Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
Getting your apartment to rent can be tricky in New York City. There are so many scams and shocking stunts people pull. It’s not surprising that many people prefer to work with rental brokers. Listing agents are professional real estate workers who make a point of vetting renters and vetting apartment owners. It doesn’t always come cheap if you want to rent through a broker. How much is a typical apartment broker fee in New York? The average NYC rental broker fee can range from a standard one-month rent to as much as 15 percent of the annual rental price. Stable and affordable housing will usually have a broker fee of one month. If you want to rent a luxury apartment, the fees can climb as high as 15 percent.
Rental broker fees in NYC are notoriously high. The typical real estate broker fee in New York City is anywhere from one month (8.33% of annual rent) up to 15% of the yearly rent.
While a 15% rental broker fee is the norm for luxury rentals, it’s more common to see NYC broker fees of one month for less expensive rentals. There has also been an increasing trend toward ‘no fee’ rentals over the past few years, particularly in neighborhoods with a larger supply of available apartments.
Most NYC rent brokers who work with standard apartments will charge one month’s rent.
Most of the time, rental broker fees get higher due to the high price of a specific rental. Luxury rentals are harder to rent out, so they must market them more. As a result, they may charge a higher fee simply because it’s so much harder to pair an apartment with an appropriate renter.
Rental brokers do not work for free; otherwise, they would be not-for-profit. If you want to rent an apartment and assume a typical broker fee is off the table, it’s best to understand how this works.
When a rental listing is a ‘no fee’ to prospective tenants, it simply means that the landlord is paying the broker fee instead of the tenant. The trend toward ‘no fee’ rentals was exacerbated by the New York Department of State’s temporary prohibition on tenants paying rental broker fees in NYC in February 2020.
When an apartment is ‘No Fee,’ it either means that
No Fee rentals are more common in parts of the city with large rental buildings, such as FiDi and Midtown. Demand for a “No Fee rental” in hot neighborhoods with less inventory and more robust demand, such as the West Village, is less realistic. This is because tenants have no trouble finding tenants, and plenty of other tenants are willing to pay the going rate broker fee.
Traditionally, the person who wants to move into the apartment covers the broker fee. This is quite different from the rest of the country, where it’s relatively typical for the landlord to compensate the rental broker. The rental broker fee is usually payable on the day you sign the rental agreement, along with the security deposit, legally capped at one month of rent in New York City.
The reason why renters in NYC typically pay the broker fee is market demand dynamics. Limited apartment inventory in NYC and robust demand from renters lets New York City landlords get away with having the tenants pay the rental broker fees.
So, saving up more than just the apartment’s deposit is essential if you are looking to rent an apartment. It’s customary to plunk down as much as 3.5 times the monthly rent to move in.
However, some areas are particularly tough to rent for other reasons, such as crime or pests. When a landlord wants to rent out their area fast, they may offer to cover the broker fee for the apartment. You might see “fee-free” apartments listed on major sites.
A tenant pays the rental broker fee most of the time in NYC. If a landlord is willing to pay the broker fee, they are having trouble finding a tenant to rent the apartment. You might find an apartment owner who wants to spend the broker fee for several reasons. These include the following common causes:
In New York State, brokerage rebates are legal. You can get cash back from your broker if they can rent out your home, and this is a great way to get a discount that kicks in after you rent out your home.
The landlord is the one who hired the agent. From his perspective, rental broker fees are just as negotiable as broker commissions on sales in NYC. The savvy landlord understands the vacancy risks and will want to ensure that the all-in cost of the rental from a tenant’s perspective is in line with comparable units. The landlord will try to negotiate down the rental broker fee even though the tenant is the one who will ultimately be paying for it.
From a tenant’s perspective, rental broker fees are less negotiable because there is a line of qualified candidates.
Legally, no rent laws bar you from renting an apartment without a broker. It’s just that brokers make things easier and safer for all things involved. Going through a broker, who is a member of the Real Estate Board of New York, means that landlords get better renters who have been vetted.
If you are worried about dealing with broker fees or similar, then there is a straightforward solution that you can consider: talk to a company that offers broker rebates. Having a rental broker is a smart way to ensure you get better deals on rentals—as both a renter and a landlord. Give our office a call today.