4 ms·

> Broker fees typically range from one month’s rent to 15% of the annual rent, but can be higher when there is more competition among renters. From the perspec

by shoo 3y ago

> Broker fees typically range from one month’s rent to 15% of the annual rent, but can be higher when there is more competition among renters. From the perspective of a long-time renter in Australia: wild. Here, in our highly imperfect private rental market, we have regulation that prevents these kinds of fees being pushed onto the renter. If the agent managing the property on behalf of the landlord wants a big fee they'd need to negotiate that with the landlord, who is going to have a lot of choice to give the job to other property managers with more competitive fees.

zdragnar 3y ago
It's also unreal to me living in the midwest US. I've rented several spaces, and never once would have considered paying one (nor was I ever asked to). This is purely a problem of: A) Too many people want a limited supply B) The government has regulations which prevent expansion of said supply C) The government does not prohibit what amounts to... gouging? collusion? utterly pointless middlemen? Sure, most people have to deal with agents when buying or selling property around here (though I bought my current house from someone who didn't have a seller's agent) but I don't know of anywhere nearby where you'd think to get an agent to rent a place to live.
threeseed 3y ago
Sounds like there is an opportunity for disruption there. Australian model is much better because it forces the brokerage fees to a minimum because the landlord is wedged between the renters wanting a cheaper property and their desire for more income.
sidewndr46 3y ago
Do you have rent control where you live?
- mattzito 3y ago
  Rent control ends when the apartment is vacated, so there’s nothing relevant for a broker with that.
  - s1artibartfast 3y ago
    my understanding is that NYC rent stabilized units also have restrictions for vacant units too. >Any time a tenant vacated, landlords received a “vacancy bonus” that let them increase the rent of the unit by up to 20%, and once an apartment’s rent reached a certain dollar amount — most recently, $2,774 a month — the unit left the rent-regulation system entirely, allowing the landlord to rent it at any price.The Housing Stability and Tenant Protection Act of 2019 (HSTPA) repealed both vacancy bonuses and vacancy decontrol. It also sharply limited how much landlords could pass along the costs of renovations to tenants through rent increases, practices that housing advocates and lawmakers criticized for spiking rents and fueling displacement. Prior to 2019, landlords could make a lot of money by emptying out rent-stabilized apartments. HSTPA essentially revoked any financial incentive to do so. https://www.thecity.nyc/2022/10/19/60000-rent-stabilized-apartments-vacant-warehousing-nyc-landlords-housing/#:~:text=An%20internal%20state%20housing%20agency,city%20emerged%20from%20COVID%20lockdown https://www.thecity.nyc/2022/10/19/60000-rent-stabilized-apa....
- ryan-allen 3y ago
  There are limitations depending on the state, the workaround is to 'no fault evict' tenants, have the property vacant and re-advertise. At least one state has banned 'no fault evictions', though there are workarounds. Our rental market is very tight at the moment, many people have been priced out in regional areas since work from home provisions due to the pandemic.
burnerthrow008 3y ago
I sort of suspect that the broker may be paying kickbacks to the landlord in these cases. Many building in New York are rent-controlled such that the allowed rent is far below market. Everyone wants one, but there are not enough for everyone to have one. And there will never be enough by definition because the rent is below market. So the market steps in to correct this imbalance. Tenants are willing and able to pay a (large!) one-time fee to access those below-market rents… like buying an annuity. Landlords on the other hand are only too willing to accept an upfront cash payment which offsets part of the below-market rent (and could be used to buy an actual annuity to supplement rent). In this case I believe the broker is simply playing the boogieman (like how Ticketmaster “resells” tickets far above the face value to launder high prices for musicians) to give the landlord and tenant both plausible deniability about what is actually going on.
- sneeze-slayer 3y ago
  But nearly every apartment has a broker fee, not just rent-controlled units. Plus, my understanding is that a rent-controlled apartment is pretty rare to actually come to the market, lots of landlords are refurbishing them and removing the rent control.
  - burnerthrow008 3y ago
    Sure, but the crazy-high broker fees always seem to be associated with highly desirable apartments.
  - chii 3y ago
    > a rent-controlled apartment is pretty rare to actually come to the market doesnt mean it's not being exchanged - it just means it's not "public", and the exchange is done privately therefore you dont hear about it.
- lotsofpulp 3y ago
  Brokers also provide plausible deniability to the landlord for claims of discrimination, or whatever types of screening the landlord wants but legally can’t.
wizerdrobe 3y ago
Is there regulation on how the property manager gets paid? I’m getting my 10% either way, if it comes from you directly in a lump payment, great! If it comes from you over the course of 12 months in marked up rent, still great! I sit around and occasionally call a plumber collecting 10%! I’ve had a small-peanuts side-gig as a property manager for my in-laws LLC, and that’s the standard practice in the US. If they eliminate brokers they’ll just rebrand as a property manager and get paid differently.

by shoo 3y ago

zdragnar 3y ago

It's also unreal to me living in the midwest US. I've rented several spaces, and never once would have considered paying one (nor was I ever asked to). This is purely a problem of: A) Too many people want a limited supply B) The government has regulations which prevent expansion of said supply C) The government does not prohibit what amounts to... gouging? collusion? utterly pointless middlemen? Sure, most people have to deal with agents when buying or selling property around here (though I bought my current house from someone who didn't have a seller's agent) but I don't know of anywhere nearby where you'd think to get an agent to rent a place to live.

threeseed 3y ago

Sounds like there is an opportunity for disruption there. Australian model is much better because it forces the brokerage fees to a minimum because the landlord is wedged between the renters wanting a cheaper property and their desire for more income.

sidewndr46 3y ago

Do you have rent control where you live?

mattzito 3y ago
Rent control ends when the apartment is vacated, so there’s nothing relevant for a broker with that.
- s1artibartfast 3y ago
  my understanding is that NYC rent stabilized units also have restrictions for vacant units too. >Any time a tenant vacated, landlords received a “vacancy bonus” that let them increase the rent of the unit by up to 20%, and once an apartment’s rent reached a certain dollar amount — most recently, $2,774 a month — the unit left the rent-regulation system entirely, allowing the landlord to rent it at any price.The Housing Stability and Tenant Protection Act of 2019 (HSTPA) repealed both vacancy bonuses and vacancy decontrol. It also sharply limited how much landlords could pass along the costs of renovations to tenants through rent increases, practices that housing advocates and lawmakers criticized for spiking rents and fueling displacement. Prior to 2019, landlords could make a lot of money by emptying out rent-stabilized apartments. HSTPA essentially revoked any financial incentive to do so. https://www.thecity.nyc/2022/10/19/60000-rent-stabilized-apartments-vacant-warehousing-nyc-landlords-housing/#:~:text=An%20internal%20state%20housing%20agency,city%20emerged%20from%20COVID%20lockdown https://www.thecity.nyc/2022/10/19/60000-rent-stabilized-apa....
ryan-allen 3y ago
There are limitations depending on the state, the workaround is to 'no fault evict' tenants, have the property vacant and re-advertise. At least one state has banned 'no fault evictions', though there are workarounds. Our rental market is very tight at the moment, many people have been priced out in regional areas since work from home provisions due to the pandemic.

burnerthrow008 3y ago

I sort of suspect that the broker may be paying kickbacks to the landlord in these cases. Many building in New York are rent-controlled such that the allowed rent is far below market. Everyone wants one, but there are not enough for everyone to have one. And there will never be enough by definition because the rent is below market. So the market steps in to correct this imbalance. Tenants are willing and able to pay a (large!) one-time fee to access those below-market rents… like buying an annuity. Landlords on the other hand are only too willing to accept an upfront cash payment which offsets part of the below-market rent (and could be used to buy an actual annuity to supplement rent). In this case I believe the broker is simply playing the boogieman (like how Ticketmaster “resells” tickets far above the face value to launder high prices for musicians) to give the landlord and tenant both plausible deniability about what is actually going on.

sneeze-slayer 3y ago
But nearly every apartment has a broker fee, not just rent-controlled units. Plus, my understanding is that a rent-controlled apartment is pretty rare to actually come to the market, lots of landlords are refurbishing them and removing the rent control.
- burnerthrow008 3y ago
  Sure, but the crazy-high broker fees always seem to be associated with highly desirable apartments.
- chii 3y ago
  > a rent-controlled apartment is pretty rare to actually come to the market doesnt mean it's not being exchanged - it just means it's not "public", and the exchange is done privately therefore you dont hear about it.
lotsofpulp 3y ago
Brokers also provide plausible deniability to the landlord for claims of discrimination, or whatever types of screening the landlord wants but legally can’t.

wizerdrobe 3y ago

Is there regulation on how the property manager gets paid? I’m getting my 10% either way, if it comes from you directly in a lump payment, great! If it comes from you over the course of 12 months in marked up rent, still great! I sit around and occasionally call a plumber collecting 10%! I’ve had a small-peanuts side-gig as a property manager for my in-laws LLC, and that’s the standard practice in the US. If they eliminate brokers they’ll just rebrand as a property manager and get paid differently.