Broker fees are almost always a cause of confusion and frustration for New York City renters. So, what is a broker fee? It’s a fee you pay to the agent or broker who is managing the listing. In New York City, renters are responsible for paying this fee, even if they did not explicitly choose or hire a broker. This is very different to other cities, where most renters are not familiar with paying such a fee. (Note that agent and broker are interchangeable terms in NYC.) So here are 6 FAQs about NYC broker fees:
1. How much is a broker fee in NYC?
A typical fee is up to 15% of the annual rent (or roughly 2 months rent). So if your apartment is $3,000 a month, your fee would be $5,400. [$3,000 x 12 months x 15% = $5,400.] You pay this fee to the listing agent at signing. It’s usually a separate fee that you make to them.
2. Can I negotiate a broker fee?
Broker fees are negotiable, and it doesn’t hurt to try. If the market isn’t super competitive, you can always try and negotiate the fee lower. If the apartment is popular and many people want it, negotiating the fee is probably not the best idea. The broker will go with the applicant who is willing to pay the highest fee.
3. Is there a limit on how much a broker can charge?
There’s no legal cap on how much a broker can charge. While the typical fee is 8-15% of the annual rent, brokers can charge more or less. If there is a lot of demand for an apartment, brokers may try to up the fee. There was an example of a broker charging $20,000 as a fee for a rent-stabilized apartment on the Upper West Side.
4. Who pays the broker fee in NYC?
The current law says that renters are on the hook to pay the broker fee. At one point, a law said landlords had to pay. It was in effect for a brief period, where eventually, a judge overturned it. However, there is a new city council proposal that could change this. The FARE Act is a piece of legislation that states that the person who hires the broker pays the broker. If this bill passes, the NYC broker dynamic could drastically change.
5. Are there no-fee apartments in NYC? How does it work?
There are No-Fee apartments in NYC. These are apartments where either the landlord is paying the broker fee or hasn’t enlisted a brokerage for support. Filtering your search to no-fee apartments is a good way to save money, but it does limit your option pool of apartments. Only about 20% of availability in NYC is “no-fee”. However, you may find more no-fee apartments during the low rental season (typically in Winter). Additionally, many “fee” apartments are rent-stabilized. So filtering out “fee” listings could also eliminate a lot of these apartments from your search results.
6. What happens if I have a broker and the landlord has a broker? Who pays?
In this case, the brokers will negotiate amongst themselves on splitting the fee. You should NOT pay a full fee to both your broker and the landlord’s broker.
7. What are the benefits of using a broker to rent an apartment in NYC?
Agents and brokers are licensed professionals. That means they understand the market and regulations of renting in NYC. In many cases, they also know what apartments are available before they are broadly posted online. If you’re new to the city or have never rented before, enlisting the help of your own broker may be wise. If you hire a broker, you can expect them to send you available listings you may like, schedule showings, help you put your application together, and follow up with landlords about applications and approvals. They can also help you avoid rental scams, which are rampant in NYC. If you hire a broker to help you, you should pay them for their time and services. To make the process smooth and transparent, have a discussion with them before working together. Ask them what their services are and what their fee is.
8. What are the cons to using a broker to rent an apartment in NYC?
The biggest con is the price, especially when you feel the broker is not helpful. 15% is a hefty fee to pay. If you are confident that you know what you’re doing, and you’re an experienced renter, you may be able to avoid using a broker and connect directly with a landlord or building.
9. The broker didn’t do anything or help me. Why do I still have to pay?
This is a frustrating reality of renting in New York. Even if you feel that the broker didn’t help in any way with your leasing process, you still have to pay. This is because usually there is more demand than supply in New York City. Landlords and brokers justify this fee because the market allows for it.
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