broker's fee — Off The MRKT

Living in New York City can be an expensive endeavor. The cost of living is among the highest in the nation. With an average of $3,000 a month on rent, this is far from cheap. For apartment seekers, finding an affordable yet nice apartment can seem like a fool’s errand.

Recently the Department of State issued a new guidance to help renters. For years, apartment seekers accepted the outrageous fees that come with living in this city. This new ruling has banned the ridiculously high fees incurred on searchers. The joy of this ruling was short-lived, however. Due to a legal challenge by the Real Estate Board of New York, the rule is in limbo. This now puts the apartment lookers in an awkward position. They may choose to hold off while the court case plays itself off, hoping that the rule is upheld.

The broker’s fee

A broker’s fee is a commission or finder’s fee for the real estate agent. Typically, this fee equates to 12 to 15% of the rent. Many residents have voiced displeasure with this added cost since it is unique to New York City. Few other cities have similar ordinances. This fee, along with the first month’s rent and a security deposit, can add up and place large financial burdens on the new tenant. The ruling, should it remain, would take the burden off the resident and onto the landlords themselves. For now, however, the potential tenants will have to pay the fee until the injunction is lifted.

Gray area

Renters may choose to bypass the middleman and look for the apartment themselves or search online. This can be a bit tricky as agents are not clearly defined, leaving some gray area. During a survey, Curb.com some renters claimed that they were pressured by landlords to sign an agreement naming a broker. For many renters, there is not much that they can do.

How will this new ruling work?

Many New Yorkers are optimistic that the court cases can work out in their favor. Even if it does, some express caution regarding it. If landlords are required to cover the broker’s fee, they could offset the cost by raising your rent.

There are numerous factors that go into apartment hunting such as, proximity to work, neighborhood, size, and more. If you have an apartment that checks most of the boxes, it might be difficult to abandon this apartment because of the raised rent prices. This is a very real possibility for apartments that aren’t rent-regulated. Many landlords already practice this by including it in their monthly rent. If the new rule takes effect, many fear that landlords could lobby the Rent Guidelines Board could raise the rent capacity.

Improving your apartment’s value

For renters looking to move, they can do a lot to help the next tenant and the landlord. Even simple home repairs and new amenities can increase your apartment’s value. Many homeowners invest in renovations. For example, a home’s value can jump up 150% by investing just a little on the property landscape.

The bathroom is another room that often needs renovations. Over 80% of homeowners admit to replacing bathroom features during the renovation process. These ideas can also apply to renters. Investing in your apartment will go a long way to secure that you receive your security deposit back. For landlords, it can help make the apartment look more appealing and attract more interest.

Communication

The tenant and landlord relationship can be a mixed bag. Some tenants complain about landlords who are nowhere to be found while others complain about those who are unnecessarily strict. Landlords often lament about tenants who cause problems or are back on their rent.

Open and honest communication between each other is essential. This is especially true before they move in. When a client is interested in an apartment, they should exchange phone numbers for quick and easy communication. Text messaging is extremely effective since they are opened and read at a 98% rate. People do not read their email nearly as often and sometimes they do not have the time to commit to a minutes-long phone call. Text messaging is a quick and easy form of communication and establishes a quality landlord-tenant relationship.

Alternative options

There are also movements and policies looking to help out renters. In a Slate.com interview, a broker mentioned an idea that had been circulating. Putting a cap on broker fees could be a win-win for all involved. The cap could be no more than one month’s rent. This way the renter could avoid a large financial burden, the landlord can easier fill an empty apartment and the broker will still get paid.

Whether the restraining order is lifted, or a new broker’s fee cap is implemented, apartment hunters face a lot of questions. There may be not much they can do, but research is definitely important. They should do their due diligence and decide what apartment may be best.