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.