In early 2020, New York State regulators issued an interpretation of the state's 2019 Housing Stability and Tenant Protection Act that ended broker fees for residential property rentals. However, a legal challenge and ruling resulted in allowing broker fees to continue. All of these recent changes may leave you wondering: What is a broker? What is a broker’s fee? How are they calculated? We’re here to provide you with all the information you need to know about working with brokers.
Working with a broker can be tricky-- especially when calculating and paying their fees. A broker’s fee, simply put, is a finder’s fee. A broker, like a real estate agent, helps a potential renter secure an apartment or rental unit. They’re the middleman between landlords and renters.
Broadly speaking, a broker’s fee will be about 12-15% of the annual rent. But it can vary. Brokers fees are almost always dependent on how much the rent is for the apartment. However, according to NYC law, the deposit is legally capped at no more than one month’s worth of rent. Don’t forget, you can still save on upfront costs by using Rhino as a security deposit alternative.
Since brokers work on a commission, this is how they earn their living. The good news, however, is that this fee can usually be negotiated.
If you’re going to haggle, first do your homework.
Generally speaking, November, January, February, and March are slow months for new leases, and you’re more likely to get a deal during this time. Mention to the broker that you have another offer for 10-15% cheaper. Remaining confident and firm can really pay off. Sometimes brokers will budge, sometimes they won’t. If you have good references and a stable job, then it’s worth using those qualities to your advantage.
The apartment’s condition can contribute to the price of the broker’s fee. Take into account these apartment features when negotiating are as followed:
How far is the apartment from public transportation?
Is the apartment in a “high crime” neighborhood?
If the apartment needs obvious repairs you can observe upon a viewing.
How long has the apartment been on the market?
Have there been violations in the past?
Look up the apartment’s rental history on a site such as JustFix.nyc and see if anything stands out.
Use all of these factors to your advantage, and you might be able to save a few pennies in the process.
It might seem like an extra expense to hire a broker, but a broker can act as your ally when navigating the New York rental market. They can help you get the amenities you want, at the price you want, and protect you from bad acting landlords and rental scams. When working with your broker, make sure you are taking advantage of everything your broker can do for you.
Some perks of having a broker include…
They can help you plan from afar. Coming from out of state? Thanks to virtual tours, a broker can help you find exactly what you’re looking for in a place from thousands of miles away.
They know their market. Generally speaking, brokers have multiple properties up their sleeve. A really good broker might even show you an awesome place that isn’t even publicly listed yet.
They can help for short-term situations and subletting. Oftentimes, brokers can match subletters with subleases and sometimes even help find month-to-month situations.
They can help in a hurry. There’s a reason the term “New York Minute” exists--things happen quickly in the city. Perhaps your dream place has fallen through. A broker can help alleviate some of that last minute stress, and hours of scrolling on Craigslist, Zillow, and Roomshare.
While for now, the proposed bill to shut down broker’s fees was shut down, that doesn’t mean it won’t be re-introduced in the future. As long as broker’s fees are sticking around, it’s important to assess your needs as a renter. What might seem expensive up front could be a small price to pay down the line for a long-term rental.
The best things in life are free, including tips on broker’s fees. If you’re planning on partnering with a broker, you can still save money with Rhino security deposit insurance. Learn more about Rhino today.