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Adding onto the complaints of economic inefficiency here: one of the worst things I found living in Boston (not sure how many other major cities this applies to
by alehul 8y ago
Adding onto the complaints of economic inefficiency here: one of the worst things I found living in Boston (not sure how many other major cities this applies to) is that it's completely standard for the renter of a property to pay a broker's fee, generally equivalent to one month's rent, to the landlord's agent.
In most (healthy, cheaper) rental markets, the landlord will pay a real estate agent a fee (one month's rent, again) to find a renter. This intuitively makes sense, as the landlord requires some number of hours of effort from the agent to list the home, show the apartment to a ton of people, and find one willing to rent it.
It seems economically so incorrect that the renter should bear the cost of the fee the rental agent charges for showing the home to like 10 potential renters— they spend maybe 10 minutes of their time showing the individual renter, and they're late more often than not!
Edit: below commenter rightly pointed out that this is economically perfectly correct— unjust from a value perspective would be better phrasing
- cde-v 8y agoNew York is the same way, except the fee can be up to 20% of yearly rent. You hope you only have to pay one month broker's fee.
- xyzzyz 8y agoStandard economic theory predicts that the tax incidence falls more on the party that has lower elasticity — that is, fewer alternative options to make a deal. If it is hard to find an apartment, the renter will pay most of the fee. If it is hard to find a renter, it’s the opposite.