New York City
8 Truths About NYC Real Estate Brokers: Beware!
Eight important facts and ways to protect yourself.
Think your NYC broker is working for you? Think again. You’re not in Kansas anymore. Lord knows I’ve had more than my fair share of broker-induced real-estate headaches. It’s a dirty business, and if you don’t know how to look out for yourself, you’re food for the piranhas.
“In New York City alone, there are 27,000 real estate agents,” says a top broker. “Last year there were 12,598 contracts, right? That means a lot of real estate agents did not do deals.”
NYC real estate brokers make money with turnover – and a lot of money. They charge the renter one month’s rent or 15% of the year’s total rent. Make sure to negotiate the commission rate before you go out with them, because once you see that apartment that you just must have, the broker is fully aware that they have you over a barrel in terms of the commission – and you can bet it’ll be the full 15%.
Here are a few other things to keep in mind when working with a NYC real estate broker:
1. They don’t want you to get a good deal.
They want you to rent or buy something – and they want it to be at the highest price possible, because every $100/month more you pay in rent, is at least another $100 in commissions they’re putting in their pocket. Therefore, they’re not going to negotiate as hard as you could if you found out who the listing broker is and went directly to them.
2. You can bypass them.
If there is an apartment you really want, but it’s labeled as “broker only,” you may be able to get a better commission deal if you go directly to the listing broker. Brokers usually split the 15% fee, with 7.5% going to the listing broker and 7.5% to the broker (your broker) who brings the client in. This means that if you go directly to the listing broker, you may be able to negotiate that they take an 8.5% or 10% fee instead. Unsurprisingly, most brokers are fine with cutting the other broker out if it means more money for them.
This is a bias article. Any industry with 27,000 workers will have some bad apples, and in New York City (the BIG apple), real estate agents are definitely no exception. However the rental brokering industry in Manhattan was born out of necessity and was created to benefit both landlords and apartment hunters.
Landlords don’t want to put up the funds for someone to manage their properties, advertising, applications and apartment showings, and prospective tenants don’t want to spend time toiling through the internet (and historically, phonebooks and magazines) to find contact information for landlords to find the best deals.
The way that the internet listings portals currently presents the rental process in New York City is at best a fairy tale, and responsible for a lot of the bad blood between rental brokers and renters. Because of the pace of the rental market, it is impossible to expect any one landlord or broker to keep their listings 100% up-to-date every second of every day. If they did, they would have no time to take anyone out and let them into the apartments in question. The listings portals are not paying them and landlords are not paying them, so their paycheck is dependent on client acquisition and providing a positive and useful service.
Any service that acts as an intermediary to multiple parties in a fast-paced product acquisition situation opens the possibility of foul play. Because of the business model of these listings portal sites, there is no incentive for them to monitor and police the listings that come through their sites, making it very easy for the bad apples to post and maintain fake or expired listings. Most of these sites make their income from the broker’s themselves, through monthly subscription packages that allow them the privilage of advertising their apartments on the listing platform. The more listings they have on their sites, the more broker’s are paying their monthly subscription.
Ergo, profit for the listings portals at the expensive of every other party.
Broker’s fees can sometimes be an overwhelming amount of money, but you are paying for the luxury of having access to listings before the rest of the internet world does and for doing minimal legwork to find what you’re looking for. Landlords have no incentive to pay these fees because they are in control of the supply. So if you want the service, you will need to pay for it.
This is, of course, if you are able to find a broker that you trust, and that you are willing to buy into their process and allow them to be your ally. It is important to be vigilant whenever you are meeting a stranger from the internet for any reason, but you cannot be unwilling to participate in the service you are requesting. If you want to navigate the internet and make contact with landlords directly on your own, then that is what you should do — but there is no way around compensating a professional for their services should you choose to utilize them. You wouldn’t go to the doctor and say “I can probably get the syringes direct from the manufacturer for cheaper, so I’m not going to compensate you as much as you are requesting”.
The internet listings portals fantasy tells you to just click on a link and then you will magically have access to an apartment that looks as fabulous as the photos — it is a ridiculous claim. Even when everyone has the best of intentions, the chain of communication between property managers to landlords to brokerages to agents to the internet to the prospective tenant and back again has many links that can easily snap. This is not a result of the industry of rental brokering, but a result of the wasteland of listings portals.
Use a broker or don’t, and if you do, make sure you do your due diligence as you would when hiring any provider of a service. You don’t need to use a broker, but there are people who can benefit from the service who are unnecessarily confused by articles like these.
Best of luck to everyone on their collective apartment search, from one well-intentioned sleazy scumbag broker in Manhattan.
Today, I was nearly scammed by a rental site named Zenly, which claims that they are not a brokerage, connecting customers with no fee apartments. When I requested to visit an apartment via Zenly, they quickly emailed me back, but would not disclose the address of the apartment until I confirmed an appointment. Suddenly, they made me aware that Zenly would be charging a three percent fee on the apartment, which came as a surprise.
After confirming my appointment, I went to go view the apartment. Upon returning to my home, I went on the internet, searched the apartment, and found it on the internet listed for less than it was on Zenly, with no fee involved. Worst of all, a simple Google search revealed that Zenly is registered as a brokerage with the state of New York.
I can supply my emails with Zenly and their customer service as needed. New Yorkers work too hard to be scammed for $500-$2000 by a brokerage falsely advertising itself as a no-fee platform. If we take apartment A, I will be $2200 a month on StreetEasy (no fee), but then $2300 a month on Zenly (plus the brokerage fee). New Yorkers should know this before being scammed like I nearly was.
Wow – this is really useful! I’m going to memorize it, and forward it to all my NYC friends!
I’ve been looking for a place in NYC… I’ll definitely go the no-fee managed-building route, but could you please write an article about the best and worst managed buildings / management companies??
Thanks for this! I took your advice and rented in a no-fee building. It saved us about $6000! I’ll forward this to my other friends in the city. What a well-researched article!
I've actually had pretty okay experiences with brokers, but I mean, if I could bypass them altogether, that would be ideal. They do charge a lot. Great tips!
This is really good to know. I've known a lot of friends who've had bad experiences with brokers, so I'll be passing this around! Thanks for the tips, they're definitely something to keep in mind next time I need to find an apartment.
I can back this up. I've rented four apartments in NYC so far, and have had multiple bad experiences with brokers. Now I just go directly to rental management companies and bypass the brokers. They're so cutthroat and manipulative. Yuk.