Everything You Need to Know About Apartment Broker Fees in NYC
March 12, 2023 | the RENT BETTA team | 5 minute read
Broker fees are the bane of NYC renters. They add thousands of dollars to the cost of renting for hard-working New Yorkers, and would seem an easy target for a popularly-inclined government to get rid of. Yet they persist. An introductory guide to NYC broker fees, and a few tips on how to negotiate them down or avoid them altogether.
What is a Broker Fee in NYC?
A broker fee in NYC is charged by a real estate broker in the process of renting an apartment.
You must pay the fee to the broker when you submit your application or before you sign the lease, you don’t get it back when you move out, and yes, the system seems as corrupt, overpriced and inefficient to you as it does to us.
Do I Have to Pay a Broker Fee in NYC?
Technically no, if you find an apartment offered by the landlord and submit your application to them directly, you can avoid the expense and hassle of the broker middleman.
On RENTBETTA.com, we combine all the property managers and landlords in NYC that let you rent directly from their leasing office, without paying a broker fee. You can click book a tour or apply and will be connected directly with the leasing office, not a broker.
Brokers don’t work for free, so if you’re communicating with one to see an apartment, expect them to charge you a fee if you apply for the apartment.
How Are Broker Fees Calculated in NYC?
A description of the broker fee is often included in the apartment listing, and they are typically calculated as months of rent or a percent of the annual rent.
You will commonly see language like a “there is a 1-2 month broker fee” or “a broker fee of 8-15% of the annual rent will apply”.
Either way they are calculated, the ranges equate to a similar amount of money for the broker. Since there are 12 months in a year, a 1 month broker fee equates to about 8% of the annual rent (1/12), and the higher 2 month broker fee is about 15% of the annual rent.
What Is a Normal Broker Fee?
A “normal” broker fee in NYC is 1-2 months of rent, or 8-15% of annual rent.
Either way it is calculated, it works out to about the same amount of money. So if you are looking at an apartment with a rent of $3,000 per month, the broker fee will likely be listed as:
1-2 months of rent: $3,000 to $6,000 (1x or 2x the rent of $3,000)
8-15% of the annual rent: $2,880 to $5,400 ($3,000 x12 = $36,000, then take 8% or 15% of that amount).
Either way the broker chooses to calculate their fee, the fee ranges are roughly similar (that’s not an accident).
Basically, the broker will size you up to see how much they can get out of you, initially asking for the high end of the range (2 months, or 15% of the annual rent), and will negotiate down to the low end of the range (1 month, or 8% of the annual rent) if they feel you are about to look somewhere else.
Sometimes, we’ve seen brokers accept a fee of less than 1 month of rent, but that is usually the least they will accept.
If you want to avoid the broker fee, avoid a broker.
Are Broker Fees Illegal in NYC?
Broker fees are perfectly legal in NYC, and in fact they are commonplace in the rental market.
In 2019, New York State passed the “Housing Stability and Tenant Protection Act” which included a lot of tenant-friendly protections. Conversely, because housing laws are very tenant friendly in NYC and it is hard to evict tenants who stop paying rent, it is also hard to rent an apartment here without an excellent credit score. Landlords don’t want to take the risk.
The 2019 law included language that seemingly made broker fees illegal, requiring landlords to pay the fee if the broker worked on their behalf, not the renters, which is almost always the case.
The brokerage industry screamed, sued, and won - broker fees are very much still legal in NYC, despite the 2019 law.
What is the Law on Broker Fees in 2023?
Broker fees are legal in NYC, and you should expect to be charged one if you are working with a broker to rent an apartment.
Why do broker fees even exist? Good question, we believe it is because the vacancy rate in NYC is so low, brokers (and landlords) have inordinate bargaining power against a renter who has to move at the end of the month, allowing them to charge this exorbitant fee. The good news is you have options.
Are NYC broker fees Negotiable?
Yes, broker fees in NYC are negotiable.
A broker will likely try to charge you the maximum amount they believe they can get out of you, and will negotiate down from there. So you feel like you “won”, while actually, you are paying them a large amount of money for a simplistic service.
If you seem to new to the process, overly excited when touring an apartment (no need to act like a jerk, though), or if they just believe it’s their lucky day, expect the broker to initially ask you for a fee of 2 months of rent, or 15% of the annual rent.
Often, you can negotiate that down to 1 month of rent, or about 8% of the annual rent. Don’t respond to the broker's email right away. Send a short text the next day, or after several hours, “can you do 1 month of rent as the fee?”. Give them some uncertainty you might walk.
Don’t talk too tough though, as always in life, sounding aggressive shows weakness and aggravates a situation.
Be pleasant. Be terse. Wait a little while to respond.
Your best bet? Avoid the broker fee altogether, by avoiding the broker. Find an apartment you can rent directly from the building owner or its property manager.
Who Pays the Broker Fee When Renting In NYC?
Broker fees are generally paid by the renter, and are due when submitting your application or signing the lease.
They’re almost always 1-2 months of rent.
But during slow periods in the rental market, such as during winter or after COVID-19 hit NYC, brokers will show “no fee” apartments.
Did the industry suddenly become charitable?
No, brokers still charge a 1 month fee for their (promotional) services, they just hide it better.
In some cases, the landlord will pay the 1 month broker fee, instead of the renter. This is known as an “OP”, as in “Owner Pays” the broker fee. But because they’ve got to write out a check to the broker when you sign a lease, the landlord may be less willing to negotiate with you on the rent.
Other times, landlords offer 1-2 months of free rent as an incentive, and the broker will just take a free month of rent as their fee. A property manager may list an apartment with 1 month of free rent, a broker will take that same listing and put it up on a site like Streeteasy, and call it “no fee.” They get paid a one month fee from the landlord. You don’t get a month of free rent.
In a normal rental market, broker fees are typically more explicit, and paid directly by the renter.
How Can I Avoid Paying a Broker Fee in NYC?
If you want to avoid paying a broker fee when renting an apartment in NYC, we suggest you avoid brokers.
There are “no fee” options on sites like Streeteasy or Renthop, but if it's posted by a broker, it is likely either a fake listing or has a hidden fee.
After all, brokers don’t work for free.
The best way to avoid a broker fee is to cut out the broker middleman and rent directly from a building’s leasing office. You can search through property records to see who actually owns the building, or pound the pavement in neighborhoods you like, knocking on doors to ask if they have any availabilities.
Or go to RENTBETTA.com. We combine all the no fee apartments available from property managers and building owners across NYC. You can click book a tour or apply for any apartment on the site, and will be connected directly with the leasing office, not a broker.
You’ll never have to pay a broker fee, and you’ll avoid the thousands of fake broker listings that spam most apartment search sites in NYC.
Craigslist also has no fee apartments, typically from smaller building owners than on RENTBETTA.com. Just be sure to skip past anything that looks its posted by a broker, or feels like a scam. It will take a bit more work (and caution), but you can still find direct deals from walk-up buildings on Craigslist.
Conclusion
Broker fees are very much legal in New York City, and expect to pay one if you’re looking for apartments with a broker. They’ll likely charge you 1-2 months of rent. Your best bet to avoid a broker fee is to rent directly from the building owner, bypassing brokers and going straight to the source. Checkout RENTBETTA.com for no fee apartments available from leasing offices throughout NYC, and if you’re up for it, Craigslist for smaller, typically walk-up landlords.