Hark, cry me a river. It's a darn shame how much broker's receive, why else a law. Why can't landlords use real estate agents? Brokers do nothing for the person looking for a REASONABLE apartment. You have romanticized a job that is really unnecessary. Careers come and they go, time for brokers to go.
18
From the landlords who are the ones should be paying you for the legwork?
6
So your husband felt no remorse when he was happily accepting 4-figure checks from people who in many cases had to scrape together every shred of their savings to pay his worthless fee? Zero sympathy. Find a job that actually helps someone.
23
If landlords paid broker fees (like they do around the rest of the country) then they would be more willing to work with Tenants and lower rents to keep good ones.
NYC rental market is totally upside down.
This new rule is fantastic for millions of renters.
16
@Deirdre I am not sure what are you talking about.
In Northern NJ you pay the broker's fee.
Most of the cost of the real estate is due to interest payments. The interest rates are propped by tax deductions which go to the most wealthy in the highest tax brackets, and all those costs impact the rental prices and tenant payments. If I were rich and owns tons of expensive buildings I would find this a humorous battle of who should pay me. When I have sold or bought a house I always felt the broker represented the person with the scarcest resource. You can’t regulate that out of existence
1
What is my family going to get its next check said... the autoworker in Flint (Japan), the coal miner in West Virginia (natural gas), the Blockbuster manager (Netflix), the Wall Street runner (program trading), the buggy whip factory foreman (cars), the ...
Too bad - really too bad. My family didn’t bilk people by “finding” apartments for a ridiculous fee.
Their jobs were destroyed by China, Silicon Valley, and Walmart.
I have no tear at all for you having spent close to $10,000 in 1990’s dollars for a non-service and the “benefit” to live in some dumb poorly maintained apartment in this city.
Only in this dumb city do we have to pay an entry price to given some drip in Long Island steady income for a building they inherited in 1983 where they have invested nothing in subsequent.
Now it’s time to get a REAL JOB and try to do something PRODUCTIVE in society vs. skim money off people moving to NYC
16
Get used to it. Homeowners have had their taxes go up 50% since the start of the Sharpton mayoralty in 2014. Out of the blue. Even a report from a reform commission does not seem sufficient to end this nightmare. Evidently brokers are also subordinate to corporate incentives, developers and luxury mega tower inhabitants.
4
foregoing my chance to live in Bed Stuy because i can’t afford to support a middleman aspiring playwright to live in Park Slope isn’t endearing me to Luke
23
This is the way I feel about real estate agents as well, people who do things I can easily do and expect a percentage of MY money. Middlemen are the worst, and it blows my mind how many people blindly accept their existence.
11
Brokers should only be paid fees by those who hire them. If a landlord hires a broker to market his apartment, The landlord should pay the fee. If a renter hires a broker to find her an apartment the renter should pay the fee.
The absurd set up which requires potential renters to shell out thousands of dollars to brokers for doing THEM no service at all is extortion. I’m sorry if your husband is in a business where extorting potential tenants is the business model, but he should be paid by the people who hire him.
And if the people who hire him stop doing so because they can’t pawn off his payment to someone else, then his services were probably not worth much to begin with. I’m sorry that this ridiculous system used to benefit him at the expense of others and now will not, and that your family may suffer for it. But the system was rotten.
15
@Karen
What's the difference if the rent is raised to cover the fee?
It's better for the tenant to sign a lease at a lower rent, so when renewal time comes around, the increase will be less.
3
Goodbye rental brokers. Are auto dealers next?
4
The pushback on the brokers wasn't on principle, it was on their greed. A 15% fee is insanely high, pure exploitation of renters who have no choice. Nea2% or 3%, rly two months rent? If they'd been reasonable and charged 2% or 3%, no one would have revolted. This writer (the unbiased wife?) reminds me of those eulogies where even the most selfish person is described as the most loving and generous and good-hearted. "Give him all your money, he's so good-hearted!!"
12
I guess the (former) brokers will argue that now there will be even more empty storefronts in NYC. Boohoo.
2
it’s high time this nonsense was ended! Bravo.
13
Some jobs are just meant to die with the times. NYC is the only city that has brokers. In LA, landlords just leave the door open and you can show yourself the place. Your husband is working an unnecessary job that has become a scam. It’s best he finds a new profession.
14
I'm sure the riding crop makers were also honorable people... What a ridiculous premise to argue they they therefore deserve protection!
6
Not all brokers may be shady, but the reverse is true: most (NYC) brokers Are shady. They lie, they deceive, they Do nothing for most renters, and some are outright sadistic (i.e., the broker who purposefully took me on a 10 minute walk to an SRO building (under the guise of showing me 'a nice apartment that would fit my criteria'), and then when I asked why he took me to such a building his response was 'if you think you can find something decent under X number of dollars, then I'm going to show you (teach you a lesson) what to expect'.
I'd have no problem paying a broker for Doing Something of Value for me, but in NYC 99% of all brokers I've encountered know nothing about the apartments they are showing, have done no due diligence, outright lie by showing photos of apartments that do not match the actual apartments they will show you.....and then they have the audacity to hold out their hands for their 'fee'? I have no tears for NYC realtors.
14
Boo hoo. My hubby has been ripping people off for many years and now they made it illegal! How dare they? Woe is me! Now he will actually have earn a living. Boo hoo.
14
Without the brokers who will stop the landlords to discriminate!? They will select from the pool of tenants the ones they like to be the best. Fair housing and discrimination? Say goodbye to that.
Some of you think the brokers just open the door and switch the lights on but they do much more than that and you will see soon without a licensed professional we will go back 30-50 years in time before the millennial nutjob senators start sending amendments and additional clarifications to the 2019 law.
This bill proposed by unexperienced progressives will create a mess on the market. Tappan Zee Cuomo happily jumped on the bandwagon with the progressives to get some undeserved popularity. This is all just politics without any regard for the thousands of people losing their job. By the way, the landlords are already increasing their prices and the tenants will pay the fee as long as they live in the apartment. Not once but forever and you get a rental increase on that as well. Hurray...
5
The New York REBNY has zero legs to stand on - this is a ridiculous parasitic scam adding no value that has fleeced renters for decades.
It is bizarre, unheard of elsewhere and egregious. See what the land lord will pay you for bringing tenants (who are in no short supply) and that is the value of your “services” .
Glad to see this system end and there are many more forms of graft NYC will need to shatter if it wants to remain competitive
4
Awwwwwww. Too bad for you. Apparently he didn't do his homework about the rent bill any sooner. Too busy reading to his children and shoveling snow I guess. Please.
15% of a year's rent has always been outrageous. At least you could afford to have children.
Become a waiter. Or a tall bartender.
And Mom, don't you work?
6
So incredible.
This is how Trump gets RE-elected as ultra liberal Dems with a bent toward neo Marxism, enact stupid and ill conceived rules without considering the consequences. Just wait until student debt gets cancelled and colleges are banned from charging tuition.
3
You live in Hackensack. Why are you commentingbon this problem which is unique to New York?
1
The problem isn't broker's fees, which you only pay once; it's the impossibility for many of finding affordable rentals. It's the landlords, who should be pushed & pushed hard.
4
@Jenifer Wolf
Yeah, the fact that NYC charges landlords 1/3rd of gross rent just in property tax each year alone, and the fact that half the apartments in NYC are rent regulated and never turn over has nothing to do with high rents!
Landlords are evil and greedy!
I want my free lunch now!
2
Everyone here is saying they are nice people. Disagree.
Writing editorials like this defending a parasitic practice that gauges people isn't nice. If this is how you made your living, your are a terrible person and it's a great outcome that you will not longer be allowed to scam renters out of their hard earned money.
7
Your husband sounds like a nice guy, but in reality the landlord should be paying the brokers fee. Renters have to come up with the first month's rent, a security deposit, and a brokers fee? That's ridiculous!
3
@Todd B. How is that working in Hoboken Todd!? You pay the 1-month brokers fee at lease signing that's how it works Todd ;(
Along with car salespersons, apartment brokers are the most useless human beings on the planet. These leeches used to infest California, though never to the degree that they did in New York. Somehow California has survived without them for decades now, thanks to the advent of Craigslist and other online sites. Welcome to the 21st century, New York City!
6
In other places, no one pays a fee to lease an apartment. You show up, the landlord or leasing agent shows you the unit and walks you thru the process. I can see why some people might like to hire someone to do that for them, in which case, they can. But it's not that hard to find and lease an apartment without any "expert help", and unlike a house, you are only committed for the terms of the lease.
I'd be really annoyed to be forced to pay a fee to someone to take me through a really rather simple process.
8
I don't see why this new law should put a hardship on your husband. The mortgage brokers are paid by the banks now (and it wasn't always like this). They figured out a way to stay in business. I hope your husband can work out deals with landlords, or he can go back to playwriting, which is where he probably belongs anyway.
2
Well, the good news is, now you can pursue your dream to be playwrights! Of course you may have to move out of Park Slope/Windsor Terrace... I hear Ridgewood is nice... or maybe Midwood, Flatbush, East New York... why not Jersey City? Too pricey? There's always Ohio.
Forgive the schadenfreude, but this city is full of "creative types" trying to rationalize their involvement in hyper-exploitative industries like finance and real estate. Regardless of what nice and "community-minded" people you are as individuals, why not admit that you and your husband are part of a systemic problem? One that has left thousands of families displaced or homeless, thousands of others forced to pay exorbitant fees on top of rents far disproportionate to value or income, while the "lucky ones" with low rents or stabilization watch their neighborhoods transform into places whose services they can't afford and don't welcome them. Whether through regulation, technological change, or people simply getting fed up, this was bound to end eventually. I think the rest of us can live without ridiculous fees and rental listings written with a flair for the poetic.
11
I heard a lot about how honest, hard working , and community minded the author and her husband are. I heard the how and why this will hurt them and how unjust they think it is. I heard little if and any justification for the existence of rent brokers in the first place. It seems there’s a better way to do this, and soaking renters certainly stinks. High rent, first-last-deposit, references, application fee...I just can’t see why renters should do or pay any more other than the fact that they can be made to. It’s the landlord’s cost and they should pay it if they want the service and think it’s worth the money. If they want the service but don’t want to pay for it, they shouldn’t be able to foist it off on someone else. If the existence of rent brokers is a real value, then landlords will pay for it. If it is, as most here seem to think, a legally sanctioned captive market with little actual value, the profession will go the way of lamplighters. Let the market, and those with a choice, decide.
10
I do feel bad for families losing income all of a sudden. But this rule has been hurting renters for so long and it never made sense. Forcing a renter to pay such an exorbitant fee for a service to the landlord, only made more costly and more difficult to rent.
Now that the landlords are responsible for the fee, we will see how much it is worth really. If they manage to pass it 100%, so be it. That means it's necessary and that where the market is.
But I believe it will be significantly reduced because the landlords, unlike renters, do have bargaining power and now have the choice to pay or not that fee.
Another important consequence, which I do not see mentioned, is that now renters do not have to put up with endless rent raises or with landlords who do not take care of the properties. Moving is not as expensive, so renters can shop around and move for a cheaper or better apartment. I know many people stuck with apartments simply because they cannot afford to pay 2 months rent, deposit and first rent, before their previous landlord returns their security deposit.
This is a really positive development and after some turmoil the market will find its equilibrium. The decent brokers will land on their feet but the rest will have to figure out a new trade.
10
this is part of a calculated march by the legislature to transfer ownership of private property to tenants or the state. if that's not socialism, what is?
1
All middlemen (middlepeople?) in all areas should be eliminated.
4
I certainly don't think all brokers are "fat cats," but simply find them useless parasites.
I have rented in NYC for nearly 50 years and always found brokers a nightmare. And the few times when I tried using them for my own loft properties (when they asked to show my property non-exclusively) they left me with deadbeat tenants. Brokers just got in the way, they never seemed able to find me what I told them I wanted.
8
I’m terribly sorry for your troubles. You seem to be a decent person. However, when times were good, you and the rest of the decent brokers looked the other way while a small percentage of sharks soured everyone’s opinion of your profession. Sadly, it was ever thus. Capitalists just can’t seem to effectively regulate themselves. The quest for one extra, private dollar always seems to outweigh the common good. Not only did you all kill the goose who laid your golden eggs, you roasted him, ate him, and then complained about indigestion afterwards.
10
Dear Ms. Koenig,
Your opinion piece elicited precisely the same amount of sympathy in me as I have for all the hard-working folks employed in other rent-seeking professions (including much of Wall Street): absolutely none.
It would be grossly unfair to call NYC apartment brokers parasites. Unfair to parasites, that is.
7
Some professions shouldn’t exist in the first place.
7
Making brokers find a more productive, less parasitic profession, on the other hand, does make sense.
4
It wasn’t out of the blue and it’s a deserved comeuppance for an industry run amok, exploiting renters mercilessly
9
I not sorry to say this but brokers and their workers in the firm get to much money for the little they do.
It's time to reflect on their jobs that don't benefit all but the brokers and real agents under them.
You are not worth the money, the total selling of a property that we own. You are a total fraud to the people that want you to sell or buy a piece of property.
I think your on par with the no account person in the WH.
Value is judged by the value a person receives.
Your value is so exorbitant for the people that think your for them and you are not. Your thoughts is HOW MUCH CAN I MAKE. APPALLING.
1
These brokers are not selling, just marketing and leasing, but I agree with your comments
2
NYC tenants should not have to pay finder's fees to rent an apartment.
8
Ronnie admits to getting an apartment in Bay Ridge fully furnished for free without any fees! Had she started out today she and her husband would be shut out of NYC and have no ability to have kids here.
Based on ACRIS a publicly available website she and her husband have done very well with a million dollar apartment in a gentrified section of Brooklyn with great public schools.
10
New York city become more "socialist" and at the city will take over...
Anyone who has rented an apartment in NYC, paid upfront thousands before paying rent monthly, which is among the highest in the nation, has to cheer this law.
Of course brokers are entitled to earn fees for their hard work. It’s a competitive business and demanding. But the broker is working for the landlord and therefore should be compensated by them. The renter in NYC has been exploited only because of the housing shortage, which is already reflected in the super high rents. The new law places the cost of finding a tenant on the landlord, where it belongs.
11
Totally agree - NYC is one of the only places in the world with this racket. I have lived in so many places where the suggestion of renters paying a months rent to find an apartment garners laughter or tragic sympathy.
Just an enmeshed form of NYC Corruption. Needing a lawyer to draft a home purchase contract - something done for without fee by a sales agent everywhere using the same standard form is not required in other places. This is a form of corruption and skimming.
I have bought three houses in three states and no lawyers were present or required - just an escrow agent. Another form of corruption and skimming, designed to provide jobs for the city’s surfeit of lawyers.
Being told to bring several hundred dollars in cash to a closing for “tipping” the lawyer for the title firm, so they will “expedite” the recording of the title - aka, doing what they are already get paid for, is a form of skimming and corruption.
Being required to pay nearly 9 percent in capital gains as an out of state resident selling the house they grew up in NYC occupied but their parents is just outrageous.
All of which explains why I left NYC and will not be going back. Life does not have to be the way people accept it to be there.
4
Why does this remind me of all the pieces bemoaning the loss of insurance-company jobs should single-payer healthcare ever be enacted?
It is not our fault if someone decides to work in a parasitic business! And it is not our responsibility to make sure that person's job remains secure.
17
NYC is one of the few cities on the planet where you need over $10,000 cash to move into a mediocre one bedroom apartment. I doubt if the writer of this article could afford to move into an apartment under these conditions themselves. You are a real estate broker and should get an appropriate percentage of the rent from the owner of the apartment, not from the renter. Fix that issue. Owners of apartments that cost $500,000+ can afford to pay 5% of their rent to you each month, while a working person is struggling to pay the rent, period.
9
@Martin
You do not. Only 45% of rentals charged fees and most were one month rent.
So may people have no idea what they're talking about.
1
I amy dying to know if you paid a broker's fee when you got your first apartment in bayridge with the Furniture the kindly landlord let you have? If you did, it probably nearly did you in. First and last month's rent is simply too much money for too many people who need apartments. Wealthy people can still hire brokers. They can afford it. That seems very fair. Your husband sounds like a nice man and I am pretty sure the law has nothing to do with his character.
8
How much is it worth to a landlord, for someone to find him a tenant?
That's the price of your husband's labor.
5
Virtually anyone who rents or rented in NY has vivid memories of shelling out $5K or more for a broker who did very little.
No sympathy.
13
@Lisa W
No. Less than half had fees.
That's beyond far fetched. None of my
family or friends ever paid a fee.
It was a choice for only some apartments!
2
NYC Brokers will and should have a very hard time gathering sympathy from anyone. What a complete joke. This article doesn’t make a valid case for anything. NYC RE has been a complete and ever worsening scam that has finally blown up in the industries face. Brokers work hard and you known who should pay them? The people who hire them. The new law enforces this basic concept that is held in every city across this country except here in NYC. You know who else should also pay the Brokers...the real estate companies they work really hard to close deals and get signed rental leases for day to day.
6
I am sympathetic to the fact that many brokers are middle-class and honest, but that does not mean that the rest of us owe them a living.
Some professions morph or disappear as technology evolves. This is why the buggy whip industry has shrunk over the past century.
Brokers' hardwired sense of parasitic entitlement to a cut of any NYC lease was always shocking. Their self-righteous laments over the loss of that entitlement are even more shocking.
7
Gimme a break. Renters never paid a broke fee at all back in the 1980's (maybe rich people did). The fee for renters slipped in and stayed. It's crooked and it's wrong. Renters mostly are renting because buying is out of the question. They are a captive group who the real estate industry figured they could swindle. I have no sympathy now for people who make their money on brokers' fees to renters--it has always been wrong, it has always taken advantage of the disadvantaged, and you should have known better than to want to make money by hurting your fellow human. later....
6
This is something that can be done on a website and by the manager of the apartment for a minimal cost.
People shouldn’t have to pay thousands of dollars for someone to do something that can be done a lot cheaper.
Honestly, this is akin to what the mafia does.
7
Tell him to find a new job. He sounds like a great guy so I'm sure he will.
BTW, we didn't really need all that Luke-and-I background either.
8
While we're on this binge of regulating things that need fixing, can we please get rid of restaurant tipping?
2
Get real. I am so happy this opportunistic scam is over! For too long New Yorkers have been paying these glorified treasure trolls thousands just to let them in to view an apartment and run a credit check. Especially now, when digital photos can apprise tenants of the goods, how are brokers really assisting tenants who do their own legwork? Perhaps the new job for brokers will be in online sales, for which they will have to charge a fee that actually reflects the value of the work they do. Your husband willingly participated in an unethical system. I am grateful that 25,000 fewer people will be allowed to assist landlords in taking advantage of tenants.
11
Sorry - still no sympathy. You seem to reference only the terrible people who ghost realtors or are rich anyway. I'm sure Luke is a great guy. But for those of us that have contacted a streeteasy ad (often poorly or deceptively written or doesn't show the actual apartment) and show up on time to meet with someone for 5 minutes of their lives and pay them thousands of dollars it still seems a gigantic scam.
9
Maybe find a line of work that doesn’t involve exploiting vulnerable people.
8
Nobody will make brokers go broke. And brokerage fees are not "banned." Apartment brokers work for the building owners, so under the new regulation the building owners who hired the brokers will pay the brokers. They will still make their "$45,000 to $60,000 a year" only their employers will now pay them. That's radical?
Is the writer claiming that building owners (I refuse to employ the feudal term "landlord") don't have the money to pay their employees? Really? Then don't hire brokers. Do it yourself. Or, sell your properties to somebody who knows basic math. You appear to be in the wrong business.
https://emcphd.wordpress.com
5
This is rich. I guess when we finally fight back against landlords and gain rent control, there will be crying landlords and luxury developers writing op-eds, too. Brokers are leeches, 60k salary or not.
7
Luke seems very nice. But the years of leg work to build relationships is clearly in reference to landlords.
Taking cleaning products to an open house is done in hopes of sprucing up a place (property of a landlord) before a showing in order to rent it more quickly.
I don’t know why he’s shoveling tenants’ driveway (it is also before a showing? Does he shovel for all tenants his previously leased to?)...
Taking care of a housebound, widowed landlord similarly is effort toward building/maintaining that relationship.
End of the day, the repeat business for the broker will naturally come from the landlord. It’s unlikely tenants repeatedly move and use the same broker, as tenants quickly change needs in terms of price point, location, amount of space, etc. (And if a landlord can easily cover all of those needs, it may be an argument that he’s not so much of an expert and more of an aggregator of online listings).
The tenant’s objective is to negotiate lower rents. Since Luke get’s paid based off higher rents incentives are not aligned. Brokers should aim to make recurring income from landlords. If a broker signs up a major landlord, by all means, become a fat cat. De Niro’s son is apparently a very well-paid broker as he’s consistently selling his dad’s friend’s homes. All the power to him, he found his niche. At least there, broker and seller/landlord are both clearly shooting for higher price!
Industry is ripe for reform.... The transition should perhaps be longer though
2
just another example of over regulation that hurts the small business person
The author is more than “a writer who covers real estate.” She is no disinterested party; she is writing from the perspective of someone whose family’s bread and butter comes in part from these exorbitant fees.
Given that the agents’ efforts (as described by the author) are of primary benefit to the landlords it seems fitting that the landlords should bear the cost.
6
"... vetting potential customers over the phone...". Vetting is the key word in the article. This character is in charge of VETTING potential renters over the phone, which means discrimination and elimination of certain New Yorkers from entering a certain neighborhood. Brokers and their agents really earn their 15% for a years rent by acting like the defense of a football team. Her husband decides on the phone to screen out "undesirable" potential tenants in an instant! Is it just on income or credit scores?
Brokers and agents are the main reason why some neighborhoods in NYC are strictly segregated - call it red lining or just racism.
1
Sounds like your husband works for the sellers, so that should be the business that should pay him. The problem with the previous business model is that the renter has to pay for his time spent on other clients, and to clean apartments that are in no condition to rent, that is a terrible model.
3
I’m sorry for the writer’s husband but Potter sure his next paycheck will simply come from the landlords who should have been paying these fees in the first place. The fact the broker community insists this means fees will go down implies the fees were exorbitant in the first place. And frankly, every service the writer describes her husband performing is one that serves the landlords, not the tenants.
I’ve lived in NYC nearly twenty years. Never used a broker to find a place. The times I tried, they were flakey, rude, dishonest and unprofessional. Several never showed up.
Finally, while this writer paints a sympathetic portrait of “families surviving on a broker’s paycheck,” those of us who have been here long enough know that few rental brokers are actually full time workers. It’s a job with low bar to entry that sounds doable by anyone who’s halfway literate. The real losers from this new law are the real estate _agencies_ who have treated prospective tenants like cash cows and been taking fees or cuts from their little armies of brokers.
PS my wife and I have been coincidentally looking at moving in the past few weeks. Several apartments suddenly had rents pop up by about ten percent between Wednesday and Friday. Wonder how that happened?
3
What goes around, comes around!
New Yorkers benefitted from the 2009 bail out. Low and lower interest rates destroyed retirees in many regions of the country.
A retiree in Texas with a million in cash, who planned to buy safe Treasuries and CD's can now get 2% on a 20 year Treasury. Wow that's 20 grand a year to live on!
IMHO - move! Plenty of smart, talented folks all over the USA. Great writers workshop in DFW...
2
Great law, about time, stop the rental Vampires.
3
People who argue for brokers fees... what other American city are you gouged for money to get an apartment? It’s already expensive enough in New York.
Let management companies list and advertise properties on their pages. That’s why they are paid by landlords. There was never anything more horrible than writing a check for a months rent to some loser broker who did literally nothing for me to rent the apartment. He opened the door and let me look. Easily accomplished by a super or a management company.
This is welcome news.
3
Maybe your husband should change professions? Sounds like both of you were pretty unhappy with it in the first place. Renters don't owe your husband anything. If he's not making a commission, that speaks to the sleaziness of his profession, his agency, and landlords -- not renters standing him up or showing up 5 minutes late with "name-brand coffee".
This law will help families and renters way more than a middleman charging exorbitant fees for a move-in.
This op-ed reeks of entitlement and disdain.
6
I am truly disappointed and disgusted by the nasty and hurtful comments posted here. Being a rental agent is not the easiest way to make a living. I’d like to see these people put up with some of the people we do and say we have it easy.
4
@Andre
Agreed. I'm with you brother!
1
100 years ago, a similar article would be titled "Making Coachman go broke isn't the solution". Every job usually has some shelf life, a real estate broker is no different in the age of the internet. The real estate industry really needs some shake up, it's time for the MLS cartels to go away to make room for new comers.
4
Bit the coachman did not go away because a bureaucrat interpreted a law that was enacted seven months ago. That’s what’s happening here.
2
The law still allows brokers to charge fees to landlords and prospective tenants that hire them directly to help with the search. I think that’s more than fair.
When I moved into my last apartment in May 2019 I paid nearly two months worth of rent to a broker that I never even met. I found the apartment on streeteasy and the previous tenants showed me the apartment. I submitted the application and all required paperwork that night and paid everything required to move in (first months rent, security deposit, broker fee) within 24 hours of being approved.
This is a long way of saying that the fee I was charged was incongruent with the services I received from the broker. If they primarily worked to help the landlord, it’s only fair that they charge the landlord for their services. The landlord can then decide whether they want to pass that cost on to the tenant (assuming they’re in a non-rent stabilized building).
107
I can commiserate with Ms. Koenig and her husband.
I was a real estate broker too in New York City in the early 1990s and turned to it when I had to support myself while I wrote.
People who have not worked in that profession do not know or understand the pressure and heartache that goes with it. It is all what Ms. Koenig writes about and more.
Every prospective apartment hunter can try and get an apartment on his or her own. Once they sign an agreement with a broker, they are bound by it and expect the broker to find them the apartment they are looking for. It is a service, like any other service, that you expect to be paid for.
I am no longer working as a real estate broker, but I was still shocked at the new legislation coming from Albany.
The good that may come of it though could be a fairer housing market and a dent in the inequality in New York City.
And that would be good.
1
@Ernholder - The situation you describe, apartment hunters signing an agreement with a broker to find them an apartment, can still continue. If the renters engaged the broker for a service, of course they should pay them.
What this new law is about is the landlord engaging the broker, and then the renter being stuck with the fee although the broker provided no services to him.
7
Landlords should pay the full brokerage fees for these transactions since for them it is a deductible business expense.
4
If you’re moving more than 50 miles for a new job you can deduct it too.
This entire "law" that was enforced virtually overnight is outrageous and very poorly thought out. Nothing in life is FREE and the fall out from this has been laid out at all. Rents are going to skyrocket and it is already leading to massive confusion in the marketplace. Not even just for renters, but not all landlords are these massive greedy landlords who are greedy and selfish. I personally represent several small time landlords who are hard working people that worked to be able to buy an investment property which is a big deal for them. The new law really messes up the cap rate and almost puts them in a very bad position to now have the property at a loss in an already tough marketplace. Not to mention, no one is talking about how a governing body OVERNIGHT changes a law that impacts 1000s of people. How would you feel if the state just decided overnight that your salary is cut by 75% or even 100% and its just too bad and then people were celebrating? Is there now going to be a cap on what doctors can charge patients? What lawyers can charge per hour? What about those professions? We should all be very worried that a governing body just decided to interpret some law after months of saying nothing and wiping out people who have worked for YEARS to build their businesses with honesty, integrity and hard work.
5
@Laura The rollout of the law was indeed poor but rents will not skyrocket and the market will operate as it does in 99% of other cities in America. This will be a good change for almost all new yorkers, despite losses to brokers and some small rent increases for some people.
4
@Big Cow
They've gone up 15% since the law changed last week.
Go on Streeteasy if you don't believe me.
I personally raised the rents on my own rentals.
4
In America, banks use Retail Credit Reports to see the history of an applicant. This knowledge is accepted as necessary in banking and all financial transactions.
In all States, other than NY, leasing agents and owners, can and do use similar tools to select good neighbors. These tools are usually a Retail Credit Report and an Eviction Report. NY does not allow the use of eviction reports, in NY the previous addresses have been removed. Making it impossible to know if this is your applicant, John Doe. Together these reports tell a story. Setting an arbitrary fee is totally dishonest to both the agent and the applicant.
2
@Carol
Housing court history is now off limits to landlords in NYC.
All new the law does is place the responsibility to negotiate the brokers' fees with the landlord - exactly where it belongs. While the landlord has the ability to competitively bid his/her property's listing, they can force brokers' fees to properly reflect the value-add brokers are providing. And, landlords can also structure the fees as they so choose - perhaps extend them over the course of the year or over a few years during the tenancy.
By pushing the fees on new tenants, the prior law removed free market dynamics. Tenants paid whatever they were told to pay without any real ability to negotiate. And so, if brokers fees do come down (as I suspect they will), it's because they were set inappropriately and unfairly relative to the actual value-added. And, yes, rents will increase over time (for those not stabilized) so that landlords can recoup these costs. That is exactly how it should work.
117
@pandqfarm Spot on take on this law change. Let's no forget that is prospective tenants want to hire a search agent on their behalf that they can still do so.
16
@pandqfarm I rent out a house CA through a broker/management company. Its very inexpensive (3% a year of the rent, or 8% if they need to find a new tenant), and the company deals with everything from finding tenants to contracting and managing repairs. There is a lot of competition between management companies. The companies are very efficient- they manage huge numbers of houses and apartments. Its so good to see changes in the predatory brokerage market in NY after so many years, a result of the end of the Republican parties control of the state senate.
8
@spike The broker charges a half months rent to get a new tenant (about 4.5%, so 3+4.5 =7.5% per year).
I still remember finding my first apartment, in Manhattan in 1998 at Park Avenue Court on 87th Street, in which to live while commuting from Miami for my job in NYC. I found the apartment myself and was presented with a bill of 1.5 months rent from the landlord for the brokers commission. I was stunned as to why I was paying the landlords broker, whom I did not hire, I felt the owner benefited from my rent they should pay. I refused to execute the lease unless the owner paid their leasing agent's fee. A week late the agent called me and said the landlord will pay the fee if I would sign the lease that day and pay three months upfront, I did.
Today, I own an portfolio of apartment buildings around the country and I never seek payment of any leasing fees from a resident. I benefit from the rent, and it's part of my cost of doing business. It's about time NYC finally caught on.
162
@Stephen
Dude, you were lucky, but that's not how it works normally in NYC.
1
@Tall Tree You're right. Normally the tenant is more desperate, and has to just eat the cost of a fee that they should never be paying in the first place.
12
Others have said this and I agree - the landlord should pay the fee for services rendered to the landlord, not the tenant. I haven’t seen comments about the following point, though: these fees, which are exorbitant, are bad for the city and the local economy. The fees deter newcomers to NYC. They deter people from switching apartments even when they have outgrown a space, for example, after having children. These fees give landlords the upper hand in determining rent increases given the tremendous costs of relocation. These fees deter civil servants and other less prosperous people from staying in NYC. All of this leads to millions of dollars taken out of the local economy each year. It also contributes to the exodus from NYC, a city with one of the highest rates of departures. It also leads to a loss of diversity. This new restriction is fantastic for the city, its economy and its inhabitants. Maybe I would not have left if this was in effect years ago.
110
@FFS Most of these points are either untrue or of minor import.
The point of economic loss to the city because people an't move in would only be true if there were a lot of vacant apartments not being filled because people couldn't afford to move, but that is not the case - vacancy rates in the city are extremely extremely low, so there is no loss to the local economy because people can't afford to move.
Also its weird to pair the above point with the fact that it discourages civil servants from living in the city vs. private sector people with higher salaries that can more easily pay broker fees. Having a higher proportion of people with lower incomes would decrease the economic vitality of the city, so broker fees may actually promote economic vitality because more high income people live here. Not saying that's the society we want or need, only that the point is wrong.
As far as people outgrowing apartments and not being able to upsize/downsize properly, broker fees are a tiny factor in this next to the rent stabiliization laws, which do very materially slow down the rate at which people rightsize their apartments.
2
@FFS
It only looks like the landlord will now pay.
In reality, he or she will increase the rent to offset the fee.
The tenant will get a higher starting rent which will be compounded by future rent increases, if he releases.
The old system in many cases was better for tenants.
Landlords will be fine either way.
Tenants and brokers, not so much. . . .
4
Perhaps the new law should have been rolled out more slowly to give people time to adjust. But other than that, sorry, brokers get little sympathy from me. It’s largely a parasitic industry that generally forces people to pay for access and not for actually providing a valuable service. I have found all of my apartments and almost always had to still pay thousands of dollars in broker's fees just because I had to before I could sign a lease.
62
@WRHS
Except now all rents will be higher, whereas before you could more easily find no fee deals.
Go on Streeteasy. Over the last few days most asking rents in NYC have gone up a lot.
Between this anti-free market overkill and the looming threat of "just cause" which will basically give life estates to tenants of all free market rentals (in essence rent control) landlords only have one option right now.
Raise rents and do it fast!
5
@Tall Tree You can post forever, Tall Tree, but it seems people aren't buying it.
15
@PoeticJustice
You're wrong. I can't post forever.
But you're right that most folks do not understand how the rental market works,
and when they hear "no broker fees" they think it's a good thing, and nothing I say will
change their minds.
2
I’m a landlord who relies on brokers to find tenants, but I prefer to pay the broker fee myself. Brokers exist because there is a demand for their services. From a tenant’s perspective the broker may appear to be an unnecessary middleman, but the person they’re serving is typically the landlord, who is relying on the broker to market and show the apartment. When a landlord is using a broker they are effectively bearing the cost since they either need to pay the broker themselves or accept a lower rent than what they could get if they listed it as a no fee apartment. Landlords can be more profitable by not using a broker, just like they can be more profitable by doing their own repairs and maintenance. But for many landlords the extra profit is not worth the cost of their time. I don’t see how this regulation will significantly reduce the demand for brokers, or ultimately how it will save tenants money. It doesn’t change the basic supply or demand for rentals, which is what sets the full price (rent and fees) for housing. If the government wants to save tenants money they need to do things that either increase the supply of rentals (e.g., higher density zoning) or decrease the demand for them (e.g., raising taxes on businesses causing jobs to leave the city).
32
@Jcres "Brokers exist because there is a demand for their services." Yes, right. Just like mobsters, loan sharks, and every other kind of extortionist. Just because a powerless person or a fool can be forced or fooled into paying money for something, does not prove that that something has value.
6
@Jcres Landlords can choose brokers who are low cost and efficient. I rent out a house in CA and my cost is just 3% a year (for complete management of the property) and 5% if they need to find a new tenant. The competition between management companies is fierce there. I think you will see a drop in cost as the brokers need to compete for business in NYC.
3
Rents will be subject to market forces. A landlord may not be able to just pass the costs on to the consumer, because I assume if that landlord could raise rents they already would. These landlords are already competing with plenty of no fee listings. Whether rents will go up (I imagine they might anyway regardless of law; depending on neighborhood). The landlords are making the profits in these transactions, not the renters. Let landlords determine value of fee and property. If realtors actually provided more of a service to renters (and charged more reasonable fees), there probably would not have been need for law.
How much work is a broker putting in to listing $5000 apartment? Someone working a 9-5 (160+ hours a month) needs to have 6 figure salary to earn that gross income. Are any brokers (Luke included) working that much to rent a nyc apartment? The tenant is actually paying for Luke’s work on all apartments he may be listing, not just the one he is showing you (Luke might work hard in listing dozens of apartments but will only collect a fee on the small percentage he actually brokers).
If landlords decide it is better to sell under these conditions, great! Maybe will lead to more affordable pricing on homes (doubt it).
6
@Josh
Josh brokers have to have multiple listings going at once to make a living in real estate. One listing is not enough after all the splits, taxes, ad fees, transportation fees, marketing etc.
I recently became a landlord in Boston and used an agent to find tenants. The standard here is tenants pay the agent one month rent - which was over $5,000 in a tight housing market. It seemed excessive to me but the landlord has little incentive to negotiate on behalf of as yet unknown tenants. If landlords pay the fee, prices for broker services are likely to settle at a level close to the value they provide. And hard-working brokers, like Luke, may be able to charge more than less service-oriented ones.
40
I can see what your husband does for the landlord - finding and sifting lots of potential tenants - but I don't see what he does for the tenant. For the person trying to rent, the broker often just seems like someone standing between them and a landlord they could easily contact directly if the broker wasn't in the way. The few I interacted with back when I was renting in NYC would show me any old place, whether or not it corresponded to what I said I wanted; regularly lied about apartments (a railroad apartment described as a 2-bedroom...), and became unpleasant if I didn't almost immediately indicate interest in places they had shown me.
It always seemed to me like the brokers tried to step in and sweep up as many apartments as they could in an area, looking to eliminate owner listings so that anyone who wanted to rent would have to go through them. They seemed to be inserting a middleman where none had been asked for. I fail to see that as a service, and I fail to see why I should pay for it.
111
Well, if your husband has provided such wonderful services to so many people, renters and landlords, over the years he must have hundreds of people eager to provide him with recommendations for his next career opportunity. Oh, and by the way, a 15% fee is just greedy.
5
I don't understand why anyone could be upset by this other than predatory brokers taking money from renters who don't want or need their services.
If I hire a broker to find me an apartment, then yes, I should absolutely pay them a commission. But if I find an apartment on my own, why should I have to pay a broker a single cent? If the owner of that apartments wants to use a broker to list it, then THEY can pay the broker's fee. But how on Earth can ANYONE expect it to be reasonable to charge tenants for a service that they did not want or ask for?
4
@Samuel if you find an apartment on your own? How did you do that? Would you have found this apartment “on your own” if a licensed agent didn’t pay for the marketing, photos, cost to post to Streeteasy or Zillow (which charges agents a daily fee to post the listing), how would you have found the apartment “on your own” if a broker didn’t show the apartment to you on multiple occasions and at all hours, processes your application, prepared the lease, coordinated the painting, cleaning, and made sure it was ready for you, and in perfect condition for your move in? And if you didn’t want to pay a fee then why did you decide to proceed with an apartment that was listed with a brokers fee? There are a million other no fee options at your disposal. Ultimately it is your choice to take an apartment marketed by a licensed professional real estate agent. It is a fee for services rendered.
6
@Randy I actually own my apartment, and I did use a realtor to buy it. One who I chose, whose services I paid for happily.
But back when I was renting, I was once charged a broker's fees, for a broker I never saw, met, or heard from. I was never showed around an apartment by anyone other than the landlord themself, and while I have no clue who made the listings online that I responded to, I frankly don't care.
If a landlord wants to do all the work of listing their property to tenants and showing it and not use a broker, that is fine. If they want to pay a broker to do that work for them, they can pay for that service. But that is not a service being provided to me as the tenant, that is a service being provided to the landlord.
That is not work that I, the tenant, would otherwise have to do if I were not paying for the broker's service. That is the landlord's responsibility, and the audacity of the author of this article, to whine about how her husband is entitled to a renter's money simply because this is his only source of income is astounding to me.
Either the service provided is extraneous, and these people should find new jobs altogether, or else the landlords will be happy to pay for the service that THEY are receiving, and will adjust the rates of their properties to account for this cost, as they do for any other cost. But charging an up-front fee to the tenant, for a service provided to the landlord can only be described in one word: Parasitic.
5
This sudden change is chaotic. My husband & I own a brownstone in the Village where we rent out 3 apartments. We’ve used the same broker for 20 years and she’s brought us good tenants, most who have stayed longer than a few years. We signed a contract with her a month ago as we prepared an apartment for rent after the former tenant who had stayed 7 years left. We’re doing a complete remodel, retiling the bath, refinishing the floors, repairing & replacing windows and repainting, all of which means we’re hiring and supervising contractors to do the work that we’re not actually doing ourselves. This is expensive & time consuming, six weeks at this point. We’re tired. If we find a tenant by March 1, we’ll be down for 2 months. What we’re not doing is worrying about finding a new, good tenant. Our broker is doing the advertising, ad copy, photography, response to inquiries, showing the apartment (multiple times), vetting of tenants and leasing arrangements. She is a valuable partner to us that allows us to do what we do best with the business side handled by a professional. Suddenly, the fee is on us. We’re negotiating the fee with our broker but to stay even will increase the monthly rent several hundred dollars per month.
This transition is too abrupt and should be rethought to look at the impact on all parties. Landlords are not greedy capitalists and brokers, as the writer’s story shows, are making an honest though difficult living. Slow down & rethink this sudden change.
11
@Jean the landlord - When you hired the contractors to do the remodel work that you're not doing yourselves, you agreed to pay them, did you not? Why would contracting with a broker to do work for you be any different?
10
@Jean the landlord "vetting of tenants" ? Could you elaborate? I doubt that you will pay the same fees that the tenant would have paid upfront. At least you have the luxury to negotiate and there are tons of brokers and agents who will take almost anything now. So now you have a market.
5
Jean the LL. Pay your broker. It is that simple.
7
"Making Brokers Go Broke Isn’t the Solution, New York"
Making brokers charge the customers who benefit—who are the landlords, not the tenants—is the solution. The cost of finding new tenants, and indeed the entire cost of tenant turnover, belongs to landlords, not tenants. Only by enforcing that as a principle can society avoid a variety of essentially parasitic practices which landlords otherwise engage in—such as churning tenants, and unjustly confiscating security fees.
9
Quelle Horreur! The end of paying months of rent to somebody who wrote an ad on the internet and opened a door.
The writer's argument reminds me of a stream of logic I'd hear in law school, that if insurance company's had to payout claims then rates would increase. Of course, the policies are useless without paying for the insured event. However, insurance defense lawyers saw the policies as an entitlement, not an exchange of services. Brokers are doing the same. The only reason brokers commissions are so high was collusion which should be -- and, in hindsight, was -- illegal.
I've since retired in Europe and just paid a real-estate professional a fee of just under one month's rent. For that, they not only showed apartments but also processed an enormous amount of paperwork (the French love paperwork), advised on moving, and even helped with utilities. They have been genuinely helpful. Their fee was fair and well worth it. If New York brokers, including the authors's spouse, could say the same they'd have nothing to worry about.
8
Many suppose that elimination of easy fees to brokers from tenants on the move will lead to an increase in rents as the offset. However, on a contrarian look - By making it easier to move without paying a fee, folks who are facing steep renewals which before would mean a choice of A. accepting the higher renewal rate or B. paying new broker fees to move, now have that new leverage of cheap mobility over the Landlord who seeks to keep a tenant.
8
I bet mortgage brokers feels the same way nowadays after the shakeout in 2009 and the advent of Rocket Mortgage and other online and app driven processes. This comeuppance may seem to come from NYS which is really just fleshing out what the meaning of being a Licensed Agent means. It is the information on the internet that mirrors the inside information that leasing agents once held close to the vest which has blown up the paradigm.
4
Fees and Commissions are paid by owners throughout this country. Some MLS's won't allow a rental listing unless there is an amount for commission to be shared between two brokers...and this ruling came down from the State who has an obligation to look out for and protect consumers...it is not their obligation to protect the income of the agent..
8
This is a clear example of how incrementalism is the proper path toward an admirable goal. I claim the moniker of social democrat proudly and feel that the right answer is the one that benefits society the most and avoids exploitation and rewards service and value. Sure I see the rental broker system as something that needs changing. I paid a 15% fee on an apartment I rented in Manhattan in 2009. But in marching toward admirable goals, we need to get there with caution, step by step, watching the rights of all parties, and open to modifications of our plans along the way. Disruptive innovations need time, analysis, and compassion.
5
Thank you for this! My perspectives on economic systems are more along yours. However, my husband is also a real estate broker, much like the author’s husband. He’s a great guy who works his buns off and gives around 15 people (agents) an opportunity to have a flexible schedule and to be entrepreneurs. He runs a clean shop, is available to help tenants long after lease signing, etc. we’ve been talking a lot about how this change should come - he’s always thought landlords should pay the fee. The issue this week is not who pays the fee, it’s the sudden and abrupt change to an entire economy without proper impact analysis, warning, and plans for transition. Real estate agents are independent contractors and as such have no benefits - no insurance, no 401k, no options to seek unemployment. And so many of these commenters don’t care, and they don’t care in such an incredibly callous way. It’s beyond insane.
4
This is really very simple. Perversely the broker is working for and hired by the the landlord in the current arrangement, but the tenant pays the fee. Tenants have no negotiation power when it comes to the brokerage fee - if they want the apartment they have to pay it, it's a "take it or leave it situation," the landlord picks the broker, the broker sets the brokerage fee.
Under the changed arrangement, landlords have the negotiating power, they can decide how much they want to pay for the services of the broker, but they can change broker if they are dissatisfied or the fee is too high. Tenants, under this system, will still be able to offer a broker a fee to look for an apartment or house, but they can negotiate that fee, because in that arrangement, the broker will be working for them, not the landlord.
Obviously brokers are upset - they went from a non-negotiated fee from a compelled customer to a negotiated fee with customers with choice.
The complaints of the brokers come down to the reality that they will have to negotiate the brokerage
15
Yes, it is very challenging when an industry changes overnight. However, the US real estate market is infested with various professions that try to get out as much money as possible from the renter, buyer or seller. Naturally each of them may not earn much money but overall it is a huge burden for those that seek a place to live. Most EU real estate markets work without all those people, seeking a property is today enterily online including booking showings. What is the difference is a highly regulated and enforced market, with a legal safety net. Thus one can strip down much of the extra folks involved by simply have more government control, that gets rid of extra cost and people, including all the lawyer and paralegal hang arounds, that like to try to profit on the transaction of finding a roof over your head.
6
I think most of us are happy that brokers are not automatically entitled their broker fee now.
I kinda dislike brokers, but thats just my experiences.
9
I'm sorry your husband may have to find other work, as people in many other industries have had to do in the past, but his preference for a particular livelihood will never justify the 20% brokerage fee I was forced to pay for a rent-stabilized apartment in Queens in 1987.
I went to the on-site management office of a large housing development to inquire about renting an apartment and was referred to a commercial real estate brokerage on Queens Blvd. The broker charged a fee of 20% of my first year's rent to rent the apartment, but did nothing at all to earn it. The apartments shown to me were handled by the on-site management office. The family-owned corporate landlord had a large administrative office in Manhattan, which is where I went for a vetting and an interview. And the lease I signed was executed in the landlord's management office, not at the broker's place of business.
I am convinced the fee I paid was largely a kick-back to the landlord, but of course I could never prove it. The new law will curtail sleazy practices such as these and I'm all for it.
24
I do feel bad for the many brokers who are going to be hurt by this law, and I'm sure most brokers do put in a lot of work and are good people, but as an recent ex-NYC resident, its hard to feel bad when all this law is doing is fixing a system where the economic incentives were all out of whack.
Under the previous regime, there was no incentive for landlords to negotiate lower brokers' fees, since they were simply passing on the costs to renters who had no market power in the face of a system where brokers fees were standardized regardless of the quality of service provided to the landlord and the choice was either renting an apartment or not. Landlords, however, have the collective market power to negotiate with brokers, and that is what this writer is worried about. Once they are on the hook for brokers' fees for the services rendered only to them, they aren't just going to accept the take it or leave it standard of 15% of the first month's rent (and those who think they can just pass that on in the form of rent will be sorely mistaken when more entrepreneurial landlords start pushing back at the standard broker fee). Brokers will actually have to compete and prove that they add enough value to the transaction to earn that 15% standard now.
Also, even if brokers are successful at holding their ground and landlords just push the cost through increased rent, being able to amortize that over the term of the lease instead of paying it all at signing, will help many renters.
16
I could never understand the broker's fee for any real estate transaction. They are all outrageous. Why are broker's fees set as a percentage of anything. As rents and the values of homes have risen, broker's fees as a percentage of the rent or selling price has remained the same. They make a killing on this system. Why aren't fees set as a fixed amount per sale. Do they work that much harder for a $1000/month apartment versus a $5000 rental. As Shakespeare says in Hamlet: "The lady doth protest too much, methinks"
18
As a NYC broker I was never a fan of the offical 15% fee. Yesterday I did open houses for 4 NYC rental units that we factored in the fee in the rental price. It's a 124% rent increase. Interesting observation that renters don't seem to care about the fee being not factored in the rent as long as the apartment is NOFEE. I and the customers agree psychologicly it is easier to handle the fee when it is hidden and spread out in the lease (not cheaper though). It was always hard to compete with StreetEasy no fee listings. Now I can have all of the customers ,since the monthly rent factor is secondary to most of them, as long as the apartment is NO FEE.
3
@Kirill - I would rather pay the fee over the years hidden in the rent instead of paying thousands of dollars up front. This way I at least get what I pay for, especially if I only live in the apartment for a year or two.
9
I work in a profession which is maligned and I provide a stellar and value-filled experience for my clients. Clients are extremely difficult and there are many barriers to finding an apartment, including business and industry experience, and I have been able to use my 20 years of experience and expertise to help countless hundreds of people find apartments they would not have otherwise found or been accepted for. How can your internet search compare to my 20 years of analyzing the apartment market and living in the same city? Does your internet search tell you which owners are best for long-term renters, which offer the lowest rate of increase, which are more flexible to pets, etc? Its amazing how many people reduce apartment hunting to an internet search. Guess what? The internet is nothing compared to personal experience. I have had countless people reject my advice and come back because they got burned because of a "good deal" they found on the internet. Every year people try to not pay after they love the apartment. Brokers are given no respect even though I treat my clients and landlords like gold. If you had to deal with the thousands of difficult, often unscrupulous, demanding people we deal with you would realize there is no amount of compensation in the world that is enough for what brokers have to put up with. I love people and helping people but when I tell friends what I go through they always say they could never do it. Brokers deserve respect.
2
@Lifelong Real Estate Professional
Fine. If your service creates demonstrable value for the renters, then they should be happy paying you a fee for your service. You have nothing to worry about. That option remains.
The issue being here is that the fee is forced upon the renter, who is given no option to select the broker or to negotiate the fee.
13
@Lifelong Real Estate Professional Listen, if I want to utilize your expertise to find the best apartment at the best value, I will hire you and I will pay you for your services.
But if I would rather do it myself and NOT utilize your services, even if it means not getting the best deal because I am not the expert in the subject that you are, why on Earth would you expect me to STILL have to pay you for that?
Could you possibly be more entitled?
2
@Lifelong Real Estate Professional Money talks, and you know it. Allow people to chose between your services / fees and the Internet search, and I bet n apple on a dollar your job will disappear, kind Sir.
1
Ms. Koenig starts out by saying she doesn't know where her family's next check will come from. I know: From a landlord instead of a tenant.
Matching would-be renters and apartment owners is a task onerous enough for most landlords to want a middleman. In a market economy, there is nothing sacred about which party pays the middleman. Like so many things, we make it up as we go along, based on who exerts what kind of influence on the rulemaking, and on what works best.
Charging the would-be renter is the norm, and has worked pretty poorly for a long, long time. Individual anecdotes aside, there are far more stories about rotten brokers than good ones. Let's change the rules to put that burden on the landlord and see if it works better.
Let's acknowledge that landlords will now will have to factor in this cost when determining rent. I like the idea of landlords, who control a scarce and thus expensive supply of housing, having to compete with each other here.
Let's acknowledge that brokers will also have to compete with each other on price and quality in offering their services to landlords. If they supply landlords with lousy tenants, that landlord will find another broker. Tenants don't have that option. I like having these gatekeepers to a scarce resource compete.
Let's acknowledge that would-be renters are at the bottom of the economic food chain, and support both landlords and renters. I like the idea of making it easier for them.
28
This needs to happen here in Boston as well to help control the price of rent. Landlords can essentially up the rent every year because they know if you leave, you will most likely have to pay a broker fee elsewhere. For a 2000/month apartment the typical broker fee will be one months rent of $2000. $2000 over 12 months is $167 a month, meaning you're probably better off staying in your apartment even though the rent was raised $100-$150. This doesn't even factor in the cost/hassle of moving.
Brokers will still make their money, make the landlord pay it.
13
Bottom line, there is no justification for anyone to receive a $4,500 fee to rent a $2,600 a month apartment that was already found by the lessee. The “broker” spent maybe an hour of his time, and that’s being generous. Sorry, no tears for someone who makes a living this way.
37
You opened a new window into the world, Ronnie. In so many areas, politicians of both parties like to make laws that shoehorn people into pigeonholes that don't fit. I hope this gets resolved to the benefit of all responsible parties and the to the detriment of the dishonest. But, that seldom happens. I would love to read your update. I live across the country and am in no position to help. But this sounds like restraint of trade.
2
@JustaHuman Most property markets do not have this fee.
5
We defend the oil and coal industries as well. We like old industries because people have jobs in them. We never expect adults to learn. We think they should be able to go through the rest of their lives never learning anything new. We do this because learning is habitual, and once you form the habit you can't stop and if that is who you are you might also learn that our politicians and corporate overlords are a bunch of sell outs and liars and that would not be good for them. What would they do for jobs themselves if the majority of people were functioning adults who continued to learn. I suspect our corporate overlords would tell us that down this path lies chaos. We will have chaos without these moral and just and generous corporate overlords.
7
Good points. I'm a good person and I want to collect a fee from people who want to be real estate brokers. My commision is 15 percent of their income for a year, making me a real estate broker license broker. To recieve my services, first pay the real estate broker license broker broker, who will only require 15 percent of annual income...
17
If the landlord pays a broker, that is a tax deductible business expense. It is not deductible for a renter.
35
Naive but world weary comments.
As a real estate professional I always refused rental listings. Sales only thank you. And except under the most unusual of circumstances only representing the seller.
Think the landlords will avoid all this big by using their property manager to rent? 😁 I have fifty years of key fee stories in strictly rencontroll buildings of their era like the Apthorp and Belnord wheretherewasalways a key fee multiple in cash.
Glad to have retired. Trump is a fitting legacy for this industry.. he loves to stiff brokers too or so he commonly bragged.
You can deal honestly in this business and and I closed over100M in transactions. But, was that easy? No. Did I find Rebny of any help ? Just another hand in my pocket. Brokers, it has long been apparent that our business is headed for the rocks.. The Dept. of State and Cuomo haven’t a clue either. They’re going to lose millions in fees and licenses. Have fun.
7
We should remember that the broker fees are high because they have no relation to the market. The LANDLORD hires the broker which the TENANT is required to use. So of course the fees are ridiculous when the tenant is trapped and the landlord pays nothing.
When I moved in January from Hell's Kitchen to another part of the city, I found a friend to take my apartment immediately after I moved out. So the broker and the landlord didn't even have to advertise or show anything, and the BROKER STILL CHARGED A FEE because the broker was contracted to show all of the landlord's apartments. This is the kind of nonsense this law is meant to correct.
So what we will see is that when landlords actually have to pay for the broker services themselves, the fees will be much smaller. Perhaps it will even go to a flat fee model, since the work showing a $1500 apartment is literally exactly the same as showing a $5000 one. In some cases they are even next door to each other.
If the broker services are as valuable as the brokers say they are, then they have nothing to worry about; the landlords will still hire them and the costs passed on to tenants some other way. But the brokers are indeed worried, and they should be.
50
@Big Cow
Every dollar spent is a dollar somebody is willing to throw down to rent an apartment. Since the agent can't charge, the landlord will.
It's basic Econ 101!
You're celebrating the fact that landlord will make more money. It's so obtuse.
2
Brokers who provide services that landlords don't want to do (like cleaning/showing apts and vetting renters) deserve to be paid and referred to accurately to avoid confusion and fraud (e.g. sales agents, salespeople, marketers). They should not be allowed to represent both the sellers and the buyers interests in the same property deal. No sane and fair industry allows this. It creates confusion, deception and fraud. It also gives bad brokers the room to create, inflate and subtly manipulate prices behind the scenes.
The system also seems akin to the restaurant industry, where owners do not want to pay servers a living wage so they offload this responsibility to customers via tips, which end up causing misery and uncertainty to the servers. The good ones in the middle running around have no power and will be squeezed if a system is unfair to begin with.
So the system benefited bad brokers and squeezed the good ones. Maybe its time to dismantle it.
11
The rental agent is doing the work that I, the landlord, don't want to do or can't do well. Why should my tenant pay the agent or broker? I hired him to look out for my property and deal with the headaches while I'm away.
36
The 15% brokers' fees were always outrageous and quite a scam for minimal work. Any brokers who relied on it deserve to go out of business and should find a more honest line of work.
26
Good try. Now negotiate with the same landlords with whom your loved obe has built painstaking relationships. I am sure they will be extra generous with you.
36
I don't wish financial hardship upon NYC real estate brokers, but the fact is that they no longer serve a function for most people, who can simply use to internet to find rentals, and are essentially just bilking renters for large sums of money. The new rule is a very good one which should be allowed to stand, although perhaps more warning should have been given. Ultimately, if your job is driving up costs for renters without contributing anything, than that job needs to be eliminated.
43
Ok, this is ridiculous. You say people use the internet to find apartments? Why is that apartment on the internet? Because a real estate professional has taken photos, written copy, and is paying a ridiculous amount of money ($6 a day on StreetEasy, $10 a day on Craigslist, and you don’t even want to know what The NY Times charges) to market that property!
3
@Amanda, Another Broker’s Wife - It is the landlord's property. If he would like an outside agent/broker to market it, then he can hire one.
When I buy anything else on the internet, do I pay the ad writer a fee? Of course not, that expense is on the seller. So if your husband wishes to continue putting apartment ads on the internet, he can look to the landlords for his fee.
2
I'm sorry but this op-ed is ridiculous. The problem is not that rental brokers are fat cats or parasites (my opinion), its that they are extracting large sums of money for almost non-existent functions from people, the majority of whom can least afford to pay them. I well remember my first experience of renting an apartment in NYC. For a $2000 per month apartment, I had to come up with first and last month's rent + $3600 in broker fees for an apartment I had found on a rental website. $7600 in down payments, almost half of which went for hardly any service whatsoever. It was then that I started calling brokers parasites and my opinion on them has never changed. And by the way, I want my $3600 back.,
64
@Sipa111
Whether the money goes to the broker or the landlord, then tenant will pay it. It's called supply and demand.
Macro Econ 101.
1
@Tall Tree Actually no, it is not.
The elimination of hardwired "rent-seeking" entitlements (i.e.: monies extracted without a reciprocal provision of goods or services) in any market nearly always reduces cost. If you had taken Econ 101, you would know that.
19
@Natalie
I got an "A" in Econ 101.
All the fees that are no longer being charged will be spread out in increased rents across the market.
You seriously think landlords will leave money on the table?
Why in the world would they do that? They've already been raising rents. Check out Streeteasy. I'm in the trenches. I know.
6
I am a real estate broker, although not in the NY residential market. While brokers technically should represent the person paying them, these days brokers just try to make a deal. They don't represent either side. They argue with the landlords that the asking rent is too high and argue with the tenants that this is the market and you should just pay it. Especially in an owner's market like today, they argue more against the tenant. The landlord should pay their fees.
20
Brokers' fees for just renting an apartment has been one of the great real estate scams going back to the late 1960s. And back in the day and even now landlords got a piece of those broker fees...it was a corrupt system then, paid by desperate renters. Glad to see this scheme curtailed. If there has to be broker fees, let the landlords pay them.
29
Isn't the issue that the work your husband used to do -- finding listings, getting landlord agreements -- is now mostly done by tenants themselves, using the internet?
When I lived there, we called it "key money." It was extortionate. Just like now, renters were finding listings in the Village Voice and only needed someone to unlock the apt for a showing, once -- hardly worth 15% of a year's rent.
When I moved to Venice Beach, it was such a relief to find a wonderful place in the canals and only have to lay out first, last, and a deposit, after finding the listing through a real estate broker who was compensated directly by the landlord.
I've also spent time building a career in a field (typesetting) that abruptly disappeared with the advent of desktop publishing, so I feel your family's pain, especially the very sudden nature of it. I hope you can both find jobs with decent compensation. But I hope those jobs don't involve gouging people who are already getting ripped off by housing costs.
52
@raph101 — Yeah, typography. I got wiped out in that one too. After 400 years, a highly skilled trade gets blasted out of existence during a three-year interval. And the new technology did almost nothing to replace the skills it was actually destroying. It just provided alternative access to equipment.
That taught me something about the notion of creative destruction. Check it out; sometimes it's just plain destruction.
3
Somehow real estate rental markets in other areas function without brokers and their large fees. No, Ms. Koenig you aren't shady, just an unnecessary "middle-man" who adds value only for the landlord (who, last I checked are cleaning up in NYC).
38
I saw someone say this the other day. Brokerage fees will be passed onto the tenant in the rent (fee/12). I am a small landlord (ground floor apartment in brownstone) and that is what I fulling intend to do.
7
@WMA Almost half of NYC rental units are rent regulated so these costs will not be just passed on to renters. Additionally, if you're passing on the full 15% you're not going to be competitive with other properties, since other landlords will recognize immediately that it costs nowhere near 15% of annual gross rents to market an apartment with vacancy rates that hover in the very low single digits and can advertise a rent 10% below yours.
I'm a landlord too, not in NYC, and we landlords always pay the broker. They work for us and we should pay them.
19
However, now that it will cost LESS for people to move in and move out, if your rent is uncompetitive, your will have vacancies via turnover. And the cost of turnover is higher than the cost of paying the broker fee as the Landlord. You will wake up soon on your side hustle.
5
@Big Cow
Those regulated apartments almost never change hands in Manhattan or Brooklyn. Folks stay until they die or pass down to kids. That's a moot point.
There are countless low-income NY'ers who are unable to find affordable housing because the amount of cash needed to sign the lease is exorbitant when you factor in the broker's fee. First and last month rent will eventually be used and a security deposit is returned (with interest) if the apartment is vacated in good condition. But the broker's fee is just an enormous amount of cash that feels like extortion. Pay or good luck finding an elusive no-fee apartment, even if you don't need a broker's services at all.
29
People spend years and thousands of dollars training for sustainable employment in a large city like New York. To obtain a real estate license in New York City it takes 75 hours of training and passing an exam (which in theory the training prepares you for). That's less than ten eight hour days. How many eight hour days does it take to become a college professor with a Ph.D.? If you own a hardware store it is your responsibility to find customers; why should apartment building owners be any different. I'm sorry for Ms. Koenig's husband but it's a flawed system and was due for reform.
43
@Doug Wallace
As much as I agree that it's a flawed system, your "hours spent training" argument is totally irrelevant to this discussion, and flies in the face of how the US economy is structured. Within a profession, sure, sometimes there is a direct correlation (Masters vs. PhD, for example) - but across professions?
Do we put a limit on Billie Eilish's royalties because that PhD holder may have studied longer than she has been alive?
Similarly with the hardware store argument, it's just nonsensical in it's irrelevance. If I wanted to find the best hardware store in the country, might I not wish to hire an agent to do that for me? People do that all the time, what do think a Personal Shopper or Concierge does?
What IS relevant is that the renter is compelled to use an agent, whether they want one or not. THAT is the flaw in the system.
1
I have little compassion for the writer. The real estate brokers in NY have been over compensated and have basked in the sun too long. A high percentage of a years worth of rent is too much. The NY real estate business has not self regulated themselves so perhaps now they suffer a collective karma.
32
"But as of this weekend, my family has no idea where our next check will come from because of this unannounced government policy enacted out of the blue that has left us — and many other New York families — blindsided."
I don't see how making landlord's pay for the services they hire affects the author's ability to get paid for doing her job.
27
Nobody will make brokers go broke. And brokerage fees are not "banned," as the writer claims. Apartment brokers work for building owners, so under the new regulation the building owners who hired the brokers will now pay the brokers. Brokers will still make their measly "$45,000 to $60,000 a year" only their employers will pay them. That's radical?
Is the writer claiming that building owners (I refuse to employ the feudal term "landlord") don't have the money to pay their employees? Really? Then don't hire brokers. Do it yourself. Or, if you own a building and cannot pay your employees, sell your property to somebody who knows basic business math - because you are in the wrong business.
https://emcphd.wordpress.com
35
@Rev. E. M. Camarena, PhD - I suspect Ms. Koenig's Luke makes more than that "$45,000 to $60,000" a year. She threw in that middle class number to play on our sympathies, but if that's what he actually makes, she would have specifically said so.
3
Brokers add zero value to the transaction. They should be paid accordingly.
16
@Troglotia DuBoeuf
I disagree. I have used the same broker to get tenants for my ground floor apt in my brownstone for 10 years now.. It has been invaluable to have someone do all the leg work that vetting a new tenet requires.
5
Then you should pay for the value the broker provides to you. NYers who spend hours each day scouring listings for a decent apartment and hours more setting up appointments with brokers who do nothing more than open the apartment door and hand them the lease to sign - they should not be paying for the benefits you receive.
36
@KK
This is the problem in a nutshell. Most renters have no idea what a broker actually does.
3
Living for 10+ years in NYC, I can confidently say that the only thing a broker ever did for me was open the door and email me paper work. I always found the apartments online, so paying an exorbitant amount for a being a "better super" is uncalled for. The landlords need to pay brokers, and the law needs to ensure that these costs are NOT charged via the rent to renters. Or limit broker fees for apartments $5000/month rent and up.
34
One problem with broker fees is that they create another barrier for people to find housing. But a second problem is that real estate broker jobs are, in many cases, illusions of jobs, with no benefits besides the occasional fee. Many, if not most, brokers are not treated as W-2 employees, but as independent contractors, even if they are affiliated with a name-brand firm. They work without pay for many hours, on "spec," in hopes that they will eventually make a match between the potential renter and a landlord or between buyers and seller. If they do seal a deal, they have to give 50 percent - or more - of their fee to the listing broker firm. If they have shared a listing, they have to split their half of the fee with the OTHER broker from a different firm, leaving themselves with a quarter of the original fee. Only the very top brokers involved in the sales of expensive properties do well, and even that is sometimes an elaborate illusion, as portrayed in a recent NYT story. For most brokers, "creative destruction" of this business could not come fast enough. Face reality and get a license or certificate in a skill that people really need.
14
It's an industry ready for disruption. The whole real estate system (not just the fees) is severely out of date.
15
The broker is a service to the landlord, not the tenant. So, why does the tenant pay a month's rent to the broker? I am having a lot of trouble here.
26
@ncmathsadist Because this is America. We always outsource our business expenses to the customer.
This is the same as saying that we shouldn't have universal, single-payer healthcare, because it would put all of those for-profit middlemen out of business and make our healthcare cheaper.
It's the same as saying that we shouldn't allow cars because blacksmiths might be put out of business.
Either something is right for society, or it isn't. But we can't keep something going that is wrong for society just because some people might lose their jobs.
Should we keep the coal industry going, even though it would eventually kill us all, simply so that miners can keep working?
Perhaps, Ms. Koenig, you should not have gone into this business in the first place, given that it's little other than a kind of protection racket. I am sorry you might lose your income, but when was the last time you expressed sorrow for someone who can't get a home because they can't afford your (mandatory!) fee?
66
Don't think landlords are going to go through the laborious process of screening prospective tenants. Tenants will still need to use a broker.
@A P - No, landlords will need to use a broker.
27
Or renters can hire their own broker that will represent their interests, not the landlords.
8
@A P
How do landlords screen, beyond doing quick online credit / background checks? What am I missing?
5
While anyone reacting to an abrupt (if absolutely just and overdue) change in fortunes deserves our empathy, one can’t help but think this is like an extortionate weeping that the racket is over. It’s been a long ride for this particular form of parasitism and the practice needed to end. I feel for you, truly but it’s unjust that the practice existed at all and it’s unconscionable that its inflationary vig was forced on a cowed public lo these long years.
34
It's a difficult place to find oneself losing you income. However I can remember my husband and I looking for an apartment and the agent playing bait-and-switch when he saw our faces. Then being told that we had to pay 2 months rent to get an apartment.
44
Coming to the defense of the broker business in NYC is bold. Why should thousands of New Yorkers subsidize your life? It was a quick change, and I empathize with the jarring nature of the law's passage, but it was long overdue. If your husband is that good and that earnest a broker, he'll still have plenty of work.
52
As a born and bred NYer who had to get out to survive, it's quite hard to shed any tears for those that chose a career in capitalizing off of a persons need to have a place to live, often to the tune of 15% of the yearly combined rent, for doing a few hours work. We should also enact policy that limits the profit a landlord can make to a fair metric based on actual costs and a reasonable profit. Housing should be a right, not a feeding frenzy for bloodsucking profiteers.
45
Many are commenting that landlords will
simply pass broker fees along to the tenants in the form of higher rent. But in reality, now that the person getting the service will actually be the one who has to pay for it, the exorbitant prices set by two parties who were either out for all they could squeeze (brokers) or who simply didn’t care since they weren’t paying (landlords) will fall to more reasonable levels. Because the landlord will only pay what’s reasonable for the work.
A broker takes pictures, lists the apartment online, shows it, runs a few credit checks. If the apartment is in good repair and priced reasonably, it will quickly find a tenant. Maybe the broker will do 10 or 20 hours of work all told. Maybe less.
Even if a broker was paid $100 an hour—a very generous hourly rate for a job requiring little education/ training—they’d get $1-2k per apartment, not the $9k they get for a typical 2-br here.
Many landlords will simply choose to do this work themselves, esp if brokers refuse to budge on these insane costs. And landlords with multiple buildings would be better off hiring a property manager to show places than paying a gazllion bucks per listing.
This lasted as long as it did because tenants had no choice. About time this parasitic practice came to an end.
Side note: hopefully this will also help end the disgusting practice of brokers gathering multiple applications per apartment and allowing the ll to choose which demographics they prefer.
45
@ae
Wrong. I'm a landlord in NYC. I've been renting apartments myself no fee for a long time.
Look on Streeteasy yourself.
Rents have increased substantially across the board since this new law came out last week.
Everybody now pays, whereas before only those who chose to did.
4
@Tall Tree
Then what’s the author so worried about?
Says you: The same landlords who won’t pay $50 for a minor repair until forced to, despite also having the same option of charging more in rent later to pay for that repair, will happily pony up thousands to brokers for their incredibly valuable work.
Says the author: Our rental-broker-fee income is about to crash, because landlords will not.
Says me: Let’s talk again in a year when the market’s had a chance to adjust.
16
@ae
The author is worried because her husband is a real estate agent, not a landlord. He'll
lose out on much of the commission that is now part of the rent.
Tenants will not all pay higher rent, since fees cannot be separated from the rent by landlords.
1
Brokers fees are outrageous both in sales and rentals. The amount of work they do versus the compensation they get is disproportionate. A .5 percent commission for rentals and 1.5 percent for sales is much more in line with fairness. The problem is the big companies take most of the money and the actual broker gets pennies in the dollar. That needs to change especially in light of the web based solutions.
13
@Blunt
The 45% of NYC renters who chose to pay fees did so for a reason.
It's more absurd for you to comment on the motivations of other people you don't even know.
But now all rents will go up to absorb fees that only 45% of renters had been paying.
Does that make you feel better?
It's seems like absurd injustice to me, and I'll profit from it as a landlord.
4
The reason we paid them is because apartments were all held hostage. No-fee apartments are typically luxury buildings with a different form of predatory behavior: insane rent increases at lease renewal time
27
@Tall Tree I’m confused. The law ends these fees where LANDLORDS CHOSE to contract with Brokers. 45% of people paid these fees, where many cleaned out their savings, because it’s nearly impossible to find an affordable and decent apartment in this city and they’ve had to make the difficult choice between one insanely priced brokers fee over another so they could have a home. But while we’re on the subject, since Landlords will be raising rent to offset this cost, I’m assuming they will be paying the full current market rate Broker fees. LOL, yeah right. And when they negotiate down those fees to a small expense but still raise the rent...they’ll be using that income to do repairs and improve their properties. LOL. Yeah, right.
12
Ms. Koenig, what you and your husband have encountered is typical of government entities attempting to do the right thing and end up creating all manner of unintended consequences.
3
@dmanuta
The consequences, as likely or not, were not unintended.
6
@dmanuta
The government here vastly improved the lives of people moving into new places, who no longer have to come up with first, last, cleaning deposit, AND 15% of the year's rent, all at the same time. Sure sounds like the right thing to me!
If the brokers perform useful work, they'll continue to be in demand by landlords. That's the immutable law of supply and demand the econ and finance types are always sawing on about, yes?
5
We worked with a broker who worked extremely hard showing us inexpensive (relatively speaking) studios all over Manhattan. She absolutely earned her fee - taking us out 3 times for hours at a time. And she went and checked out many of the places before taking us. Her per hour compensation was not very high. But she insisted on making sure we found the right place. We have enormous respect (and gratitude) to our broker.
21
@Steve M And this law did nothing to affect tenant-side brokers who the tenants are still required to pay, so...
19
@AE Yes, understood. Just putting in a good work for the tenant-side broker who truly earned her fee.
11
@Steve M her per hour compensation isn’t high because like restaurant servers, the public has been paying their salaries through gratuities. Only here the tip is really big and automatic. Meanwhile, the Brokers firm takes a big cut of that gratuity puts it in their pockets and still doesn’t pay a living wage.
5
I have no problem with brokers as people and I sympathize with those like your husband who will lose income as a result of this. But New York has been one of the very few cities in America in which *tenants* are responsible for brokers’ fees. It’s also a city in the midst of a housing crisis, where decent, affordable apartments are unavailable to so many. Paying a broker’s fee can effectively raise a monthly rent by hundreds of dollars and New Yorkers’ budgets are already beyond strained.
If landlords want to screen prospective tenants, they can pay the brokers. If renters want to work with brokers, they can decide to hire them.
23
I think the brokers are parasitic, just like the health insurance companies that other developed countries can do without. The fact that Luke has made a living at this is no reason to continue exploiting people in need of housing.
And I speak as a landlord in a city where housing has become unaffordable (though less unaffordable that NY). Our policy is to charge below market rents so as to have our pick of nice tenants rather than just the ones with the fattest wallets. And we don't raise the rent every year just because we can--in fact, we promise the tenant that the rent will stay the same unless we start to have wild inflation a la Weimar Republic.
We'll never get rich. But we're quite comfortable and we can look ourselves in the mirror every day. And we send some of the profits to Bernie.
56
@Martha Shelley You sound like the landlord version of Luke! Nice!
It shouldn't be "unusual" to find decent folks in these professions, but, unfortunately, this seems to be the case. My own landlord treats his tenants, his customers, as if we're the vermin...as opposed to the actual vermin in the building. He stints on staff and services, and the building is barely maintained. In order to make a change, I have to deal with brokers who certainly don't appear to care at all about my requirements or well-being and who want to hustle me in order to "earn" a "commission" on what will end up being my HOME. For this "service," I'm supposed to plunk down at least a month's rent and pray that I'm not ending up in another bad situation.
I have never understood treating potential clients this way, since doing business honorably would seem to be the way to build great word-of-mouth. But as the brokers really do work for the landlords anyway, this laughable pretense of servicing tenants should end, as should the fee.
P.S. Another heartwarming story: I approach a broker who's leaving an open house to ask a question...she says, "I can't even begin this conversation without your credit score."
5
I am sorry for almost anyone who loses their income but your opinion piece really sets my teeth on edge... If your husband's services are as valuable to the renter as you claim, then they are still free to hire him and pay a fee.
78
Sorry, but Luke sounds like the exception, not the rule. And I'm not running into too many sensitive, artistic types when I go into a real estate office to ask a question. Take a look at my comment in the "New York Today" section from Friday. I've been treated abominably by several brokers I've used. Plus, whenever I walk into an office to ask about apts. in my range, they literally laugh at me and make insulting remarks. It's not as if I have some fantasy of a $900 apt. with a terrace. I know what rents generally are, but I do see some things in my range online. There's no reason to be insulting or low class. Everyone I know has horror stories. Perhaps your husband works for a higher-end brokerage or for himself and is not involved with such annoyances as renters who are looking for something under $3,000 a month. (The vermin!)
I've been through the bait-and-switch. I've requested specifics, such as lots of light, only to show up to see caves. I've shown up supposedly for an appt. to view, when the broker actually had no appt. with the tenant and we couldn't get in. These are just a few of my stories.
I recently asked two co-workers who rent near me if they could recommend their brokers. They both said no.
It's disingenuous to pretend there are just a few bad apples and you have no idea where this notion of shifty rental brokers comes from. Plead your case to them. They're the reason for Luke's income loss.
38
Broker fees for rentals are outdated. But let’s have empathy for this woman and her husband. NY State should have given people warning and a phase out before it just ripped the rug out from people. Taking on a new career when you are older is a lot harder when you have zero time to prepare.
14
It’s hard when you’re used to making $1000.00 per minute and you get called out for it. I’m sure husband is really decent, but I’m sure a lot of the renters who had to pony up to him are as well. I bet a lot of young artists had to eat a lot of instant ramen noodles so hubby could have quality time with the kids and top chef worthy meals. All renters in NYC, especially low income renters live in daily fear of eviction or harassment from unscrupulous landlords and real estate speculators. You know this and you hitched yourself to this wagon. Hubby could have become a nurse or someone in the real helping professions. But alas that doesn’t work with his spirit. $1000.00 per minute did though even if it put others in precarious positions.
22
@Mike
Showing twenty apartments over Saturday and Sunday and making $2500 that you split with your broker is hardly $1000/hr, but nice try.
And I'm not a broker or and agent, just a landlord.
2
@Tall Tree No one is outlawing hard work and showing twenty apartments over Saturday and Sunday. In every other city that does not have the brokers fee, property markets do fine with hard working people there as well working really hard. Or do you believe that outside of NY, all real estate agents/rental markets/landlords must remain solvent and viable via magic?
So with respect, I feel you may be determined not to grasp the point of the change... which is your choice of course. Keep on keeping on.
3
I believe in free markets.
This intervention will backfire by increasing rents on folks who previously would not have paid fees.
While in college I got a summer job renting apartments in Boston. A real estate salesman's license was required, and all salespeople had to be employed by a real estate agency headed by a licensed broker. The laws allowed the RE agent's office to charge the landlord 5% of the total of the first year's rent as a commission . This amount was split 50-50 between the salesman and the broker. Brokerage fee for a $2000 a month rental, $2400. This amount was paid by the landlord for services rendered and was deducted from the first/last/security deposit.
It was a fair system: the salesmen did the leg work, the broker obtained the listings and paid any advertising costs, prepared the lease, and handled the money. The renter knew up front what the deal was.
6
It's hard to feel sorry for a broker lamenting where their next paycheck will come from when I basically had to give them the first two of mine to secure an apartment in the city. I was not wealthy, I was a struggling young professional who needed to be within commuting distance for my career. I wouldn't have minded paying a much more reasonable percentage, but they callously gouge you even when they are privy to your financial situation as part of the application process and know it will hurt.
Maybe if NYC brokers had been less greedy and more reasonable (say, charging less than 10%) they wouldn't have caught the eye of regulators and earned the hatred of the whole rental market.
69
"Of course, people often balk at his fee, which he insists on calling a commission. He gently reminds customers that the fee is his only income."
That is utterly ridiculous. It may be his only income, but it's not fair to make a tenant responsible for directly paying someone who is essentially the landlord's employee. If the broker's services are really worthwhile, the landlord can compensate them accordingly.
65
@Susan For real. If a guy begging for money in the subway said the same thing about it being his "only income", would we somehow become OBLIGATED to pay him? The entitlement of these parasites is astounding.
5
Sorry to say that market changes happen all the time to business sectors; they are natural and inevitable. When I began my career in the film business 30 years ago, the money was in features. Now that the internet has completely revolutionized the delivery of filmed content — sparking a platinum age of TV, forget golden — features are no longer practical, too few and far between. They are short stories versus the big meaty novels that are streaming series.
It's time for the rental broker to go the way of the travel agent. It was never the big bucks of real estate, anyway.
16
I see. So we're supposed to put this one family ahead of the hundreds of thousands negatively impacted by these fees?
42
@truth
No, all rents will go up because of this in NYC.
We will all pay, whereas previously, only those 45% of renters who chose to pay fees paid them!
Wake up and smell the coffee!
5
@Tall Tree Did they really choose, though? My impression is that these renters who didn't directly hire a broker themselves paid fees out of necessity, not choice.
14
@Susan
Alot of apartments are no fee. Some are one month rent upfront.
Others are 10-15% depending on neighborhood. It is not one fee for all units. Agents look at neighborhoods, tenant's ability to pay, and a host of other deciding factors to qualify a renter. A lot pf times the agent is a tenant's best resource to get into an apartment.
1
Apartments cost what they cost because of the market, and that’s going to be true whatever the structure of payment. Landlords will still need brokers and brokers will need to charge the landlords the equivalent of their tenant fees. Then, landlords will pass the cost on to tenants through rent increases. What was once a one-time hit will now be stretched out over monthly rent checks, benefiting short-term renters and people who can’t afford the fee, but hurting long-term renters who will pay more over a number of years.
imo we should be prioritizing long-term renters who make up the civic heart of New York neighborhoods, but this change does acknowledge reality. The service of brokers is to the landlords and, moreover, much of New York is made of young people moving here without a few thousand dollars of savings.
3
Very few broker’s actually charge a 15% fee - it is typically 1 month’s rent (ie just over 8%). It’s not nothing, but it’s rarely the 15% everyone is quoting.
And for those who argue “I found the listing myself on StreetEasy, why should I pay a broker??..” - who do you think made, posted, and *paid* for that listing to be on StreetEasy for you to so easily find?
7
@Austin
Rents will go up to compensate, but I don't think brokers will get most of that increase. This law has mostly shifted income from brokers to landlords. Overall it's bad as well for tenants since rents will be higher and in essence everybody will be paying a fee.
5
@Austin
Thank you!!!
Renters don't realize we have to pay $5 a day to post the listing.
When I was looking for my first apartment in NYC, I tried to find an apartment in this neighborhood without a broker. I was 20, still in college, and I remember doing a lot of legwork. When I was decluttering recently, I found a notebook I'd kept where I had cut out listings from the Village Voice and taped them down. I had notes about when I'd called, who had returned my calls and the meetings I'd had with brokers. What struck me, now that I'm double my age, wasn't just that I had this weird, super organized artifact, but that I had put a lot of time into finding these listings myself and meeting with a variety of brokers.
Only one broker showed me more than one apartment, and she worked for Steve Croman. She knocked her price down to "only" 12%, so she got $2376 for meeting me and showing me two apartments. She wasn't working in my interest. She never disclosed that her boss was my landlord. When I saw the first apartment, which had a hole punched in one wall, I said that I didn't think these were really good listings, and she gave me a line about how I didn't know enough to understand what I was seeing. While she said that she'd help me find a roommate, she didn't return my calls after she got her fee. The apartment I moved into had been rented for $110 a month, and Croman was suing renters to get them out and renovate. She didn't disclose that, nor did she disclose that there would be construction for the next year in the building.
51
If the brokers' services are really necessary, making the landlord pay will not reduce the rent - landlords' cost will just be passed on. If rents don't go up, it will indicate that the services are not really necessary.
7
@skeptonomist
It will hurt brokers and tenants.
Landlords will be fine.
1
Brokers will go out of business. Tenants will be fine as well.
3
I do not remember brokers when we lived in NYC, and I don't claim to understand all the issues here. that said, this law was announced in June - which hardly seems like an 'overnight' change.
More to the point, I am surprised by the tone of this piece. I'm sure the author's spouse is a very nice person. I don't know his prior employment or his creativity are relevant to the issue. And, I'm just astounded that there are kids' cartoons that feature this NYC-only job of being a broker.
11
"But as of this weekend, my family has no idea where our next check will come from..."
I will come from the landlord - the person your husband is working for. Or from the tenant that directly hires your husband. Or it won't come at all. The way it should be.
35
So is the author arguing that renters ought to pay the broker fee even though they may not need to just so that some people can make living off that fee? I don't need a broker to rent a place in a vast metropolis like LA, why should it be otherwise in NYC which is much smaller place and so much easier to go check out rental places taking the public transport without having a broker chaperon me around? If someone finds a rental through online ads why would that person pay a fee to this author's husband? Shouldn't he find another line of work utilizing his interesting personality instead of trying to make a buck off the renters who are hard pressed to marshal the cost of a move in?
30
"When I heard the news about New York City regulators suddenly banning brokers from charging a fee to renters, I was shocked, and not in a good way."
When I moved to NYC more than two decades ago and engaged in my first apartment search, I was gobsmacked to discover that as a renter I was expected to pay the broker fee. I'd lived in cities in California and Texas, and had not encountered such a ridiculous practice before. In those cities, brokers collected the fees from the landlords; in NYC, I quickly discovered, landlords and brokers had set up a rapacious system designed to bleed renters dry.
Forgive me for not having much sympathy for those standing up for a system completely out of line with how things are done everywhere else.
46
Just because your story is sympathetic doesn't mean that this industry should be structured this way, or requires this many brokers to take the money of people seeking apartments to make the market work. We can all find stories to back up a particular position based on anecdotes.
With this change, we might see that the market for rental places works just as well through a consolidated listing system instead of 1000s of brokers who keep lists for themselves. And the market would change. And lots of people (renters, landlords) would save money. Maybe some brokers will need to stop being brokers and try some other job.
I have no doubt that some brokers will still make money in the future. You're just upset that it won't be you in particular.
15
You folks should look at Streeteasy right now.
Most asking rents for apartments that previously had been listed both "fee" and "no fee" have been increased substantially. For example, $2000/mo apartments are now asking $2300/mo.
There is no question that the DOS just increased market rents for everybody, whereas previously, overall rents were lower, and only the 45% of folks who chose to rent "fee" apartments, paid fees.
If you think this is unfair, please vote Republican straight down the ticket at the next local election.
The "Socialist Dems" running NYC are destroying it from the inside out.
2
I’m sorry, this is simply not possible. Most apartments are rent-stabilized which means increases are strictly regulated, plus the rent cap is well over $2000/month before more lax market rate laws kick in. In any event, landlords should pay brokers for the service of finding suitable tenants. That’s the way it is in most cities.
13
@Tall Tree
Nearly everywhere else in the country manages to get by without NYC's byzantine real estate practices. I'm sure you'll adjust.
9
That’s their asking prices, it doesn’t mean they’ll get it. The market forces will determine rent just like before, only this time the landlords will factor in broker fees as a cost of doing business like any other normal business would do.
They can ask for more. And renters can negotiate. That’s how business works.
9
Here's another way of looking at things.
For a $4,000 per month apartment, the broker's fee, paid by the tenant, is about $6,000.
For a million dollar house, the broker's fee, paid by the seller, is about $6,000.
Brokers in New York simply out-priced themselves by a factor of about ten.
Here are two suggestions for your husband:
Sell apartments and get the commission.
Become a "consultant", and for a fixed fee, educate prospective tenants about New York, its neighborhoods, transportation and schools.
The current system discriminates against people without much money saved up, meaning mostly minority people.
27
@akamai
"For a million dollar house, the broker's fee, paid by the seller, is about $6,000."
No. 6% of a million is $60,000.
20
I think for a million dollar house the fee would be 60000. The fees are so high because the average broker might sell one or two houses per year not because of the intellectual and physical effort. That is the beauty of rent seeking and transactionalists.
3
@akamai point of information: with regard to sales commissions, you are off by around 1 order of magnitude. You’re comparing apples to oranges.
I am a landlord in NYC but in the past I have also been a renter.
It is true that a broker plays an important role and if I have an apartment to rent, I would rather use a broker than have to manage this process myself. It is a lot of work.
But fundamentally, this service is to the landlord, to save his or her time, and it is a cost that should be bourne by landlords, especially in an age where most listings are widely available through sites like the NYT and STREETEASY.
Requiring renters to pay agents a fee of 12-15% of yearly rent is unfair and predatory, especially in NYC. I am happy to see this practice abolished, even though it means that landlords like myself will have to shoulder some additional costs to save our time and rent our empty apartments.
142
@Carl
You don't sound like a landlord, and I'm a landlord too.
Only 45% of NYC rentals had a fee. The other 55% did not.
Now rents are all going up to compensate for this new law. The majority of fees collected were for expensive apartments that rented for thousands of dollars a month.
If people were willing to pay them previously, they'll be willing to pay them now. But the difference is that everybody will pay more, not just those 45% that chose to.
2
@Tall Tree
"The majority of fees collected were for expensive apartments that rented for thousands of dollars a month."
Yes...doesn't that describe every single apartment in New York City? Can you rent anything other than a cardboard box for under four digits?
12
@Susan
I rent apartments every month no fee. People choose to pay a fee for certain apartments.
Respectfully, your husband’s income should come from the people he works for - the landlords.
That brokers have been able to create a situation where the people paying directly for the service is not the ones who engage them, direct their activities or make decisions based on their input is nonsensical. As you point out, part of the brokers’ job is making relationships with the landlords, so they will keep hiring the same broker when they rent apartments in the future. But the cost of that relationship is paid by someone who has no option in the matter.
At the end if the day, tenants are still the ones who will be paying the brokerage fees, assuming that landlords still value the broker services when they are the ones who have to write the big check when the lease is signed, not the tenant. But making the landlord a direct participant in the transaction means that the person who decides about the service will at least be the one fronting the brokerage and then being reimbursed monthly thru rent.
35
@JM
If you have the right to tell her where her husbands income should come from, she has the right to tell you the same thing.
We don't live in Venezuela. In America we have a free market and it's been better than in economic system ever in the history of the world in terms of affording average people the ability to move up in the world.
These draconian regulations that limit free business practices in the NYC rental market will have huge negative consequences for most people.
Rents will go up and it will be much harder to find an affordable apartment because of these crazy new regulations that Socialist Dems are passing willy nilly.
There is actually no need for this to affect your husbands business. He can still operate as a search agent for prospective tenants and contract directly with them. He could charge a flat rate for searching on their behalf or a finders fee for finding them a place they ultimately go with. There are tons of people that move to NYC and are unfamiliar with the neighbourhoods or don't have the time to search for a place themselves. I'm sure your husband is a good man but by your claim that "Of course, people often balk at his fee, which he insists on calling a commission." it sounds like he arrangement with clients wasn't always as transparent and upfront as it could have been.
44
Nothing is free. To be honesty renters paying a fee to a agent is not uncommon.
But the logic behind the legislation is all too common. Especially in center of Socialism like NYC. Remember that the only thing that really matters to the politicians is getting re-elected.
4
Renters paying a fee is only common in NYC and Boston. Nowhere else.
15
@John Hay
I paid a fee to an agent when I rented in Worcester 15 years ago. And Worcester ain't Boston.
The logic is that the one receiving a service should be the one paying.
Being a landlord is a business, and having broker is a form of marketing and legal assistance in processing tenants.
A landlord can even deduct it from their tax burden as a business expense.
Socialism this is not! It's freezing up the market to see what landlords think brokers are really worth.
9
15 years ago we used a broker to get our rent-stablized apartment. It was very a very worthwhile investment . It was a month and a half of rent- so we had to have 3 and a half months rent to get it.
I had called him about a listing for another apartment, and after listening to what we were looking for, brought us to see another apartment, which was perfect and had just become available. His agency handled this building. It would not have been listed anywhere. And we didn't know of theis neighborhood. He then helped us with our application (including bad credit of one of us) and we got the apartment over another person applying. We got lost on the way to his office and were very late, and he still took us out to see apartments, also.
That's my one an only experience of using a broker. I remain grateful for his assistance.
NYC is going to remain expensive, I don't know if suddenly cutting out brokers is going to make a difference in the big picture. And there should have been at least a 6 month notice of this policy going into effect- it's not fare to pull the rug out from people like this.
8
@lkos your experience sounds great. you hired a broker to find you an apartment and the broker provided a service to you and you paid him for it. the law doesn’t prevent renters from hiring brokers. it prevents predatory behavior, like when renters find their own apartments and have to pay a broker because the landlord doesn’t want to (or can’t) take the time to manage the rental. in these cases the landlord hires and should pay the broker, not the tenant. brokers can still earn money. the law just shifts the financial burden from renters to landlords. landlords profit from owning their rental properties and hiring a broker is part of their cost of doing business. if they want to pass that cost on to tenants, they can try raising rents and see if the market will bear it.
16
Kudos to your husband being a nice man but that has nothing to do with whether this was a good law change or not. There is no reason for a tenant to pay the fees of a broker hired by a landlord to rent the landlord's property. This should be the landlord's cost. If prospective tenants want to hire an agent to search on their behalf and pay him to do so, they can still do so.
58
When I rented my apartment 30 years ago, I called the number listed on the building's plaque and arranged a time for the super to show me around. After seeing the apartment, I was then given an appointment with the agent. I sat down, signed the lease, and wrote a check for 2 months rent. This took about 10 minutes, after which I wrote another check to the agent for $1000.
He had neither found the apartment for me nor showed it to me. But his minimal amount of work was supposed to be worth a thousand dollars. No wonder New Yorkers are happy to see the agent fees become a thing of the past.
153
Nothing is more satisfying than paying a broker a non refundable fee and then not getting the apartment.
How is that even remotely legal?
28
@davey385
That shouldn't happen ever.
Brokers fees are services to landlords not tenants, thus they are tax deductible for the landlord and not for the tenant. An even more obvious reason that these fees should be paid by landlords.
53
Who cares if the landlord pays the fee and passes it on to their renters? At least the arrangement will make sense. My experiences were always the same, I paid a huge fee to someone who worked for the landlord, not me.
31
If tenants thought that real estate brokers provided a valuable service, they would hire and pay them. They don't. That should tell you all you need to know.
I don't care how nice and smart your boyfriend is: if you want to make money, you should have to offer something the market finds valuable.
67
Isn’t New York the only major US city in which brokers command fees of this sort on a widespread basis? Having rented a bunch of apts there, all in the age of trulia/streeteasy, I never have felt brokers added much value to my experience. Definitely not a months rent worth of value. While I actually am nervous that NY lawmakers are passing tenant-friendly laws Without thinking through their consequences, this one doesn’t trouble me all that much. The analogy to taxi cab medallions seems apt. An expensive New York quirk that we’re all better off without.
And as someone whose soul is routinely crushed by my white collar office job, I don’t think providing employment to generically sociable would-be writers is reason enough to spare this profession when technology has claimed so many others.
67
Everywhere I have ever lived the seller/landlord pays the fee. Brokers survive in those areas just fine. People will adapt. This is the correct approach and should have been done a long time ago.
59
I am sure that your husband is a nice man but in the same way so many other jobs have disappeared or morphed into something very different in the last 20 years I'm afraid that now is the time for his profession to take it on the chin. From the viewpoint of most if not all of the people who live in NYC it should have happened a very long time ago. Greed, yes greed is what made this happen. The 15% fee of annual rent is highway robbery. Your husband might be very involved and puts in long days but how do you justify him getting $9,000 for renting a great $5,000 apartment that goes in a week or less because it's in a good neighborhood? Most brokers are not nice by the way so if the handful of nice ones get punished by losing income it should make them consider if they ever should have had this job in the first place. There is no justification for a business model that exploits the needy and doesn't allow for options.
The fee is only eliminated for rent regulated apartments so the other half of the market is still there for the fleecing. There is also nothing prohibiting brokers charging a service fee to the landlords but of course it will have to be more in line with the value of the service performed.
Just because your husband's name means king doesn't make him one.
71
I don’t see how renters will save money under this legislation. If landlords will now have to pay the brokers their fees, why wouldn’t the landlords proportionally increase the monthly rent they charge to make up for these additional expenses?
4
@Renee Silver They might and the goal of the law isn't for renters to save money. The goal is transparency of fees and to make the markets more open to competition. Landlord's can hire the broker they feel will best serve them and pay that fee, tenants can hire a search agent and pay that fee or do the searching themselves. Structurally, the rental market is much different than decades ago and most people now do their own searching online so it can be argued that a broker hired by the landlord adds very little value for a prospective tenant.
14
You should also consider cash flow. Paying that cost in small increments over many months is ideal over having to pay lump sum for most people.
I’ve rented apartments in a few major cities and this is the only one where I had to pay up front a significant lump sum amount for someone who only handed me standard paperwork and unlocked a door to an apartment.
16
@Renee Silver
Maybe, but not for stabilized apartments.
3
I feel for the people who might lose their livelihood over this and I have no doubt they have expertise and work hard at what they do.
That said, it doesn’t change the fact that the whole industry is unnecessary and built on the scam of needing to hire someone to obtain access to something which should be available on the free market. Every other city in America has done just fine without these middlemen, and it’s about time that New York because more free and more fair without them.
175
I'm sorry but rental brokers do nothing more than parasitize the real estate market...they add tremendous costs to renting with no benefits that I can see? Or can someone explain to me what value they bring to me, as a renter for the tremendous costs they impose?
89
He may be a great guy - and he sounds like he is, lucky you! - but this is about a fundamental shift in the real estate industry whereby customers don’t have to pay thousands of dollars to someone who takes them to an apartment they likely found themselves online. Snapping photos and writing 10 lines about an apartment simply does not merit thousands of dollars in fees.
85
Don't take it personally. It can cost over $8k to move into a $2k a month apartment in NYC when you factor in a $2k fee. How is anyone able to afford that? You seem to have an outsized opinion of how much money people actually have. Landlords should pay this fee. I doubt they will quit renting their places out.
67
@John - In principle I agree, but I doubt that many landlords will pay this fee without passing the expense on to the renters.
3
@John “I doubt they will quit renting their places out.” No, first they will just raise the rent to cover the fee. But if they can’t recoup their costs then of course they will stop renting it out and instead sell the unit. And you can be sure that people who currently own condos and coops in New York who would like to rent out their units are thinking two and three times first, not just because of this new law, but because of all of the recent regulation that gives landlords precious little control of their property. Why take such a huge risk? Invest in something else that you actually own. That’s what I am recommending to my friends in New York.
1
It's fine to say that the landlord should pay the fee, although let's not pretend that won't be passed along in the form of a rent increase (at least for those of us not lucky enough to have rent control or stabilization). The problem is that they did this overnight without any vetting or clear legislative authority, completely upending an entire industry. It's not how changes like this should be accomplished.
7
@Sara Even if you're still paying the fee as a tenant, would you rather pay it in full, up front, when you move in even if you move out in 3 months, or would you rather pay it spread out over time, only for as long as you're living in that place?
1
@Sara
The change was announced 8 months ago.
The law is not about making realtors' business illegal. It is about limiting the unfair practice of landlords passing over the cost of a service they need directly on to the tenant. If the tenant feels they need a realtor, they are allowed to hire one. The landlord is the de facto client and the contractual obligation is between the landlord and the broker. So how come is it proper that the tenant gets the invoice? When the party that signs the contract with the broker also pays their fee, the price of the service gets determined by the market, as in any other transaction. Why should this business be an exception? Services that are not directly necessary for the well being of the public should be governed by market dynamics - which is sometimes achieved through regulation. That said, the law could have been rolled in a little slower. This leaves a lot of people scrambling.
37
New York is one of the few cities in the United States where you have to pay a broker a lot of money to rent an apartment which the broker played no role whatsoever in helping you find. This scam has been going on for decades, and I refuse to feel sorry for the brokers who will no longer get the money. When I moved to the city in the 80s, I had to pay the broker a month's rent to get on the lease in place of the previous tenant from whom I had gotten the apartment, something that took five minutes with the landlord in every other city in three countries in which I have ever lived.
146
Its very simple. If the services of the agent are so necessary and essential then the landlords will be happy to pay the fees and your husband has nothing to worry about. But I don't think that will turn out to be the case. I think the reality is that the situation was brokers and landlords tacitly working together, taking advantage of asymmetrical power to raise the overall cost of housing. Which is then paid by the renter. Im sorry for your husband. Im sure he is a good person and i wish him luck in a better field
94
It’s not true that these laws were inacted “out of the blue.” As others have pointed out, this was decided last June. These broker fees have always been unethical price gouging. Your partner made the decision to participate in that unjust scheme. It was naive to assume that New York would put up with it forever. Many people change careers over the course of a life. Sorry not sorry.
102
@Ja
Untrue. The 2019 rent laws did not mention broker fees.
I'm a landlord. I've read the laws. The mention fees charged by us, not brokers.
Anyway, everybody is worse off now. This stupidy combined with looming "just cause" (aka rent control) is reducing the supply of apartments in NYC and jacking rents.
How is less supply and higher prices good for the average person?
Please vote the Socialist Dems out!
Perhaps there could have been more notice, or a phase out period for the industry and brokers to adjust to the new reality. However, having rented in NYC for a long time (and having worked at a large agency years ago), it simply doesn't make sense that a renter pays a large fee to cover the work the broker did for other potential renters. Yes, the broker does do a lot of work showing to many potential tenants, and this is why the landlord should pay, not the eventual renter.
Furthermore, as a renter it's not like I can look at an apartment online and then "shop around" for a broker to then show me the place. Now with landlords paying the fee there will be actual competition among the brokers to provide the best service at the most reasonable price. That's an actual market: the people receiving the service can pick and choose who to do the job based on cost, recommendations and services provided. This how it works for other services landlords routinely purchase (repairs, maintenance, building porters). When tenants pay they fee, there is no market.
I don't begrudge your husband, but the rental fee system has been distorted for a long time and it's time it became aligned with market ideals. I'm sure he'll do well marketing his competent services to landlords. He may need to innovate and compete, but that's also what a true market is supposed to push forward.
46
Seems like this might hurt tenants in the long run.
A one time fee versus an increased rent potentially lasting for years of occupancy sounds like it could be a much better deal.
3
@Bronx Jon
Of course, but logic is not the strong suit for Socialist Dems.
"If it sounds good, do it." seems to be their motto.
Vetting prospective customers? Is it too cynical to think that this is a way of letting landlords off the hook for certain choices?
6
@Cloudy How is the landlord let off the hook?! If I get a bad tenant who trashes my home or refuses to pay the rent, how am I off the hook?? If fact, I am the one putting my property at risk, not the lawmakers and certainly not the tenants.
2
@Carole To be explicit, it lets the landlord off the hook for racial or other forms of discrimination, because they can and do claim that the broker was the one who initially screened the tenants and therefore the one responsible for rejecting blacks, immigrants, families with children, etc.
3
I understand your personal dilemma with this change, but the best answer has to be that the landlord pay your husband’s commission for the work he’s doing, not the tenant.
Also, I think your husband has a responsibility to more thoroughly vet the condition of the properties he shows to potential tenants. I know this first hand because he was the broker showing my apartment to clients when we were moving from Brooklyn to be closer to family.
We shared our concerns with your husband about the landlord’s neglect of major repair issues in the bathroom of the apartment, but didn’t seem concerned about them and called them “cosmetic”. If he had taken an interest in hearing our experience with the landlord’s failures in making lasting repairs, and of the landlord hiring sub-par contractors who did quick, cheap and shoddy work, he could have taken the opportunity to seek assurances that the issues would be fully addressed by the landlord for the next tenant and not risk letting the landlord slap up some paint to cover over the stagnant water stains and the mold growing through the seams of the sheet rock in the bathroom ceiling.
I’d certainly want to trust that a broker I work with is looking out for my experience as a renter over preserving their relationship with the landlord, especially if the tenant was going to be on the hook for the broker’s commission. Unfortunately, your husband’s behavior in our situation didn’t do much to build my trust in the profession.
238
@Former Brooklyn Renter Great point! If landlords have to pay the agent then it will be by the hour and not more than $20 since all it takes to be an agent is to take a $400 course and take an exam. Large companies already manage and handle rentals by paying a salary.
9
Every two years, all and I mean all, licensed real estate agents MUST take a Fair Housing continuing education course in order to maintain their license as required by the Department of State. These agents are a Silent Army that work on behalf of the consumer to protect them from Landlords who might take advantage of them. Landlords know that agents are required to protect renters. Further, Landlords appreciate agents performing the proper vetting for them on prospective renters together with the proper marketing of the apartments that Landlords want to rent. The very same Department of State, that in pursuit of protecting consumers by this guideline, will, in the end, degrade the very protections that they desire for consumers by reducing the number of agents that can meaningfully earn a living.
3
@Howard
Howard, thanks for your brilliant message. Would you mind clarifying a bit? What proportion of licensed real estate agents did you say needed to take a continuing education course every two years? I had trouble following your explanation of this complicated math. I wonder if you could also help me understand the way in which a requirement for continuing education classes provides evidence that brokers are something other than parasites, or that that the brokers do anything recommended ("taught") in the continuing education classes. Also, can you help me understand the way capitalization is used in the English language? I always get mixed up between English and German, and your prose seems very smart in this regard. Thanks!
12
@Howard
If brokers' are as valuable as you say, then landlords should pay them.
10
Brokers will go the way the taxi medallion did. I for one find this refreshing. This should have happened long ago.
145
@Jose
De Blasio is bailing out the taxi guys. Think he'll bail out brokers too?
Somehow I doubt it.
@Tall Tree
I agree. He will not bail out the brokers. He shouldn’t have bailed out the taxi drivers. Landlords will not pay these high broker fees that tenants currently pay. Landlords also have lots of new rent regulations to abide by. IMO someone clever (not me) will come up with the Uber version of the broker. The broker will not go extinct, but will have a much smaller footprint in NYC.
2
@Jose
Maybe, but unless zoning is changed to allow for massive new housing projects, or rent stabilization is ruled unconstitutional, there's always going to be a shortage of available apartments for rent in NYC, especially at "affordable" prices.
Trying to legislate better prices will only backfire and reduce available housing.
I don’t agree. Landlords will still need sales people but now the cost will be paid by the building owner and the cost absorbed into rent if the market allows for price increases.
14
Which is exactly how it’s supposed to work.
@Prudence Spencer IF is the key word there.
The problem is that brokers provide a service for the landlord, but charge a fee to the renter. When I lived in New York, even if you found an apartment listing yourself on Craigslist, you still had to pay a broker because landlords always had an agreement with a broker that the only way to rent the apartment was to go through the broker. This is different than if the renter specifically hires a broker to find them an apartment.
115
@Brian Schmidt
Your first sentence hit the nail on the head. I think the next progressive step for NYC is to ban all tipping in bars and restaurants, and adopt the European model. If I decide to dine out, I am required to hire the waitperson to serve me the establishment’s fare for now 25% of the tab? (It is a fairly well known fact that most bars in NYC are owned by former bartenders that amassed their largely untaxed investment capital through their tips.). Let the owner pay the servers the same as he pays the kitchen staff.
4
@Brian Schmidt
No, in NYC, it's very hard to find an affordable apartment.
Brokers provide that. . . for a fee.
Even though I no longer live there, I celebrate this change for the renters of New York. If your husband is as resourceful and diligent as you say, he'll land on his feet.
53
If they were notified of the change in June that gives ample time to hunker down cut expenses and prepare for the law to take place. As for not knowing where your next check is going to come from is a scary feeling but that's why you save for situations like this. Every industry faces change at different times. Look to adapt by possibly selling property rather than focusing on the rentals. Best of luck, true NY'ers don't play the victim card they find a solution. Keep moving - Stay positive.
26
No one likes to see someone's job uprooted but this one is simple...if the service is of value then the Landlord should pay not the renter.
67
What the law tried to curb was the excessive fees not by brokers but by landlords or their management agents. For which nothing - nothing! - is done for either side. Yet, the same interpretation of the law that tries to eliminate broker fees payable by tenants now allows the collection of fees from management companies, condos and co-ops. Here is the list of fees from one of Manhattan's condo buildings for a one year lease (First Service Management):
- Move Out Deposit $1,000.00
- Move Out Fee $500.00
- Digital Document Retention Fee $112.50
- Application Processing Fee $650.00
- Move In Deposit $1,000.00
- Move In Fee $500.00
- Move Out Deposit $1,000.00
- Move Out Fee $500.00
- Consumer Report Fee $75.00
Insanity, even if we assume that the items marked "Deposit" may be refundable.
30
@Thomas That looks a lot like a scaled-up version of what our building charges. Those fees are mostly set by the co-op, not the management company, and they're meant not only to protect the co-op from damage when people move in and out, but also to discourage owners from renting out their units. There are probably an equal-but-opposite set of fees for the owners of your apartment that is built into your rent.
Our co-op doesn't have a limit on how many years people can rent built into the bylaws, and we've started upping our fees. Renters aren't more like to be nuisances than owners are, but we want people who stick around for years and will literally live co-operatively with us, especially since we're in a neighborhood that attracts a lot of young folks who want to have a good time but will move out in a few years. In addition to wanting stability among our neighbors, if more than a certain percentage of the apartments in the building are subleased, it can become more expensive for new owners to get mortgages.
2
@Brian
The fact is, however, that a coop is technically a landlord (as you only have a lease and own shares of the corporation that owns the building). Therefore these fees are illegal as well (or capped with $20) and it is this type of fee the law sought to eliminate. There is no mention of brokers in the entire law whatsoever.
1
@Thomas
I suggest cleaning up your comment. There are several errors, e.g., "collection of fees FROM management companies".
It is nice for you and your husband, that he has been able to provide an income for many years as a broker.
But in itself, this does not legitimize the unethical and socially unjust aspects of his profession.
I grew up in a major European capital, in a country where it is explicitly illegal to charge fees (beyond nominal amount) for connecting prospective renters and landlords. The rental market is thriving. There are other ways of insuring the integrity of transactions on the rental market than having a middle man extract exorbitant fees from mostly non that well off people in dire need of roof over their head.
189
I sympathize with the writer and her family, but I have to point out that in our experience, Luke is an anomaly in the world of NYC real estate brokers.
When my wife and I first moved to NYC, I met with a broker who handed me a key to a couple of apartments in one brownstone and, except for writing him a hefty check after we rented one, that was the extent of our interaction.
I agree with many of the commenters that it makes more sense to have landlords paying a middleman to represent their interests.
86
For renters, broker fees are approximately 15% the first year's rent. A two-bedroom apartment that rents on the free market for $5,000 has a fee of $9,000. I have never seen brokers as doing anything to provide anything near that value. It is a weird, antique system that no other major city seems to need.
316
Assuming the wife is correct the average broker is making 60000. So assuming an average rent of 3000 you would have to fill 20 apartments per year to make that. That leaves a huge amount of time free. I think there are way too many brokers chasing too few fees. Most of the time is spent courting landlords to get listings so the sheep can be shorn. That time is self marketing an the authors piece sounds like it.
11
@Reader
When I sold my house, I think the commission was about 6%. A house! With the myriad of showings, negotiations, paperwork, etc. A 15% fee for an apartment rental seems excessively high.
14
@Reader The $9,000 is for blocking VETTING as she states in the article and NOT allowing for certain tenants for entering the neighborhood Luke is "representing". What about that couple today that tries to get a foothold into an apartment in NYC? She and her hubby got into an apartment with free furniture for nothing!
4
Nobody except civil service and union members have a significant measure of job security. Until recently, I worked for a large firm which moved our group to a lower cost state. Many of us were out of a job at that point with very little notice and a number of us, me included, are still unemployed. You have my sympathy but many folks are in the same boat. Like the rest of us, you need to move on and find something else. The real estate market is tight and the government is not wrong to protect the public but that said, there are seldom any perfect solutions. Someone always seems to get the shaft. That might not be right but that's the way it is.
29
I have lived in the same house since 1984. Three bedrooms, one and a half baths, large open fireplace and an attached enclosed porch.
It was constructed in 1935 by Italian and Irish immigrants and is made of brick -- as per the advice of the Wise Little Pig.
It is connected to a two car garage and has a driveway that catches the sun and melts the snow.
It contains a large basement and a large attic which keep me and my many hundreds of books dry.
It is surrounded by green grass, 6 huge oak trees -- you can count them, there are six -- and a high colonial fence behind which my dogs and cats run free.
There is a granite patio in the backyard for sitting and snoozing.
No air conditioning, but we own plenty of fans.
The house is located a few miles away from my doctor, dentist and vets offices, a large shopping center, banks, a university library and carry-out restaurants galore.
Apart from several falling branches, nothing untoward has ever happened to me there.
I attribute my good fortune to G-d, good luck and the Wise Little Pig.
Beat that New York.
7
@A. Stanton But I bet you still have to get into your car and drive, if you want something as simple as a carton or loaf of bread at a late hour. Personally, I prefer to live in a place where I can use my feet to get things, rather than driving everywhere. Within walking distance of the house I grew up in in Brooklyn (3 bedrooms 2.5 baths plus a downstairs apartment to rent out, backyard garden with deck for grilling/parties in the back, small garden in the front, with Oak, Elm, and Maple trees covering the entire block), you can find 2 hospitals, 2 libraries, 4 banks, 3 avenues containing more stores than any shopping center, more restaurants than you could ever want, and a 24 hour bodega every few blocks.
Other than the time I fell into a snowdrift and got stuck in the Blizzard of '96, nothing untoward ever happened to me here either. Beat that, Texas.
2
Sounds very nice, but how is this relevant?
2
@A. Stanton Sure, but you have to live in Dallas, so I think NYC beats that pretty handily.
2
I sympathize with the author and her husband but this policy became law last June, so there was time to prepare for its effects. As a former landlord (and renter) in NJ, I've been on both sides of the transaction. When I owned 2 properties I always paid the listing fee. On a personal level, I have a conceptual dislike for middlemen and agents period. In some areas they are still necessary, but technology should eventually supplant many of them.
55
When I moved to Greenpoint in 1991, it was still a very Polish and a very locally-oriented community. In the ten years I lived there, I got both of my apartments through advertisements at the back of the Greenpoint Gazette -- you went on a Sunday when the apartment was being shown, you talked to the landlord, and she either approved of you or not. Done.
By the mid-1990s, the neighborhood was swarmed over by real estate agents looking to gentrify, and one could no longer get an apartment *without* going through an agent, and this is where your Luke enters the picture.
The neighborhood apartment market is routinized overnight: the agents insert themselves between the apartment seekers and the landlord, while standardizing the market rates for, say, every one bedroom in Greenpoint -- there are no more "deals" to be negotiated between landlord and renter. And that is all on your Luke and his cohort agents: they are simply there to create an income for themselves. Most of them don't care about the community; they offer little value added to the transaction, yet they utterly transform a local community into a Manhattan-like business matrix.
If I sound unsympathetic to your Luke, it's because I'm unsympathetic to your Luke and his colleagues.
272
Everywhere else in the country rental markets work just fine without brokers, but, yeah, you have a right to be the middleman. Whatever
91
And rent laws. But yeah, whatever.
Even though you make it sound like a non profit egalitarian enterprise at the end of the day profit is being made by the land lords. The transparency of who engages whom becomes the point. Tell the renter up front that the charge to find them a home is two months rent then you have the conditions for caviat emptor. The Landlords, Trumps and Kushners do not wish to pay for anything since they are broke and bankrupt (not all the landlords are bankrupt). After the high cotton is picked you just have to pick the rest.
13
@David
The landlords do all the work. The landlords should make profit. There's no reason to be a landlord, if you don't profit.
It's not an occupation that feeds the soul. It's one that's about making money in exchange for providing housing.
And much of the time, it's a serious pain in the neck.
@David
You mean "broke" and "bankrupt", of course.
And why aren’t these brokers getting the fee from the landlord? That’s the way it is in most places. NYC just had been fleecing renters for years with these “finders” fees.
87
@JCAZ
Actually, much of the time they were!
And only 45% of renters ever paid a fee!
This law (or interpretation from the DOS) will jack all NYC rents.
There's nothing good about it for ordinary people looking for the most affordable apartment they can find.
I think NYC got the change right but the timing wrong. It’s not fair to blindside agents like this but I have to say this is a long time coming. Landlords clearly benefit from the agents services and should pay.
15
...the law was passed last June, nearly 7 months ago. How much advance notice does one need?
32
@Meredith
The laws passed last June did not mention broker fees.
I’m always touched when I hear stories of kind people doing work in unexpected professions. Probably because I was one. Best of luck to your family
1
I will probably hire a broker when I look for my next apartment. I’m making more money than last time I moved and I want help finding something that is exactly what I want. I will be happy to pay someone who is representing MY interests. I was not happy the last time I moved, when I did all the research myself, and kept dealing with a separate broker for each apartment who was trying to find the *right tenant* on behalf of the landlord, and I was rejected a few times for having a dog. This was not representing my interests but going against them. The landlords should’ve been the one paying these people. I was lucky to ultimately find a no-fee apartment that time.
36
Agree totally. Focusing on the broker fee is not going to make rents go down.
1
We paid for a broker in Boston. It feels like extortion. Landlords should pay the fee or do the work themselves.
144
It is extremely difficult for young people to gain a foothold in NYC as it is with the high rents and their low salaries. These “ fees “ have been slowly creeping up for years and have become prohibitive for many wishing to move here...students, young professionals, people employed in the arts,non-profits,education and other low paying fields. And then we have the vast number of people barely making it in the gig economy.
I’m sorry for those who make their living gouging those who can least afford these fees. Perhaps they can begin selling those luxury condominiums that are sitting empty and come with big percentage payouts. A bit harder work but a bigger payout in the end.
And perhaps relieving people of this undue burden will bring a more lively, creative, risk taking and entrepreneurial spirit into what is now a city that is fast becoming staid.
60
I agree having the landlord pay makes more sense since the broker represents the landlord not the renter.
92
I certainly have no first-hand (or even second-hand) knowledge of what a broker does, so I will rely on Ms. Koenig's description.
"Obtaining the rental listings from landlords requires years of legwork and relationship building, writing listing descriptions, vetting potential customers over the phone, arranging viewings and organizing open houses."
These all look like services performed for the landlord, not the renter. It seems to me that the landlord should pay, not the renter.
380
@Michael "These all look like services performed for the landlord, not the renter. It seems to me that the landlord should pay, not the renter."
And do you think that will solve the problem? No, because the landlords just pass the cost to the renters - as a renter you will end up paying for the broker one way or the other. The effort needs to be focused on removing brokers from the picture entirely. Their services aren't worth anywhere near what they are legally allowed to charge either landlords or tenants.
8
@mpound, I'm not sure what "the problem" is, unless it's broker services that aren't worth the fees charged. When the services are for the benefit of the landlord, it is the landlord who should decide whether the fees are worth the service. If the landlord doesn't pay directly for the services that benefit them, they will have little or no incentive to reduce their cost. Worse, if the broker fees are a percentage of the rent, the broker has no incentive to negotiate a reduced rent; they are not the renter's agent and do not work on their behalf.
32
@mpound
The point is that the costs to the landlords is nothing like $5-6,000. It's probably a tenth of that. Let them pass that on.
13
I congratulate NY for making this change. Fees charged by brokers for minimal time and effort were shameful. I'm sure brokers giggled whenever they collected their fees knowing what they were getting away with. Prices that are too high for the value of services rendered eventually correct themselves.
78
The industry has moved on. He should consider a vocation such as pumping gas in New Jersey if he wants to continue practicing in an area that also has moved on but maintains government protection.
42
@Joshua He could also become a Whaler, and whine about how those evil electric lights are just destroying his livelihood.
2
Your husband sounds nice. But why is NY (I think) basically the only US city with brokers? There are many other cities where people want to live and where rents are high on average but renters do perfectly fine without them.
262
@Yesme1993
What are the brokers fee in Ohio? Just tried to google. What I found instead is the the median rent in most cities is well under $1000, many in the $600 - $800 range.
https://www.nerdwallet.com/blog/mortgages/best-cities-rent-ohio-2015/
This clearly suggests that this NYC’s homegrown Broker’s industry is what is driving rents here to astronomical levels.
2
Chicago has this right, the landlord pays the broker for the service they provide filling the apartment. Why should the tenant be on the hook for a service provided to the landlord?
207
@AP I rented my condo in Chicago and just did it myself.. You can list your apartment/condo on mutiple web sites for free. The applicant pays the credit check and the rent is collected by zillow for free. Technology has done so much to reduce what brokers do...¨an this is a kitchen." I do find it strange that so many owners prefer to use t broker..the fee seems so out of proportion to the added value. I am really surprised that nobody has started a business where non commission people open and unlock the apartment doors for showings. And a mobile app could easily include all the info you need.
But this NY law of forcing the tenant to pay - and 3 points more than Chicago at that - seemed really predatory. Good for NY State!
24
@AP - It has to do with supply and demand. In mother was a landlord in Boston for 30+ years, and she said that when the economy was good (lots of people looking for apartments) then the tenant paid the broker fee, when the economy was bad, she had to pay the broker fee.
2
@AP
Just optics. If the landlord pays, the rent is higher to offset the fee.
1
Just because good people are in a profession does not mean society has to keep that profession going by milking people for unnecessary fees. Weak argument. Perhaps more of a phase out period.... but again.... is it the job of everyone else to prop up an industry that doesn’t really add value to a transaction?
398
@John
Exactly correct. That's the thing about capitalism -- everyone believes in the "free market" as it applies to the other person -- but MY interests need protection!
25
@John Ronnie Koenig fail to mention that based on ACRIS a publicly available government website that she and he husband already own a one million dollar condo in Windsor Place in Brooklyn so he has been doing quite well over the typical $60,000 a year that an agent makes a year.
7
@Gilbert Rosen
Brooklyn housing prices have skyrocketed over the last 20 years. A coop worth 100k twenty years ago could easily be worth 1m today.
Folks who never bought even though the could afford to when the market was low really missed out.
1