Friday, September 17, 2010

Why Do I Have To Pay A FEE???

What’s in a fee?

Since the uptick in the Real Estate market over the past several months the one thing people ask me daily is “where are the no fee apartments?

Simple: they are there, but you won’t want to live there! Just kidding! (sort of) - Allow me to clarify why some apartments have fees and others don’t. First off, a broker has no control over fees. Unless it’s an exclusive. More on this later…

Most brokers in the city (meaning any reputable broker) works with all of the management companies and landlords. So if management company “A” sends out their daily update on their buildings, it could include a building in Murray Hill, West Village and/or the Upper West Side. There is no rhyme or reason to this. It just is what it is.

At the same time, management company “B” sends out their updates an hour later and although they manage seven buildings quite possibly in the same areas as company “A”, they only have four vacancies across all of their offerings.  Meanwhile, company “A” has the same amount of buildings but have 13 vacancies.

Depending on the market and inventory, management companies will offer to pay the broker fee in order to rent the apartments faster.  In this case, for example, company “A” will offer to pay the broker fee or “OP” which stands for “Owner Pays” to brokers, which in turn makes the open listing “No fee.” 
Company “B” since they only have a couple of vacancies, they can either decide to pay the broker fee or not. If not, then it becomes a fee apartment. Meaning, the client is charged a fee.

**NOTE: The same management company can decide to offer NO FEE on one building and a fee on their other buildings. In some cases, some units in the same building will have fee AND no fee units! Insanity!**

So why do some people have to pay a 15% fee on the annual rent to the broker?

Back to this… In certain instances when there is an apartment that is by a smaller landlord or an “exclusive” meaning a particular brokerage owns the listing, any broker has the right to rent the apartment, but, such as in buying or selling a home, it becomes a “co-broke” which means you typically charge a 15% fee on the annual rent and it’s split 50/50 to each broker, the listing agent and the broker who took you to the apartment.

Back in late 2008 and all of 2009, we saw NO FEE everywhere! We even saw landlords giving free rent and no fee just to rent apartments. Those days have passed and if you were able to “cash in” on the good times then congratulations! If not, don’t worry. The market changes monthly. Although we may not see what we saw last year in regards to inventory and prices, it’s still a good time to rent in NYC.  It’s an even better time to buy!  If you are looking to rent OR own, please contact me. I can help you get pre-qualified to buy, or give you the tools you need to rent in these tough times.  

Either way, I’ve got you covered!

**Personal note: Keep in mind brokers are trained with extensive knowledge on the market, trends, prices and inventory. There is no substitution for the valuable service we provide for clients. You can't find this sort of value on Craigslist (read an older post of mine for my view on Craigslist and you'll see why). So in cases when you may have to pay a fee to your broker, it's never money thrown away. You can't put a price on the time and money you as a client save by having a broker do the work for you. 


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