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New York City Council Votes to End Broker Fees Squeezing Renters

(www.bloomberg.com)
258 points JumpCrisscross | 1 comments | 13 Nov 24 21:38 UTC | HN request time: 0s | source
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GenerWork ◴[13 Nov 24 22:31 UTC] No.42130920[source]▶
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?
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voberoi ◴[13 Nov 24 23:08 UTC] No.42131237[source]▶
The fee will end up somewhere.

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.

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standardUser ◴[14 Nov 24 00:20 UTC] No.42131759[source]▶
A landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate the higher rent. The idea that it must "end up somewhere" doesn't hold water since the fee offered no value to begin with.
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1. voberoi ◴[14 Nov 24 03:34 UTC] No.42132905[source]▶
You are right that the landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate it.

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.