Do I need a broker to rent in New York City?
This is the million-dollar question! The simple answer is "no," you don't need a broker to rent in NYC. But it is helpful to have one. Most management companies and landlords do not make vacancy listings available to the general public, but rather only to brokers. Why? Because for these companies it is easier to let a middleman (or woman) handle the work of actually leasing an apartment to someone else. The management company/ landlord does not have to show the place; the broker does it. The management company/ landlord does not have to fill out the paperwork for credit checks and leasing; the broker does it. However, there is a new shift of management companies/ landlords who make their vacancies available to the general public, and these limited listings do make it possible, to rent an apartment in NYC without a broker.
So is it better to go through a broker or to do it on your own?
Most of my peers came to this city swearing they would never use a broker to rent an apartment. I swore that I would not use a broker. However, most of those peers (and I) gave in after a short period and hired one. Why? A few years ago there weren't any "NO-FEE" sites to make appointments on your own. And the truth is, brokers have hundreds of listings that you do not have access to, they get the keys to the units more readily than you do and they help you get all of the paperwork together faster than you would on your own. In short, they cut down on time and effort for everyone involved. So, is it better to go on your own these days? That is up to you. With sources such as HowToRentInNYC.com and management company's going online you do have the abilitiy to do so. If you have the time and energy I would suggest trying it on your own and seeing if you can find what you want is realistic. As you know, brokers will always be there to help...
What's a normal commission rate for a New York City rental broker?
The commission is the money that the broker earns for successfully renting you someone else's apartment. You do not pay for them to show you apartments or for getting your paperwork together. You only pay if you rent and sign a lease for an apartment through them. That commission, or fee, has fluctuated over the last several years due to several factors: a drop in rent after the tragedy of 9/11/2001, an influx of people into the city to take advantage of a favorable housing market, and a decrease in rental properties due to this influx. Rates have shot-up from 8-10% just six years ago to around 14-18% in 2006. Why the increase? Again, there are more people competing for fewer listings. The market controls the rate. As a rule, expect to pay about 15% in commissions. "Fifteen percent of what?" you ask. Fifteen percent of your first year's rent. For example, let's say that your rent each month is $2,000. That means that you pay $24,000 for your apartment over the course of an entire year. Fifteen percent of $24,000, ( that is, 24,000 x .15,) equals $3,600.
Can I get around the broker if I sign one of those "fee agreements" at the brokerage companies?
The legal answer is NO! The Fee Agreement is designed to protect the broker from you going behind their back and renting the apartment without them. You signed your name to a contract stating that you will not rent this apartment with another broker or try to contact the management company directly for at least 180 days (the average fee agreement length of time). Make sure the broker gives you a copy of your fee agreement after they are done taking you to apartments. This way hi you have the list of apartments at your disposal, and that way, when you talk to the next broker, you can tell them what you have all ready seen and it doesn't waste your time or theirs. If a broker finds out that you rented the apartment without their knowledge, and that broker works for a bigger company such as Citi-habitats, Corcoran, or Best Apartments, then be aware that they do have the time and the resources to come after you. You'll definitely wind-up paying the fee, and if the case makes it to court, well...it could get worse. It isn't worth the anxiety, well for most anyway.
I have seen "no fee" broker services in the classified ads. What's the deal?
You can use a broker and pay no fee. This is of course, is rare now, especially in such a competitive market. So how does it work? When brokers list an apartment under the "no fee" section this means that the management company/owner pays the broker the fee, and you don't. So, why are these management companies being so generous? They're not. Afterall, this is about business. There is always going to be a benefit to the management company/ owner.
1. The location that you are renting may be in an undesirable neighborhood, and the management company is paying the fee as an incentive to get you into the area.
2. The company has increased your rent an extra $200 per month to cover the broker fee's cost. In short, you could be paying $2,000 a month for a "no fee" apartment that a "for commission" brokerage rents for $1,800. Still, the company may give you the no fee option to create "word of mouth" on a new development or property. By putting you in an apartment with a good deal, they send you out to create a buzz on the place.
How do I find an apartment in the city without a broker?
If you have the time and energy, then YES, you can find an apartment in NYC without a broker.
Additional FAQ Topics:
1. NO FEE WEBSITES
There are many NO FEE websites for management companies where you can see their listings. These sites explain their rental process and usually allow you to make an appointment to view the units directly. Fortunately for you HowToRentInNYC.com has the largest NO FEE MANAGEMENT COMPANIES and WEBSITE list on the web. There are also "search engine" websites such as Craigslist.com and Backpages.com that offer good leads, however, when browsing on any of these, look for "owner" listings and not those of a broker. Brokers use these sites to generate business, and again, you're trying to avoid that fee.
2. WALK AROUND THE AREA YOU WANT TO LIVE IN
Another idea is to walk around the area you want to live in. Look inside buildings for the management company's phone number. Call the company directly, but make certain that you are prepared to hear the words, "We only talk directly with brokers." Nevertheless, be positive and persistent because inevitably some companies will deal directly with you, even if they don't list.
3. CALL ALL YOUR CONTACTS
Make certain to contact anyone and everyone you know who lives in the city. There is always someone trying to find a roommate or to sublet an apartment. This means no fee to you.
4. RANDOM ROOMATES, MOST PEOPLE ARE NORMAL
Building off number 3, check out craigslist.com, backpages.com and other sites to find people you DON'T know who are looking for roommates. It is a scary thought living with someone you don't know anything about, but this is becoming the norm in NYC due to high prices and low inventory. TIP- it is ok to ask the potential roommate about their history and referrals for them.
5. DOORMEN ARE YOU FRIENDS!
Finally, remember to talk to NYC's most knowledgeable people: building doormen. Most of the doormen are aware of the availabilities in the building that they work at, and sometimes they can put you in direct contact with the Management Company or owner of a particular. Be polite, kind, and gracious when you approach, because if things go well, you'll be seeing a lot of your new doorman (doorwoman.)