trying to force myself to be happy for all the NYC renters now and in the future, rather than enraged that this incredible and joyous change happened 5 months after I moved out of the city! https://t.co/LLcn5Fw4nv
The NYTimes article that covers the issue is here: https://t.co/UCpcxz1hSJ
Also, I know that the video above is cropped (twitter limits video length) but you can find her full post here:
Let me know if you have additional questions and I’ll ask her!
Now the brokers say the tenant is the client. This rule only applies if the landlord is the broker's client. So the law is useless, I'm still paying brokers fees. The fee was not "banned". Thank goodness for our benevolent government overlords to bestow us with this amazing law.
All kidding aside this is a huge change to the NYC multifamily rental dynamic, although I doubt it will have the intended “consumer protection” effect they’re going for.
I have a lot of thoughts on this , but curious what others think of this.
My main prediction: There are about 27,000 brokers in NYC currently. Seeing as most landlords are much tougher negotiators and have more leverage than the average renter... I think this law will deal a heavy blow to that profession, and reduce that number dramatically.
My other thought on this: It could possibly make markets more efficient. As my other NY colleagues will attest to, dealing with rental brokers is very unpleasant and the whole process usually feels scummy (they post an apt online, show you it to you, and get up to 15% of your rent for minimal effort). This always struck me as a middleman that needs to be squeezed out of the equation, and this law may just do that.
Exactly. I cant believe the nievity of people who expect landlords to start doing all the work involved themselves or the RE brokers to provide their services for free. Then again, this is probably the "abolish personal property" crowd of reddit anyway...
People are stupid.
Renting is a business, and businesses have to make money... which means no matter how much a landlord spends to own and service a property they have to make MORE than that back in rent... No matter what the tenant is paying this fee and any other fee and expense of operating the business. Anyone who doesn't understand that I just ignore, they are helpless.
Except renters will now pay that every year instead of once.
A better solution would be to a) require all listings to show the exact broker fee and b) allow tenants to pay any broker fee upfront **or** over the duration of the first term of the lease.
I'm a landlord... because you will anyway. This will raise rent prices.
You, the tenant, pay for all fees and expenses that the landlord has for owning the property, and then some. That's how profit works, that's how business works.
You think you don't pay property tax because you rent? I've got news for you... You think that "free cable" that's included with your rent is actually free? I've got news for you...
Assuming the landlords have more bargaining power with the brokers than the prospective tenants, the fees should go down. Yes, there will be fees factored into the rent but they shouldn't be anywhere near the 15% some people were paying.
Thanks for the economics lesson. It should still be prorated into the rent, not an up-front charge on renters. A renter doesn't need to be exposed to the expenses of the landlord. Thats the landlords problem.
Good. Seriously, what value does this add? Just because it's been around for a while doesn't make it sensible. Making thousands of dollars for sometimes little to no work is absurd. You like this apt? Ok give me $5k and you get the key. Dumb, waste of money.
Depends. If you're renting a N Buffalo upper, you're probably not outsourcing to a broker. If you've a larger portfolio, maybe you have a property manager who deals with leasing too, but that's going to be baked into the rent. Luxury rentals on the waterfront will probably involve a broker and may detail that fee to the lessee. Either way, nobody is going to eat the costs or not for long.
As you know, theres more to Buffalo lately then just owner-occupied doubles.
I want to build an app that lets landlords handle the application process for prospective tenants, lets tenants pay their rent through the app with ACH or credit card, put in maintenance requests, do the background checks, and all of that bullshit, in one centralized place. Then I want to convince every small landlord in the city to use this system. Then I want to take my millions and start buying up small buildings and becoming a not shitty landlord. If you pay the rent, I really don't care if you make 8000% the monthly rent.
I moved to NYC in Dec 2018, toured several apartments off StreetEasy (with no fee), all of them shown by leasing agents working directly for the building. No fee, and I negotiated 1.5 months free I think. I moved in the same building next year, and it’s a dream apartment.
My guess is that people need to insist on viewing direct-from-landlord apartments more. Landlords are in a better position to evaluate broker services and opt in or out.
This will be overturned very shortly. The statute underlying this supposed "guidance" does not support the interpretation. Further, it's a regulatory body creating a new regulation outside of the proper procedure (no comment period etc) under the guise of "guidance".
Lawsuits will commence shortly and I am certain there will be an injunction.
Even if what this broker says is true, this is still a huge benefit to renters, who no longer have the collect the lump sum up front--that's often a big barrier to ppl getting into a rental in the fist place.
"Brokers warned that the new rules would simply increase what tenants pay in monthly rent, since many landlords will likely pass on the cost of a broker’s fee to their residents in higher rent.
“What was the intended purpose of this?” said Jared Antin, director of sales at Elegran. “If it’s to minimize the cost to the tenant, it just changes when the cost is due. Instead of upfront, they will pay it monthly.”"
Exactly. And if anyone thinks landlords, who have much more leverage and knowledge than your average tenant, are gonna be paying 15% of annual rent to a broker, you're crazy. Not to mention that around 50% of units in NYC are rent stabilized, where landlords won't be allowed to raise rents.
There is so much outright fraud in the rental agent industry as well. When I first moved into the city after school, I’d constantly see apartments advertised online, set up an appointment to see the apartment, travel to the appointment, only to have the broker tell me that the apartment I came to see had just been rented, but they had a different apartment available for 30% more expensive and 40% smaller.
They’d also try to create hysteria to get me to sign right away, trying to convince me that there was a shortage of apartments so I’d be homeless if I didn’t rent their apartment (one literally told me that a particularly terrible apartment was one of the last available apartments in Manhattan). I was young and naive, but not that young and naive, and eventually looked only for “no fee” apartments that ended up being cheaper and nicer than the ones these brokers were pushing. Good riddance.
When I was apartment shopping in NYC, I had to deal with a lot of arrogant, pompous fucks willing to do anything to land a fee or tell me to get lost. I feel like going back through some messages to find the most egregious of these little shits just to waste their time and tell them off.
I think the brokers fee cost will still get passed through to the tenant by higher rents. However this is still great news! It's a good start to killing the profession of brokers who I view as the scum of NYC. Landlords have much more bargaining power than tenants and I'd rather have them deal with any fees paid to the brokers. I think it will also begin and expedite the process of removing the most scummy brokers from the industry.
I looked two apartments last year online and I went to meet with the broker. The fee was the same as first months rent. I would have paid the brokers fee + 1st months rent and security. I said to myself, let me check the management website, and they had apartments up with no brokers fee. All I had to pay was security and first months rent.
This is much needed disruption in an inefficient market. Brokers have long gouged renters for the "service" they offer. This also provides an opportunity for new businesses to spring up that can undercut the traditional brokers and assist "small building owners" who are apparently incapable of "showing apartments and finding tenants" themselves.
Wow! The time-honored tradition of fleecing newcomers to the city has been ended.
Broker fees are particularly awful to new arrivals, who probably are probably going to have short tenure at their first couple apartments. A fee is more forgivable if you can amortize it over several years.
There are some risks of how it may distort the market if fees are internalized into market rents, but I think it's worth the risk for eliminating the huge barrier to tenancy created by the lump sum broker payment to get a place, on top of first month rent and security.