UPDATE (Feb. 10th)
Because of a lawsuit initiated by REBNY, NYSAR and others, a temporary restraining order was granted today. Landlord’s agents can collect a commission from a tenant until further notice. Next court date is schedule for March 13th to litigate the State’s interpretation of this rule.
No more Broker Fees in NYC? Will you get your old fees back? Here’s a quick guide to what’s happening with broker fees in NYC.
New York State has had historic rent reforms in the last year, including limiting security deposits to no more than one month’s rent, limiting onerous application fees, and as of February 6, 2020, thanks to a new understanding of last June’s rent law, renters are no longer responsible for paying broker fees — in some cases.
The owner of the property must pay the broker, if they hired the broker to market and rent their property. However if you hire a broker to find you a home, you will be responsible for paying their fee.
Is this interpretation set in stone?
Not necessarily. The Real Estate Board of New York (REBNY) — the industry trade organization — plans on suing the state of New York over this interpretation, arguing that it was not the intent of the law to get rid of broker fees.
Reggie Thomas, Senior Vice President for Government Affairs at REBNY, said in a statement after the publications of the new interpretation: “We are aggressively pushing back on the Department of State’s misguided interpretation that will have a devastating impact on hard-working real estate agents, owners, and renters throughout New York State.”
SO WHAT DOES THIS MEAN FOR YOU?
For now, if you do not hire a broker to represent you, you won’t have to pay a broker fee to move into an apartment.
What if you paid a broker fee after the law went into effect in June 2019?
Unfortunately the updated guidance does not address this question. There have been conflicting messages from authorities, with some saying that broker fees paid since June 2019 should be refunded. Others suggest that the new interpretation only impacts broker fees paid after January 31, 2020. We will watch this matter closely and will update this post and our social media when the matter is resolved.
What if you paid a broker fee before June?
You won’t get your broker fee back. Laws don’t work retroactively. Sorry.
Will rents just go up to cover the broker fee, now that landlords are responsible?
Maybe! Property owners still need to have their vacant (or soon to be vacant) properties photographed, marketed, and rented. “The question is who will do it and how much will landlords want to pay for that service” said Steve Kalifowitz, President of Localize.city “It’s in the landlord’s court, they will either eat the cost, cut the broker’s fee, or pass it on to the renters.”
Should you pay a broker’s fee?
Brokers who represent you will use their market intelligence and expertise to quickly find you good options. They’ll help you evaluate a short-list of homes, know when there’s a good deal you should move on fast, and will negotiate on your behalf.
If you can afford to pay between one month’s rent to 15% of one year’s rent, then hiring a real estate agent to represent you could be a smart move, especially if it’s your first apartment in NYC.
Not working with an agent will cost you a lot of time (researching, setting up appointments, etc…) and you’ll be left to negotiate on your own. For the do-it-yourselfers, this could be a good option.
Regardless of whether or not you choose to work with a broker, be sure to read Localize.city’s review of every property in New York City. It’s the only way to learn detailed facts about any property in the five boroughs.
So how should you find a home?
Whether or not the new interpretation banning fees is overturned, you still need a way to see the inventory in the market and know what’s really going on at each address. Localize.city is the first and only real estate marketplace that pairs complete inventory with the complete story about every property, and will always be the place to start your search.