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The short-lived ban on broker's fees is officially history. On Tuesday, the New York Department of State quietly walked back its bombshell guidance that aimed to block brokers from collecting a commission from tenants.
Real estate agents may continue charging prospective tenants, the new guidance states, because state rent laws "do not, in and of themselves, prohibit a landlord's agent from collecting a 'broker fee' from a prospective tenant."
New York is one of just a handful of cities nationwide where tenants regularly fork over thousands of dollars to brokers.
The guidance will not immediately change the existing rules on broker's fees, which have been legal since a New York court issued an injunction last February, just days after the state's original guidance to ban them. But for many renters, the announcement offered an unsatisfying conclusion to the winding 15-month saga concerning of the legality of the fees.
On a recent Sunday afternoon, dozens of New Yorkers lined the narrow hallway of an East Village building. Most had arrived early for the open house, which promised a one-bedroom apartment on the fourth-floor of a walk-up priced at $2,2000 per month. An air of desperation, familiar to many pre-pandemic showings, hung in the air.
The real estate broker explained the terms, unmentioned in the listing: On top of first month’s rent and a security deposit, the tenant would be expected to pay 15% of the annual lease for her fee. After plugging the figures into a calculator, one prospective tenant balked at the nearly $4,000 figure, then requested an application anyway.
“You could make a lower offer,” the agent deadpanned, “but then you probably won't get the apartment.”
After a whirlwind couple of years, the broker fee has come roaring back from its pandemic-induced absence. Several real estate agents said they were now collecting higher commissions than they did before COVID, shouldered almost entirely by tenants.
David Rosen, a veteran broker with Douglas Elliman, recounted a “sudden flood of humanity” returning to the city, allowing brokers to collect one-time payments that seemed unfathomable even a few months ago. He described the hefty commissions as “distasteful” to discuss, but added, “Most brokers are having their best year ever.”
David Rosen, a veteran broker with Douglas Elliman, recounted a “sudden flood of humanity” returning to the city, allowing brokers to collect one-time payments that seemed unfathomable even a few months ago. He described the hefty commissions as “distasteful” to discuss, but added, “Most brokers are having their best year ever.”
I genuinely hate everything about the NYC real estate machine.
Brokers would simply go through the classified ads and call landlords to see if they wanted free coverage by them .
I used to run my ads in The NY Times and brokers would call me all the time to handle it free so I said sure .
Other wise few landlords needed brokers to rent their place out here
That's simply not true. Lots of landlords don't want to be bothered having to screen tenants, so they have brokers do it, especially if they have several properties. Only small time landlords would want to screen tenants themselves. Too much of a hassle.
But if they had to pay to do it , they would do it themselves …we used Douglas Elliman but if it cost me money I would have done it myself..renting most of the time took a day And it was done
Thank god we signed our new lease a few weeks ago for our new place. Got a month free with a two year lease as well. No fee. But now 80% of the places I see listed around us has in all caps "THIS IS A FEE APARTMENT" and don't mention concessions. WTF happened in three weeks?
I genuinely hate everything about the NYC real estate machine.
I don't think this is ven the NYC RE machine. This is a make work program by NYC politicians. Go check out who most of the brokers are for apartment rentals. It's recently arrived transplants.
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