10 ms·

Would love something like this to kill (or at least severely maim) the broker industry in NYC. 0 value added at the cost of 10-15% of yearly rent.

by cde-v 5y ago

aerovistae 5y ago
Yeah it's pretty atrocious. They're so useless. It's such a feel-bad experience working with them, knowing they're not helping at all, and knowing you have to pay them thousands of dollars if you want the apartment - for nothing.
- solumos 5y ago
  What's worse is when they try to pretend like you're actually getting value for the crazy fee they charge. "Now, I'm you're broker so if there are any problems throughout the lease, feel free to contact me. This isn't just a one time thing!" We literally emailed/called him two weeks later and he ghosted us. When we were moving out of our apartment when our lease was up, he was around showing another unit, introduced himself, asked us how long we lived there, etc
KoftaBob 5y ago
If I’m not mistaken, didn’t NYC enact a law last year that bans landlords from charging tenants the broker fee?
- infogulch 5y ago
  It's good that there's no surprise fees, but they're still being paid. It's like anything, the value is just hidden in the price of the product now, rent in this case.
  - justaguy88 5y ago
    The landlord can decide if it's worth paying them then
    - michaelmrose 5y ago
      If the landlord pays a fee equal to a percentage of the rent you will be paying them if you rent there. If they are pervasively popular in your market you wont have much choice but to pay them as well.
    - infogulch 5y ago
      That's not how anything works. The money doesn't just come from nowhere, or from the landlord's profits. It is accounted for as an increase to rent. That's what I meant by "surprise fees", you're still paying them, they're just not a surprise anymore. Maybe the increased transparency in the market will push out brokers that aren't adding value, but that's more of a hope.
      - heurisko 5y ago
        It's not a hope, it's reality in other countries, like the UK. We banned letting agent fees charged to the tenant. Miraculously, landlords didn't find paying £250 for a contract renewal value for money. Rents continue to go up and down, but now tenants know they are spending money on their flat or house, rather than paying inflated fees to a letting agent/broker.
- syshum 5y ago
  That is not how economics work... All fees are passed on to the consumer in some way, it is either a line item or hidden
  - apercu 5y ago
    True, except in this case NY is one of the few places in the world that requires such nonsense.
  - tut-urut-utut 5y ago
    No, they are not. The consumer price depends only on supply and demand. Fees don't influence none of it, only the cost of the selling party and thus his profit.
    - enjo 5y ago
      This is correct in almost all cases (outside of highly commoditized goods) and it's crazy how people don't understand it. It's why the price of McDonalds doesn't increase when minimum wage does. McDonalds is already charging as much as they can for a Big Mac (where stores averages a 40% margin). Increasing minimum wage means that margin goes down a bit, not that prices increase. If they could increase prices they already would have.
      - stale2002 5y ago
        So you just reject the field of economics entirely? Like, lets say that the government adds a 20$ tax/fee on fast food, per burger sold. Clearly McDonalds would no longer be able to sell burgers for 4 dollars. Thus price would increase. Or supply of burgers would go down (thereby only leaving higher priced burgers in the market).
      - EricE 5y ago
        Fast food prices have increased greater than inflation for some time: https://www.delish.com/food/news/a39265/fast-food-menu-price-increases-from-2002-to-2013/ https://www.delish.com/food/news/a39265/fast-food-menu-price... Thinking that labor costs do not impact product costs is grossly ignorant.
- solumos 5y ago
  It was a state law that capped application fees at $20 or something, and some authority interpreted that as broker's could no longer charge fees to tenants, but then the real estate brokers association was granted a stay + the court eventually decided in their favor.
mushufasa 5y ago
0 value added for the tenant, but brokers typically serve the landlord.
- edoceo 5y ago
  Software serves both parties with a win. Faster for LL, cheaper for Tenant.
  - listenallyall 5y ago
    Is it though? Airbnb is essentially a rental broker, it charges a high fee, and still hasn't turned an annual profit. Plus the landlords add on "cleaning fees" and more that the tenant must agree to pay.
- klodolph 5y ago
  In NYC, there are often two brokers—one for the landlord, and one for the tenant.
- throwawayboise 5y ago
  They serve themselves, really.
- TillE 5y ago
  I don't really get where brokers fit in. Most landlords should have the time/employees to take care of such things themselves. An absentee landlord would need a whole property management service to take care of everything, not just one small part. Brokers should be a niche service at best.
  - jedberg 5y ago
    Not really. My parents used a broker for their rental. They manage the maintenance and rent collection themselves, but did not have the time or energy to do marketing/showing/vetting of new tenants. And the broker they used basically does all the listings in the condo complex, so he has a steady flow of interested and vetted renters as well as standard leases that cover the specifics of the condo complex, as well as a relationship with the management office to get the renters approved quickly and get them keys for amenities and such. In our case we pay the broker, but I can see a lot of value in their services for the landlord.
crazygringo 5y ago
Yeah, last year it had briefly seemed that broker's fees had become illegal, but this year that was "clarified" and now they're definitively legal again. [1] [2] Previously it had seemed like nothing could get rid of them -- landlords mostly didn't care since it was mostly tenants who paid them in the end. But COVID suddenly made everyone a bit more willing to consider other options (like virtual tours), and with some rents down landlords are perhaps a bit more willing to realize that if there's no broker's fee, tenants can pay a little more. I'm actually really excited about this lockbox technology, I genuinely think it could be the key to "unlocking" competition again. My only concern is that a lot of buildings don't have anything obvious in the front to lock it to, as well as plenty of buildings prohibiting tenants from storing keys in lockboxes in front, both because anyone can take a hammer to one and smash it to get the building key, and also because they don't trust it's not someone running an AirBNB. [1] https://www.nytimes.com/2021/05/27/nyregion/broker-fees-real-estate.html https://www.nytimes.com/2021/05/27/nyregion/broker-fees-real... [2] https://www.timeout.com/newyork/news/you-will-still-have-to-pay-broker-fees-in-nyc-041221 https://www.timeout.com/newyork/news/you-will-still-have-to-...
shazzzm 5y ago
Lettings fees were banned in Scotland a while back, I think they're now also illegal in England and Wales too.
- jon-wood 5y ago
  Yup, also banned in England now. It shouldn't have been, but it was very refreshing when I last renewed my lease not to be charged several hundred pounds for the privilege of emailing back a signed copy of the document with the end date changed.
tut-urut-utut 5y ago
The assumption that software can solve this problem is simply wrong. It's the regulation change that needs to happen if you don't want that renter pay the broker "services". For example, a new law in Germany to apply the "who hires pays" principle for brokers in the renting market basically made the renting "broker fee free" for renters. Previously, the landlords would hire a broker that needed to be paid by the renter. Why not, it doesn't cost them anything, and at least they don't need to have a contact with the potential renters. Now, that they have to pay for the brokers service themselves, it's suddenly not that valuable to them.
- literallycancer 5y ago
  So the landlords just make the rent more expensive to account for having to pay the broker, what changed?
  - tut-urut-utut 5y ago
    The rent price depends on supply and demand, not on landlords costs.
    - dspillett 5y ago
      It isn't quite as simple as that in many cases. Kickbacks from brokers and other dubious jiggery-pokery can make quite a difference.
    - bin_bash 5y ago
      Doesn’t it stand to reason that without broker fees the landlord margins would increase bringing more landlords (supply) into the market?
    - einpoklum 5y ago
      That's like saying rent prices depend on the will of god. Retroactively, you can justify this claim regardless of what happened: "It was god's will" or "You had to adapt your price to the demand".
  - 5y ago
spyspy 5y ago
What's worse is they also employ high pressure sales tactics to get tenants to settle asap. Young professionals and students moving to the city for the first time are their bread and butter, along with people who decided to end their current lease and have 30 short days to find a new spot. While searching for my current apartment, I was month-to-month on my previous NYC lease and was therefore 1) not a complete noob to the city and 2) could be super picky and I kept getting the sense brokers had no patience for someone like me.
- listenallyall 5y ago
  Not sure why you are surprised or annoyed by this. It doesn't matter what you sell, aren't you going to avoid the self-described "super picky" customer? Salespeople work on volume, a customer like you is a time suck with limited probability of resulting in a sale. You're welcome to be as selective as you like, but certainly don't expect salespeople to want to deal with you.
  - caddemon 5y ago
    "Customer" is an interesting word choice for someone who receives literally 0 value from the agent. Especially now with the internet, but even before with school/work connections, the majority of students/transplants will find their own apartment. They then have to pay the broker fee to whatever agent their chosen landlord has decided to use, in exchange for being a middleman with paperwork. Many of the prospective tenants do not even find out about this until it is time to officially apply! Since there is usually a deadline to find an apartment, and most apartments will have (proportionally) the same exact fee, the "customer" is really a captive. Ironically, the person you are replying to tried to actually be a customer with the agent, but since these people have no need to sell apartments (they will sell themselves in NYC and Boston), you're right - why bother? The real key is to become buddies with a few landlords, that's where to spend time.
    - listenallyall 5y ago
      "Especially now with the internet," can you show me a service that doesn't extract its own fee when connecting buyers and sellers?
d33lio 5y ago
It's a huge hassle in Boston as well. Pretty boy hustle brokers deserve easy work that doesn't require real education so I can pay more to find a domicile - said no one ever...
- bredren 5y ago
  Had to deal with this in Boston back in 2007. Some bro driving me around. Took this massive fee. Made no sense.
nostromo 5y ago
It'd be interesting to see if that fixed the problem or just replaced one parasite with another. Many software companies fix the problem, disrupt rent-seekers with reduced costs, only to later become rent-seekers that have the market power to increase costs.
analyte123 5y ago
If evictions didn’t take 3-6 months minimum in NYC (even pre-COVID), landlords could afford to be a lot less picky about who they rent to. Brokers or other middlemen also benefit the landlord by keeping the landlord at arms length from tenant selection and therefore possible discrimination lawsuits.
- EricE 5y ago
  Yup. And people wonder why landlords are so picky... 10 years ago I would have entertained owning rental properties. I'm so glad with todays climate I didn't go down that path!
nwsm 5y ago
Similar situation in Boston. The value add is that the brokers are regulated and in theory this means no one gets scammed. For context, over the past few years of crazy rental market, many people have gotten scammed by finding a fake listing online, sending off a deposit, and never hearing from the "landlord" again.
gbronner 5y ago
I don't use brokers, but rent control enshrines them. More housing->fewer brokers, so join open ny

Would love something like this to kill (or at least severely maim) the broker industry in NYC. 0 value added at the cost of 10-15% of yearly rent.

by cde-v 5y ago

Would love something like this to kill (or at least severely maim) the broker industry in NYC. 0 value added at the cost of 10-15% of yearly rent.

aerovistae 5y ago

Yeah it's pretty atrocious. They're so useless. It's such a feel-bad experience working with them, knowing they're not helping at all, and knowing you have to pay them thousands of dollars if you want the apartment - for nothing.

solumos 5y ago
What's worse is when they try to pretend like you're actually getting value for the crazy fee they charge. "Now, I'm you're broker so if there are any problems throughout the lease, feel free to contact me. This isn't just a one time thing!" We literally emailed/called him two weeks later and he ghosted us. When we were moving out of our apartment when our lease was up, he was around showing another unit, introduced himself, asked us how long we lived there, etc

KoftaBob 5y ago

If I’m not mistaken, didn’t NYC enact a law last year that bans landlords from charging tenants the broker fee?

infogulch 5y ago
It's good that there's no surprise fees, but they're still being paid. It's like anything, the value is just hidden in the price of the product now, rent in this case.
- justaguy88 5y ago
  The landlord can decide if it's worth paying them then
  - michaelmrose 5y ago
    If the landlord pays a fee equal to a percentage of the rent you will be paying them if you rent there. If they are pervasively popular in your market you wont have much choice but to pay them as well.
  - infogulch 5y ago
    That's not how anything works. The money doesn't just come from nowhere, or from the landlord's profits. It is accounted for as an increase to rent. That's what I meant by "surprise fees", you're still paying them, they're just not a surprise anymore. Maybe the increased transparency in the market will push out brokers that aren't adding value, but that's more of a hope.
    - heurisko 5y ago
      It's not a hope, it's reality in other countries, like the UK. We banned letting agent fees charged to the tenant. Miraculously, landlords didn't find paying £250 for a contract renewal value for money. Rents continue to go up and down, but now tenants know they are spending money on their flat or house, rather than paying inflated fees to a letting agent/broker.
syshum 5y ago
That is not how economics work... All fees are passed on to the consumer in some way, it is either a line item or hidden
- apercu 5y ago
  True, except in this case NY is one of the few places in the world that requires such nonsense.
- tut-urut-utut 5y ago
  No, they are not. The consumer price depends only on supply and demand. Fees don't influence none of it, only the cost of the selling party and thus his profit.
  - enjo 5y ago
    This is correct in almost all cases (outside of highly commoditized goods) and it's crazy how people don't understand it. It's why the price of McDonalds doesn't increase when minimum wage does. McDonalds is already charging as much as they can for a Big Mac (where stores averages a 40% margin). Increasing minimum wage means that margin goes down a bit, not that prices increase. If they could increase prices they already would have.
    - stale2002 5y ago
      So you just reject the field of economics entirely? Like, lets say that the government adds a 20$ tax/fee on fast food, per burger sold. Clearly McDonalds would no longer be able to sell burgers for 4 dollars. Thus price would increase. Or supply of burgers would go down (thereby only leaving higher priced burgers in the market).
    - EricE 5y ago
      Fast food prices have increased greater than inflation for some time: https://www.delish.com/food/news/a39265/fast-food-menu-price-increases-from-2002-to-2013/ https://www.delish.com/food/news/a39265/fast-food-menu-price... Thinking that labor costs do not impact product costs is grossly ignorant.
solumos 5y ago
It was a state law that capped application fees at $20 or something, and some authority interpreted that as broker's could no longer charge fees to tenants, but then the real estate brokers association was granted a stay + the court eventually decided in their favor.

mushufasa 5y ago

0 value added for the tenant, but brokers typically serve the landlord.

edoceo 5y ago
Software serves both parties with a win. Faster for LL, cheaper for Tenant.
- listenallyall 5y ago
  Is it though? Airbnb is essentially a rental broker, it charges a high fee, and still hasn't turned an annual profit. Plus the landlords add on "cleaning fees" and more that the tenant must agree to pay.
klodolph 5y ago
In NYC, there are often two brokers—one for the landlord, and one for the tenant.
throwawayboise 5y ago
They serve themselves, really.
TillE 5y ago
I don't really get where brokers fit in. Most landlords should have the time/employees to take care of such things themselves. An absentee landlord would need a whole property management service to take care of everything, not just one small part. Brokers should be a niche service at best.
- jedberg 5y ago
  Not really. My parents used a broker for their rental. They manage the maintenance and rent collection themselves, but did not have the time or energy to do marketing/showing/vetting of new tenants. And the broker they used basically does all the listings in the condo complex, so he has a steady flow of interested and vetted renters as well as standard leases that cover the specifics of the condo complex, as well as a relationship with the management office to get the renters approved quickly and get them keys for amenities and such. In our case we pay the broker, but I can see a lot of value in their services for the landlord.

crazygringo 5y ago

Yeah, last year it had briefly seemed that broker's fees had become illegal, but this year that was "clarified" and now they're definitively legal again. [1] [2] Previously it had seemed like nothing could get rid of them -- landlords mostly didn't care since it was mostly tenants who paid them in the end. But COVID suddenly made everyone a bit more willing to consider other options (like virtual tours), and with some rents down landlords are perhaps a bit more willing to realize that if there's no broker's fee, tenants can pay a little more. I'm actually really excited about this lockbox technology, I genuinely think it could be the key to "unlocking" competition again. My only concern is that a lot of buildings don't have anything obvious in the front to lock it to, as well as plenty of buildings prohibiting tenants from storing keys in lockboxes in front, both because anyone can take a hammer to one and smash it to get the building key, and also because they don't trust it's not someone running an AirBNB. [1] https://www.nytimes.com/2021/05/27/nyregion/broker-fees-real-estate.html https://www.nytimes.com/2021/05/27/nyregion/broker-fees-real... [2] https://www.timeout.com/newyork/news/you-will-still-have-to-pay-broker-fees-in-nyc-041221 https://www.timeout.com/newyork/news/you-will-still-have-to-...

shazzzm 5y ago

Lettings fees were banned in Scotland a while back, I think they're now also illegal in England and Wales too.

jon-wood 5y ago
Yup, also banned in England now. It shouldn't have been, but it was very refreshing when I last renewed my lease not to be charged several hundred pounds for the privilege of emailing back a signed copy of the document with the end date changed.

tut-urut-utut 5y ago

The assumption that software can solve this problem is simply wrong. It's the regulation change that needs to happen if you don't want that renter pay the broker "services". For example, a new law in Germany to apply the "who hires pays" principle for brokers in the renting market basically made the renting "broker fee free" for renters. Previously, the landlords would hire a broker that needed to be paid by the renter. Why not, it doesn't cost them anything, and at least they don't need to have a contact with the potential renters. Now, that they have to pay for the brokers service themselves, it's suddenly not that valuable to them.

literallycancer 5y ago
So the landlords just make the rent more expensive to account for having to pay the broker, what changed?
- tut-urut-utut 5y ago
  The rent price depends on supply and demand, not on landlords costs.
  - dspillett 5y ago
    It isn't quite as simple as that in many cases. Kickbacks from brokers and other dubious jiggery-pokery can make quite a difference.
  - bin_bash 5y ago
    Doesn’t it stand to reason that without broker fees the landlord margins would increase bringing more landlords (supply) into the market?
  - einpoklum 5y ago
    That's like saying rent prices depend on the will of god. Retroactively, you can justify this claim regardless of what happened: "It was god's will" or "You had to adapt your price to the demand".
- 5y ago

spyspy 5y ago

What's worse is they also employ high pressure sales tactics to get tenants to settle asap. Young professionals and students moving to the city for the first time are their bread and butter, along with people who decided to end their current lease and have 30 short days to find a new spot. While searching for my current apartment, I was month-to-month on my previous NYC lease and was therefore 1) not a complete noob to the city and 2) could be super picky and I kept getting the sense brokers had no patience for someone like me.

listenallyall 5y ago
Not sure why you are surprised or annoyed by this. It doesn't matter what you sell, aren't you going to avoid the self-described "super picky" customer? Salespeople work on volume, a customer like you is a time suck with limited probability of resulting in a sale. You're welcome to be as selective as you like, but certainly don't expect salespeople to want to deal with you.
- caddemon 5y ago
  "Customer" is an interesting word choice for someone who receives literally 0 value from the agent. Especially now with the internet, but even before with school/work connections, the majority of students/transplants will find their own apartment. They then have to pay the broker fee to whatever agent their chosen landlord has decided to use, in exchange for being a middleman with paperwork. Many of the prospective tenants do not even find out about this until it is time to officially apply! Since there is usually a deadline to find an apartment, and most apartments will have (proportionally) the same exact fee, the "customer" is really a captive. Ironically, the person you are replying to tried to actually be a customer with the agent, but since these people have no need to sell apartments (they will sell themselves in NYC and Boston), you're right - why bother? The real key is to become buddies with a few landlords, that's where to spend time.
  - listenallyall 5y ago
    "Especially now with the internet," can you show me a service that doesn't extract its own fee when connecting buyers and sellers?

d33lio 5y ago

It's a huge hassle in Boston as well. Pretty boy hustle brokers deserve easy work that doesn't require real education so I can pay more to find a domicile - said no one ever...

bredren 5y ago
Had to deal with this in Boston back in 2007. Some bro driving me around. Took this massive fee. Made no sense.

nostromo 5y ago

It'd be interesting to see if that fixed the problem or just replaced one parasite with another. Many software companies fix the problem, disrupt rent-seekers with reduced costs, only to later become rent-seekers that have the market power to increase costs.

analyte123 5y ago

If evictions didn’t take 3-6 months minimum in NYC (even pre-COVID), landlords could afford to be a lot less picky about who they rent to. Brokers or other middlemen also benefit the landlord by keeping the landlord at arms length from tenant selection and therefore possible discrimination lawsuits.

EricE 5y ago
Yup. And people wonder why landlords are so picky... 10 years ago I would have entertained owning rental properties. I'm so glad with todays climate I didn't go down that path!

nwsm 5y ago

Similar situation in Boston. The value add is that the brokers are regulated and in theory this means no one gets scammed. For context, over the past few years of crazy rental market, many people have gotten scammed by finding a fake listing online, sending off a deposit, and never hearing from the "landlord" again.

gbronner 5y ago

I don't use brokers, but rent control enshrines them. More housing->fewer brokers, so join open ny