Q. I recently hired a broker to rent out my apartment in Manhattan. I wanted to rent it as fast as possible, so I thought it would be best to list it as a “no fee” apartment. I agreed to pay the broker one month’s rent if he found a tenant within ten days.
He did, but I later found out that he also collected a one month fee from that tenant. Is that appropriate?
A. Not unless you agreed to it. Many rental brokers request a fee equal to 15% of the annual rent (a little less than two months’ rent) from tenants, so the total compensation that your agent accepted is in line with the market.
However, your broker seriously violated his fiduciary duties to you by failing to tell you that he intended to collect an additional fee from the tenant. The listing agreement should have been (but very likely was not) very clear about compensation. For example, it should have stated that the owner was to pay a one month fee in full satisfaction of the broker’s fee and that the agent would not collect a fee from the tenant; or that this fee would constitute partial payment of the broker’s fee and that the agent would collect the remainder from the tenant.
Even if the contract was unclear, your agent had a duty to tell you about any profit he earned on the transaction, including the fee collected from the renter. I would suggest speaking to the branch manager of your agent’s firm about your concerns.
Q. I have been searching for an apartment on Craigslist and have found that in some cases, more than one broker is advertising the same apartment but at different prices. What’s going on here and how do I know the real price?
A. Landlords often give brokers an “open listing” which is the right to advertise and broker the rental of an apartment on a non-exclusive basis. Any agent who has a client can submit an application for the apartment. That’s why you’re seeing more than one agent advertise the listing.
Unfortunately, it is not uncommon for an unethical agent to state a price that is lower than what the landlord is actually asking. They assume that this will result in them getting all the phone calls when prospective tenants see the apartment advertised multiple times. They also assume that if the price they list is within $50 - $100 of the landlord’s asking price, they can frame your “full price offer” to the landlord as a small concession in the rent when they present your application.
However, the landlord may reject your offer of a lower price or you may lose the apartment to another renter offering the real asking price. In the current market, that’s a real risk. I would suggest that you call the agent with the highest rent in their advertisement and ask them to verify that the landlord has not recently lowered their asking rent. That’s your best bet at determining the real rent.