How Real Estate Broker Fees Work In NYC

Anyone whos ever lived in New York City or attempted to move to the Big Apple knows that real estate across the five boroughs is a contact sport. Great apartments in great neighborhoods dont stay on the market very long if they are listed at all. For many years, renters trying to get the upper hand   enlisted brokers in hopes that they would have exclusive access to listings. And since they understand New York Citys real estate market and were able to leverage relationships with landlords and developers, brokers watched the commissions roll in.

Contrary to public opinion, there is no standard brokers fee. In fact, if brokers got together and set a standardized fee that would be collusion illegal in New York City. So in place of the standardized brokers fee we have the industry standard thats typically set at 15% of the annual rent. For example, lets say you find a 1-bedroom for $2,000 a month; you can expect to pay a brokers fee of $3,600 ($2,000 x 12 = $24,000 x. 0.15 = $3,600).

Now, shelling out an additional $3,600 dollars is a stretch for many renters. And despite the fact that brokers are licensed and regulated by the City and State of New York, potential renters are becoming less and less reliant on the need to employ brokers, and are taking matters into their own hands.

Some renters continue to employ brokers because of irreplaceable relationships they have with landlords. True, these relationships are impossible for renters replicate via a series of emails and page views. However, renters with excellent credit or a solid guarantor (beyond family members there are new offerings such as Insurent ) are in a better position to bypass the need for that established relationship that the broker brings to the table.

The Internet and the DIY culture that apartment hunting has taken on means that for those who do use a broker their fees should be completely negotiable. Since there is no such thing as a standardized brokers fee, renters are in a position to drive down brokers fees. Remember, brokers have bills to pay, too, so accepting a lower fee especially when the renter has done much, if not all of the legwork, may be in their best interest. However, before you think you can take the broker to the cleaners, remember that they will be splitting that $3,600 commission we mentioned above down the middle with their real estate firm. If your broker did right by you, its in your best interest to build a long-term relationship, right?

All told, renters have more options than ever to avoid broker fees, and brokers have been working extra hard in order keep pace with an ever-changing renters market.

Written by Gregory Joseph