Renters' Guide to Broker Fees in NYC and No Fee Options
August 25, 2023 | 9 minute read | the RENT BETTA team
Broker fees are the bane of NYC renters.
They add thousands of dollars to the cost of renting an apartment, reducing housing affordability. They also seem unfair and unnecessary, and many renters wonder why they even exist.
So what are NYC broker fees, how much do they cost, and can you negotiate them lower...or avoid them altogether?
Do You Need a Broker to Rent a NYC Apartment?
No. It's possible to find an apartment by yourself and avoid paying a broker fee.
However, most of the apartment listings you find online will be posted by brokers eager to get your money. Check out common apartment search websites in NYC like Streeteasy, RentHop, and CityRealty, and you'll see that most of the listings are actually from brokers, not building owners.
Find an apartment available directly from a landlord or property manager, where you can rent directly from the leasing office, to avoid a broker fee.
RENTBETTA.com makes this easy by connecting you to no fee apartments from all the leasing offices in NYC. For any apartment, click Book a Tour or Apply Now, and you'll be connected to the property manager or landlord to schedule a tour or submit your application, not a broker.
You can also find no fee apartments on Craigslist from smaller landlords, though you will have to filter through a lot of fake listings.
What is a Broker Fee in NYC?
A broker fee in NYC is charged by a real estate broker for you to rent an apartment they introduced you to.
You must pay the fee to the broker either when you submit your application or before you sign the lease. Once you pay it, that money is gone forever. You don’t get it back when you move out.
And yes, this system seems as corrupt, overpriced and inefficient to you as it does to us.
Do I Have to Pay a Broker Fee in NYC?
If you find an apartment offered directly by the landlord or property manager, and submit your application through their leasing office, you will avoid a broker fee.
After all, you're not working with a broker...so you don't have to pay one.
This is exactly what you get on RENTBETTA.com, where we've collected all the no fee landlords and property managers in NYC and connect you directly with them to book a tour and apply.
For every apartment listing on the site, you'll send a message or email directly to the leasing office for the property, not a broker middleman.
Click "Apply Now" and you can download their application or will be connected with their online application portal.
You'll never interact with a broker, only the leasing office, and you'll never have to pay a broker fee.
How Are Broker Fees Calculated in NYC?
Apartment listing descriptions typically describe any broker fee involved, and they are often calculated as months of rent or a percent of the annual rent.
You will commonly see language like “there is a 1-2 month broker fee” or “a broker fee of 8-15% of the annual rent will apply”.
Both are asking for a similar amount of money.
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 in NYC?
Typically, broker fees are 1-2 months or 8-15% of the annual rent.
If you are looking at an apartment with a rent of $3,000 per month, the broker fee will likely be listed as:
1. 1-2 months of rent $3,000 to $6,000 (1x or 2x the monthly rent of $3,000)
2. 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 present their fee, the amount is roughly similar, and that’s not an accident.
Basically, brokers like to size up the renters who reach out to them to see how much they can get out of them.
They will initially ask for 2 months of rent, and if you seem desperate, in a hurry, or new to New York City they won't budge much from that demand.
If you appear like you know what you're doing, currently live in NYC, or are generally non-committal and let them know you are looking at a few other places, you'll likely be able to get them down to just 1 month of rent as a fee.
Sometimes, we’ve seen brokers accept a fee of less than 1 month of rent (one of our team members got it down to a fee of 1/2 month of rent for an UES walk-up), but that's usually as low as they go.
We recommend that if you want to completely avoid the broker fee, avoid working with a broker and rent directly.
How to Negotiate Broker Fees in NYC
So you found the perfect apartment, were super excited during the tour and asked the broker for an application.
The only problem is...they emailed you an invoice asking for a 2 month broker fee along with the application.
That's thousands of dollars...just for them to open the door and click "forward" on your emailed application!?!
There are a few steps to negotiate broker fees in NYC:
1. Setup a new yahoo email with a fake name and use a burner phone number
This way if a broker makes you sign an exclusivity form before the tour, they don't have your real name.
It's a little sketchy, but so are most real estate brokers.
Sometimes, they may ask for your ID when you sign the exclusivity form, so this situation could turn awkward, fast.
In any event, you may want to refuse to sign an exclusivity form (it says you must pay that broker a fee if you rent the apartment they show, along with who knows what else) and just look elsewhere.
Or you could just sign the form, go on the tour, but never be intent on renting that apartment.
2. Don't act too excited during your tour
This is key. If you act over-excited when you see the apartment, the broker isn't going to be very willing to negotiate when it comes to the broker fee. Be pleasant (there's no point to ever being unpleasant in life), maybe slightly aloof, and non-committal.
You may say things like "I like it, I just have two more places to see tomorrow" if they try to ask how far you are along in the process.
3. Negotiate the broker fee from 2 months to 1 month of rent
Brokers typically demand 2 months of rent, and will negotiate down to a 1 month fee if you are the only interested renter. Sometimes, like during the Winter when it is slower, they may accept less than 1 month of rent as their fee.
If the broker sent you an invoice asking for 2 months of rent, find a round number that is less than one month of rent, and email them back (after waiting a day), can you do "X"?
For example, if you are looking at a $2,500, and they sent you an application with an invoice for $5,000 (2 months of rent), you could email them a terse one-line email the next day "Can you do $2,000 as the fee?"
In which case, they will likely counter-offer with 1 month of rent ($2,500, in this example). Be prepared to accept it, or move on.
4. Be prepared to move on
Everyone in NYC has (too many?) options. If you found the perfect place and the broker isn't budging on the fee (they're usually high on the charm, but firm on the fee), it can be easier to just let it go and move on.
Are Broker Fees Illegal in NYC?
Broker fees are perfectly legal in NYC, in fact, they are commonplace in the rental market. Most apartment listings have broker fees.
In 2019, New York State passed the “Housing Stability and Tenant Protection Act” which included many 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 vague language that seemingly made broker fees illegal, requiring landlords to pay the fee if the broker worked on their behalf, which is almost always the case.
The brokerage industry screamed, sued, and won - broker fees are very much still legal in NYC, despite the intentions of the 2019 law.
There's a new bill floating around the New York State Senate to make broker fees the landlord's responsibility, but it hasn't been passed and doesn't look to have enough support. We're not expecting the current paradigm to change anytime soon.
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?
We believe it's because the vacancy rate in NYC is low (compared to most major cities), so brokers (and landlords) have inordinate bargaining power against renters.
You may be able to see a lot of different apartments, but as the days tick down to the last day on your lease, options run out. Since the NYPD frowns upon camping under a bridge, as you approach the 31st, you are forced to accept what brokers demand as their fee. And they know that.
The good news is you can now easily rent directly from property managers across NYC.
Are NYC Broker Fees Negotiable?
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 it's up to you to negotiate them down from there.
If you bargain them down from 2 months of rent to a 1 month fee, you may feel like you “won”, though actually, you are still paying them a large amount of money for a simple service.
So if negotiations aren't going well, don't waste your time.
Checkout other ways to find a no broker fee apartment.
Don’t try to talk tough, 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 you submit the rental application or sign the lease.
They’re almost always 1-2 months of rent.
But during slow periods in the rental market, such as during winter or following the onset of the COVID-19 pandemic when everyone moved out of 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 when the rental market is weak.
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.
This can be directly advertised in an apartment listing, with text in the description saying something like "1 month OP."
But because they’ve got to write a check to the broker when you sign a lease, the landlord may be less willing to negotiate with you on the rent, so while you're not paying it directly, you still lose some leverage.
Other times, landlords offer 1-2 months of free rent as an incentive for new renters into their buildings, and the broker will just take one of those free months of rent as their fee.
For example, 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 Streeteasy and advertise it as “no fee.” They get paid a one month fee from the landlord. You don’t get a month of free rent.
So is it really "no fee"?
No, and you're better off renting directly from the property manager, as you can do on RENTBETTA.com.
In a normal rental market, broker fees are typically more explicit, and paid directly by the renter as 1-2 months of rent.
How Can I Avoid Paying a Broker Fee in NYC?
If you want to avoid paying a broker fee when you rent an apartment in NYC, it's best to avoid a broker.
After all, brokers don’t work for free, so if you're working with one, expect to be paying a fee, directly or indirectly.
So to cut out the fee entirely, cut out the broker middleman and rent directly from the landlord or property manager by going to their leasing office.
You can do this by searching through property records to find out who actually owns the building and do a Google search if they have an office, or pound the pavement in neighborhoods you like and knock on doors to ask if they have any availabilities.
You can also go to RENTBETTA.com. We combine all the no fee apartments available from property managers 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 websites in NYC.
It will take a bit more work (and caution), but you can still find direct deals from walk-up buildings on Craigslist.
Broker fees are entirely 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 (ouch!). Your best bet to avoiding a broker fee is to rent directly from the property manager, bypassing brokers and the fees they charge. 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.