The tightest rental market in five years has a lot of rental brokers refusing to lower their 15% fee--and spurred a lot of chatter on the subject lately on StreetEasy.com ("The 15% of Yearly Rent Broker Fee" and "12% Broker's Fee").
“Does anyone else have an issue with the 15 percent broker fee that is being asked for now across the board, REGARDLESS of the individual's financial situation?” wonders one renter.
Another writes, “I am currently trying to negotiate down a broker's fee from 15 percent (while staying in the running for the apartment I'd like to have; it's a condo rental). Is 12 percent an accepted norm in certain circumstances?”
Many StreetEasy commenters—some of them agents, some of them renters, some of them landlords—chimed in with information and advice, including:
- “On exclusives, I will lower the price if the owner agrees,” says a self-identified real estate agent. “I have also lowered the fee. However, once both have been reduced I won't entertain further reductions for either. If it's a matter of affordability and the agent won't agree, you should continue searching. However, if you're just trying to strike a deal for yourself I wouldn't hold out too long. There's nothing keeping the agent from showing the property to others while you're dragging your feet.”
- “There's nothing ‘standard’ about rates,” says a renter. “Do your thing and negotiate; just know your ‘uncle’ point and theirs. I've worked with brokers who charge one month to 15 percent; [it] depends on [the] company and agent. Some are more flexible than others. Just ask. Bottom line: Know your max budget and live within your means. Walk away if it doesn't work.”
- “Twelve percent is too high,” offers another commenter. “The maximum fee should be one month rent for a broker that has worked for the renter. For the property agent, the owner should pay the fee.”
- “Just factor in the cost of the commission and adjust your budget accordingly,” advises another.
One commenter advises everyone to “always get brokers through personal referrals” (ahem--don't forget BrickUnderground's Renter Referral Program). And as we've advised before, make sure to get in writing that your agent will not only disclose whether a landlord is paying a fee, but offset that amount against the fee you owe.
On that note, consider this sorry tale from a StreetEasy commenter:
“I mostly hear of people paying a broker a one-month rental fee, which comes out to [about] 8 percent. But in my own recent experience I paid the broker who listed an apartment online a 12 percent fee, which came to $4,000. [A] few days after I moved into my apartment I saw my apartment rental listed on NYBits.com for $230 less in monthly rent than my lease agreement. [After] getting to know the building owner's leasing staff I learned why: This particular landlord pays all brokers a ‘one-month fee’ on all apartments they rent. The landlord recaptures the one-month fee paid to the broker by just adding it to the tenants’ rent spread out equally over 12 months. So the broker I worked with got paid a fee from me [and] the landlord, and I am technically paying the fee the landlord paid to the broker via my rent. Bottom line: I paid $4,000 + $2,750 = $6,750 in fees for this apartment rental. Obviously, this was a shady transaction. If you can afford it or have been hitting the pavement and working very closely with one particular broker, obviously it’s more of a situation where the broker is working for you and not the landlord and deserves a fee.”
Others swear by the no-broker route: “I've found my last three apartments on my own with no broker. Granted, I've devoted a tremendous amount of time each go-around, but it's worth it to me for several reasons: 1) I feel more invested in my apartment. 2) I have the satisfaction of knowing I didn't pay a sleazy broker thousands of dollars for what amounts to a few hours of work for me. And 3) I've been renting in various condo buildings for the last five years, and I've never found a broker who could show me a wide variety of condo units—despite all claims.”