While I do agree with the spirit of this, doesn't this mean that any fees that brokers require will be included in the rent?
replies(7):
If it's in the rent, it's better to amortize the cost of the broker fee over a year vs. pay upfront.
Between the fee + first month's rent + security deposit (+ sometimes an additional month's rent) it is common to have to front 10K - 20K just to get into an apartment here.
If you have 2 buddies and going on a $5500 3 bedroom in Boston, you'll likely be requested first rent + last rent + deposit + broker fee (=1 rent) = 4 * rent = $22k just to get the keys. That's $7300 per person. This is only to get the key, the next month you pay rent #2.
If you're going on a $4k 1 bedroom by yourself (or with your partner) you'll be hit with 4 * 4=$16k upfront cost, or $8k if you're lucky and have a partner.
Renting is extraordinarily expensive in big cities in the US right now. I'm sometimes surprised people can survive this market. I make ~$150k a year in a lucrative software engineering role, and rent is still too expensive for me. It's very difficult for e.g. teachers, researchers etc making ~$70k a year etc.
Some cities will be cheaper, some will be more expensive. E.g. I know that Philadelphia is particularly cheap when it comes to cost of living. Chicago is expensive, but seems to be slightly cheaper than NYC/Boston etc...
One's personal definition could mean $1000/m difference compared to someone else's.
I imagine some other cities have done the same.
Where I live, in a desirable Manhattan neighborhood with an old building stock, you can find a decent 1-bedroom for around $3500/mo and move in for a total of $7k. If you hunt for a deal and can make a few sacrifices, you can bring that down to $6k.
Sometimes it seems like they are the only governments that can!
I am not arguing that it will end up in the rent. I was only arguing that, if it did, that would still be a better arrangement.
However, you are wrong that the service provided by the fee offers no value, and that the fee will not end up somewhere (even in a diminished way).
- To landlords it offers upfront vetting, no required face time with prospects, and less work to land a tenant. We have a 1.4% vacancy rate in NYC -- apartments on the market will have hundreds of interested people and multiple applications. Landlords basically manage none of this.
- To prospective renters who actively hire a broker -- and these do exist, I did this once -- it offers zero time on the prospect's part to look for, schedule, and research units. You tell the broker your parameters, they will do the research, and then set up a multi-hour tour of apartments.
(Unless you are only looking at no-fee apartments, you are better off just hiring a broker so you get at least some value from it if you rent a fee-ful apartment)
The value the fee provides to the people who care about it, will end up somewhere. This work doesn't go away. Many landlords and prospective renters will take on the work themselves, but many won't.
These people will pay for the broker fee. Those broker fees end up with the landlord or the prospective renter.
It is not my conclusion that eliminating the broker fee will result in higher rent. I think what will happen is:
- The broker market will shrink.
- Some landlords or renters will pay for it.
In a nutty housing market like NYC's, there is actual value provided by brokers, to some people.
Finally -- to be clear, I'm not arguing against the FARE Act. I am fully supportive of it and wish this happened years ago.