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My sister is in the process of renting an apt in westchester county. The broker showing her the apt told her that if she really liked/wanted the apt she should give a $500 down payment and the apt will no longer be advertised. He said the $500 would go towards the brokers fee in the event she doesn't get it and if she's denied it'll be returned.
Anyone ever heard of this? The only part I found fishy was the part of them removing the apt from the listing and no longer advertising it.
If the broker actually showed the apartment, it's probably not the old "rental listing scam" which operates in tight markets. This payment could be the rental equivalent of an "earnest money" deposit when making an offer on a house or condo. Ask for a copy of the broker's NYS real estate license before plunking down the $500.
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He said the $500 would go towards the brokers fee in the event she doesn't get it and if she's denied it'll be returned.
Yes, I've put down a deposit before to hold an apartment. I forget exactly how much, probably around $500. I think it went to the landlord though. At the time of the lease signing, I paid the broker the full broker fee. While I paid the landlord the 1st month rent + the 1-month security deposit - the $500 deposit.
My understanding was the deposit was to hold the apartment and they would take it off the market while processing my application. If my application was approved and I no longer wanted the apartment, they would keep my deposit. If my application was denied, they would return the deposit to me.
At that time, I did research on the internet and found that this was a pretty common practice in NYC. However, there is always potential for scams so make sure you're dealing with a reputable broker and you get receipts.
My understanding was the deposit was to hold the apartment and they would take it off the market while processing my application. If my application was approved and I no longer wanted the apartment, they would keep my deposit. If my application was denied, they would return the deposit to me.
This is exactly the reasoning behind it. Its how i do business as well, some landlords/management companies ask for a check equal to 1 months rent for the same reason in that case i dont ask for $300-$500 from the client.
There is no reason for a "good faith deposit", since the broker incurs no costs and is injured in no way from an unsuccessful application. The costs of the application (application fee) and credit check fee are already borne by the applicant. Any money above and beyond that is unnecessary. In any case, if you choose to move forward with submitting an unnecessary good faith deposit, then it should be via credit card or certified check and should in the LANDLORD's name only. The broker should have no financial interest/access in the GFD, there should be a separate contractual agreement wrt the GFD outlining the terms and that it should ONLY be applied to the first month's rent or security deposit by the landlord in case of approval and returned otherwise.
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