clock menu more-arrow no yes

Filed under:

NYC rental brokers: Why they exist and how to work with them

New, 1 comment

Industry experts explain why rental brokers are so prevalent in New York City—and offer advice on how to avoid being scammed

A color-filled Brooklyn apartment.  Gabriella Herman

Finding a rental apartment in New York City is no easy—or affordable—feat. That’s in no small part to the abundance of rental brokers, a service pretty much unheard of in other cities around the country. Outside of New York, apartments are regularly rented between the owner and tenant, without any agent involved.

But in New York, it’s typical for both the apartment owner and the potential renter to be represented by agents, who then take fees for securing the space. It’s a service that makes the already expensive task of renting even pricier. It also opens up doors for scammers to take advantage of renters anxious to find a place to live.

So why is the service so prevalent in New York?

handbook-widget

"The size and scale on the New York City market is overwhelming," said Gary Malin, the president of brokerage firm Citi Habitats. "We’ve got walkups to luxury highrises and everything in between. Then there’s the question of guarantors, how much money is required upfront, if the landlord accepts pets or not."

Basically, there are a lot of options, and a lot of different requirements, when it comes to renting an apartment in the largest city in the United States. Plus, there’s the matter of how many people want to rent an apartment in New York.

"It’s about market dynamics," said Naked Apartments CEO Joe Charat. "The demand far exceeds supply, so landlords have the rare privilege to outsource the work of finding tenants. Landlords typically don’t have to pay, they can use this service for free."

"The demand far exceeds supply, so landlords have the rare privilege to outsource the work of finding tenants."

There are three options for landlords to work with brokers when they’ve got a listing, Charat explained. The first is that the landlord works with one agent, or one brokerage firm, exclusively to represent all available listings in the building. Then there’s a limited listing, when the landlord gives a rental listing to a select few rental brokers. Finally there’s the open listing, when the landlord or management company distributes listings throughout the entire brokerage community.

"If you want access to all the inventory on the market, you will likely need to work with a broker," Charat said.

There are still ways to avoid one, however. You can search places like Craigslist, Naked Apartments, or StreetEasy for "no fee" apartments. Sometimes, landlords won’t offer a listing to broker and instead rent it out directly. Then, there are OP listings—meaning "owner pays"—where the owner pays the broker fee when they need help filling vacancies quickly.

Finally, you can always walk right into the leasing office of a building and rent an apartment that way. Some buildings without leasing offices have signage that lists the management's phone number, another way to reach the landlord directly to inquire about listings.

But say you decide to go the broker route. You’ll have to take some precautions to ensure they’re actually working in your best interest. "A renter should find a referral from someone they know and trust before they work with a broker," recommended Malin.

If a broker says, "Meet me on the corner and bring cash," your antenna should be up.

But if you don’t have a referral, there are simple ways to investigate if your broker is legit. Check all their listings on rental websites; if they’re marketing a bunch of listings that look the exact same, that’s probably a bad sign.

Familiarize yourself with average rental prices in neighborhoods so you know when a listing looks too good to be true. "If the apartment looks too good to be true, it probably is," said Malin.

And if the broker claims that the great apartment you’ve inquired about was just rented, but they want to show you others, your guard should be up—that’s a common tactic known as "bait and switch."

When you make plans to meet with a broker, do they have an office to meet you at? Are you feeling rushed or pressured into anything by them? "If they’re saying, ‘Meet me on the corner and bring cash,’ your antenna should be up," Malin said.

One hard and fast rule of renting is that if anybody asks you to wire or fork over money before you’ve seen the apartment, do not do it. Be clear about the fee agreement with your rental broker before you even decide to see an apartment. Fees range up to 15 percent, the industry standard, of your first year’s rent, and this cost is typically due upfront when you sign the lease.

Don’t be afraid to negotiate, Charat said. "I always encourage renters to ask and negotiate… renters can bring the fee as low as 8.5 percent, or one-month's rent," he said.

And don’t be afraid to set guidelines with your broker. If a broker shows you an apartment in a particular building, they have the right to collect a broker’s fee even if you find a different apartment yourself in that same building. Also, if a rental broker finds a no-fee apartment on, say, Craigslist, then shows it to you, they’ll collect a broker’s fee—even though it’s an apartment you could have found on Craigslist yourself, then rented without a broker.

"If the apartment looks too good to be true, it probably is."

"When you’re talking to your broker, carve out those buildings where you can just walk in on your own [to talk to the landlord]," Charat explained. "Tell your broker only to show you the stuff you wouldn’t have access to on your own."

Should you sign an exclusive agreement with a broker? Malin said that it can be a benefit because "one dedicated broker will put more time and effort in your apartment… they’re not getting a paycheck unless they find you something."

But Charat said that you should feel "no need. You should have the liberty to work with whoever you want." Basically, if you’re looking for one broker to do all your heavy lifting, it’s an option to consider. But if you want to also look for apartments yourself, and potentially avoid a broker’s fee, then don’t sign an exclusive agreement.

At the end of the frantic, apartment-searching day, you want to trust your gut when it comes to rental brokers. "Don’t act on emotion, especially if you’re a first time renter," Malin said.

Do your broker research before they even show you a listing, and if they’re acting shifty in person, don’t be afraid to bolt. "You’re looking for someone responsive and professional," he said. "It’s worth the peace of mind to have someone you can deal with in a market where you’re already feeling stressed."