The NY Times created a bit of stir with their recent article, You Don’t Have to Pay It. While the article focused on brokers commissions for buying and selling apartments, it’s even more relevant to renting an apartment. Do you need to use a real estate broker in New York City to find an apartment?
Obviously, we at Urban Edge feel that the answer generally is no. While there are situations where a real estate broker may prove helpful (or necessary), for the majority of people renting an apartment, you just don’t need to use one. In most of the country, brokers are not involved in renting apartments. And if they are, it’s part of the landlord’s normal marketing expenses. NYC is the exception, where tenants are expected to pay, and if the landlord is paying, it’s normally not part of his regular ad budget. Because of that, the landlord is less likely to offer any incentives, or negotiate the rent.
So why do people pay a broker to find an apartment? Because traditionally brokers have kept information on what is available to themselves. Ever wonder why most real estate brokers in New York want you to meet in their office, or on a street corner, rather than give you the address of the building? Because they don’t want you to know where it is, and go behind their back directly to the landlord.
The internet has changed that. While it may seem like a lot of landlord information is hard to come by (and it is, compared to much of the rest of the country), the last 10 years have seen a major change in NYC. Many property managers and owners now have their own websites, and put their available apartments on various listings websites (like Urban Edge). Many landlords who used to not deal directly with tenants in the rental process, are now actively looking to rent their apartments without using a broker as a middleman. Large buildings now have rental offices onsite, and not just during the initial lease-up (believe it or not, that is a recent phenomena).
The other reason often cited for using a broker is the complicated process of applying. It’s true that in most of the country, all you need to do is fill out an application, hand over cash or check for a credit check, and you’re done. Most NYC property managers and owners require a plethora of paperwork… copies of tax forms, pay stubs, letters of employment, bank statements… the list goes on (to learn more about what paperwork you need, check out our renter’s guide on rental agreements and application information). However, unless you’re trying to navigate a difficult board package to rent in a co-op building (which is a rare occurence), then most people can handle this… as long as you have all of your paperwork pulled together BEFORE you start looking. Just like with the Boy Scouts… Be Prepared!
Finally, many New York real estate brokers will tell you that they can get you a better deal because they have a “special” relationship with the landlord. Or can get you approved with poor credit, etc. IF the broker has the listing exclusively, and IF the broker has worked with that landlord on an exclusive basis for many years, that may be true. However, negotiating rent is not rocket science. In most cases they are just going to offer the landlord a lower rent when they fax or FedEx your application to the landlord. That’s right, most of the brokers never even see the landlord, at least not until the lease signing, when they show up, hand extended waiting for a check from you. Want to learn more about negotiating your rent? Check out our tips and guidelines for negotiating rent.
Also, remember that if the apartment is “no fee,” the landlord is paying the broker. Do you think the landlord will be more likely to accept an offer of lower rent if he has to pay the broker too? What if you’re paying the brokers fee? Well, say you get $100 off the rent… that saves you $1200 in a year. The brokers fee on most apartment is more than that, often much more. It may take multiple years just to break even with what you paid the broker.
So, should you ever use a broker? Well, there are a few cases where it may be helpful, or necessary:
- The broker has the exclusive listing. This means that you cannot rent the apartment without going through that broker, and even if you were to rent directly through the landlord, the broker would still get paid. Exclusive listings exist, but not to the same degree as in the past.
- The owner is out of town. Often condos and co-ops are owned by out-of-town investors that rent them out. You also may find this with smaller buildings where the owner invested from out of state (or retired and moved away, while retaining the building as an investment). They may give a broker an exclusive listing, or they may give it to many brokers. Either way, you can’t avoid going through the broker. This is found more often in the outerboroughs, than in Manhattan.
- You are in a hurry. We don’t recommend you try to rent in a hurry. You usually will need 30-60 days to get a feel for prices, look around, etc. If possible, stay with friends, stay in a hotel, sublet for a month or two… give yourself time. If that’s not possible, a GOOD broker will listen to your needs, and work to find you an apartment quickly. Emphasis on finding a GOOD broker.
- You’re trying to rent in a co-op with a strict board. Few co-ops allow rentals. While some may have an easy board approval, some are notoriously difficult. IF the broker has experience doing deals in the building, and IF they know what pitfalls you may be up against in getting approved, then a broker could prove useful. In many cases, the listing will be exclusive, so you would have to go through the broker regardless.
Bottom line–for the majority of renters, using a broker is not necessary in order to successfully find and rent an apartment in NYC. All you need is some “know-how” (check out our numerous renters and apartment guides), and access to listings. Urban Edge is here to provide you with both–for free. Good luck!