As New York battles broker fees, learn how to beat them on your own
Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about oureditorial standards
and how we make money.
Apartment hunters likely rejoiced after New York state banned broker fees on Feb. 4, but that joy was short-lived. A judge temporarily blocked the law Monday after several real estate agencies sued the state.
Broker fees are the norm in areas with high housing demand, like New York City and Boston. Renters in those cities are all too familiar with one-time broker fees costing at least 12% to 15% of one year’s rent. So if your apartment is $2,000 per month, your broker fee could be as low as $2,880 or as high as $3,600 up front, on top of moving costs and the security deposit.
Landlords send new listings to real estate agents because they don’t have the time to look for qualified tenants, said Daniel Amodeo, president of Boston City Properties, a real estate brokerage. But landlords don't pay for this service — tenants do in the form of broker fees.
If New York succeeds in banning upfront fees for tenants, landlords will increase rent to make up for the cost, Amodeo said. If your rent is $2,000 per month, “it could jump to $2,200,” he said, costing the tenant more money in the long run.
Real estate fees can be confusing. Whether you’re a renter or buyer, you don’t want to feel like you’re paying too much. Here are three ways to avoid paying unnecessary fees.
You can search for no-fee apartment listings on sites like RentHop, Loftey, Transparentcity, CityRealty, Naked Apartments, LeaseBreak and StreetEasy. While these sites have a vast selection of apartments, they won’t have every available listing.
Real estate agents have access to a wider selection of apartments and have the time and resources to scout listings, neighborhoods, school districts or any other criteria a renter may have — which is why there’s a fee attached to their services, said Gregory Klein, a licensed real estate salesperson for Brown Harris Stevens. “There’s always going to be a cost to doing business.”
Renters can still enlist an agent’s help, even with New York’s proposed ban — but in doing so, you will be obligated to pay a broker fee.
Broker fees exist because most landlords, or owners, don’t have time to regularly promote listings. You can find apartments and homes listed directly by owners or landlords. By cutting out the middleman, you can avoid a broker fee.
Amodeo suggests looking at different housing boards to find these sort of deals, but warns: “You may only find two or three options, whereas if you go to an agency” you’d likely have more options, he said.
Most things in life are negotiable, including real estate fees.
“As long as you’re being reasonable, the worst people can say is no," said Klein.
Let’s say you find an apartment for rent by owner. You can argue that you, the tenant, did the research on your own and don’t need to pay a broker fee.
“Landlords are absolutely open to negotiations … want to get apartments occupied with quality tenants,” Klein said.
If you’re in the process of moving, take a look at our guide to renters insurance.
Get essential money news & money moves with the Easy Money newsletter.
Free in your inbox each Friday.