StreetEasy, for example, scroll down to "about this building" and check out how big it is and how many other active listings there are.
Need some extra help finding the perfect apartment in the perfect neighborhood? Looking for a landlord who is flexible about guarantors, pets, "flexing" your space with temporary walls—or who won't automatically reject you if you lack work, credit or rental history? Put your search into the capable hands of The Agency, a tech-savvy real estate brokerage founded by a pair of Yale grads in response to the frustrating apartment-search experiences of classmates and colleagues. The Agency will charge a broker's fee of 10 percent of a year's rent on open listings instead of the usual 12 to 15 percent if you sign up here. Bonus: The agents at The Agency are a delight to deal with.
Negotiating down is doable—sometimes
And if you don't see any way around paying a fee, it may be possible to negotiate. Need advice for what to say? Try a simple question like, "Is your fee negotiable?" and go from there. Be sure to keep the exchange polite and respectful.
But don't lead with this question—it should be one of the last things you ask about. Because if you have already shown yourself to be a solid applicant with your documents in hand and ready to sign a lease on the right apartment, you'll be in a better position rather than someone who seems like they are merely browsing.
You probably won't be able to negotiate your way out of the fee altogether, but if you start by offering less, like 10 percent rather than 15 percent, you may be able to get to a compromise.
And you need to pay attention to demand for the apartment, so read the room before asking for a break. If there are lots of other applicants, you won't be successful. Brokers may be more amenable to this if the market is slow, like in the dead of winter, so it may be worth it to wait a bit for better negotiability.
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