What You Should Know about Using a Rental Broker

Using a fee broker to find your first apartment should be your last resort, but sometimes you may not have a choice, especially if you are moving to a new city that has a low vacancy rate, such as New York.

When you’re searching for a pad, you’ll probably start out with Craigslist and other online rental sites. Even if you know you’re going to use a broker, it may be a good idea to survey these sites to get an idea of what’s out there. Once you’ve exhausted these free internet resources, you will move on to print ads, then to no-fee brokers who get paid by the landlord and, finally, if nothing else works out, fee brokers who get paid by you. Using a fee broker will be expensive, so here are a few basics that you should study before you get started in order to protect yourself and your money:

1. Make sure the broker your are dealing with is licensed. This is very important because you’ll be handing security deposit or rent money to the broker and you want to make sure that the money will end up in an escrow account and not in the broker’s pocket.

2. Fee rental brokers charge anything from a month’s rent up to 15% of your first year’s rent. If there is any question as to who will pay the fee, you or the landlord, make sure you’ll find out up front and get the terms in writing.

2. Just because you are paying the broker’s fee does not mean his loyalty is to you. He is usually the landlord’s agent and he needs to keep the landlord happy in order to continue renting the landlord’s apartments. You are just one potential tenant in many. Deal with it!

3. Get a written commission agreement from the broker, so you’ll know exactly when the commission is earned. You’ll want that agreement to say that commission is earned when you take occupancy or after both you and the landlord have signed the lease.

4. You can negotiate with the broker and he may be flexible with his fee if you are the type of tenant any landlord would love – one with good credit rating, a steady job and solid guarantor, if needed.

5. And, finally, remember that in real estate a verbal agreement is worthless. No matter what the broker tells you, you do not have the apartment until the lease is signed.

Most states and cities have good information about laws and regulations related to renting apartment with or without a broker. The State of Massachusetts provides these guidelines, which should be helpful no matter what state you live in. In New York City, you’ll want to check out both this New York state site and this New York City site.

For real life tales from the front here’s again the New York Times article that I linked to several posts ago.

Author My First Apartment
Kate

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Comments (5)

  1. Tim larkin

    Renting an apartment without a broker limits your choices as a tenant. Most of the high quality housing units are owned by opulent investors who hire(at no cost to them) highly experienced and well trained brokers rather than do the job themselves. Cheap tenants that want to bypass the broker fee apartments are usually stuck with inferior units from unprofessional landlords. Ask yourself this, Why would a rich landlord want to expend his/her valuable time and money on a job that a well trained highly experienced professional will graciously do for free? Most landlords who do not use the services of a FREE realtor try to pump tenants for extra security deposits or hike rent . WHY? They know you are trying to save a commission and they want a piece of it. Not a good negotiating position for a prospective tenant to be in.

    Reply
  2. Jesse

    Hi Kate,

    Since you posted this blog entry there is a quick and easy way to find out if the broker you contact is licensed by the state.

    See Here:
    https://appsext7.dos.state.ny.us/nydos/selSearchType.do

    Also a good broker in NYC will have access to apartments that you cannot get on your own. Some landlords in NYC have been using a handful of brokers exclusively and will only work brokers even if you call them yourself. Here are the top three broker only landlords:

    Pan Am
    BLDG
    Manocherian Brothers

    Most if not all of their apartments are currently No-Fee. If you have any questions feel free to google them and try calling them up yourself. You could also contact me and I can point you in the right direction.

    Reply
  3. Anonymous

    Kate. Just wanted to add some intel to your article. Check out http://www.nyrentclub.com

    This is an independent site where NYC renters can rate and review the service of NYC rental brokers. And, all brokers on the site agree to offer a minimum 20% discount off the fee. Some offer an even higher discount.

    This looks like a really good way to get help finding a NYC rental apartment and avoid unethical brokers.

    Reply
  4. Anonymous

    Hi Kate,

    Good article!

    I wanted to bring to your attention an alternative to using a broker in NYC. As it is, there are plenty of buildings in the city that have their own rental office and do not charge a fee. There are several websites that sell comperhensive lists of such buildings, or you can find a free list of buildings imposed on a google map at http://www.NoFeeMaps.com, along with phone numbers and websites of the rental agents.

    Reply
  5. Anonymous

    Hi Kate,

    Good article!

    I wanted to bring to your attention an alternative to using a broker in NYC. As it is, there are plenty of buildings in the city that have their own rental office and do not charge a fee. There are several websites that sell comperhensive lists of such buildings, or you can find a free list of buildings imposed on a google map at NoFeeMaps.com, along with phone numbers and websites of the rental agents.

    Reply