Do You Need a Broker to Rent an Apartment in NYC?

Most renters in NYC end up working with a broker out of necessity rather than by choice. What do we mean by this? Since most rental apartments have a listing broker representing the landlord, it’s impossible to avoid working with that agent and paying the broker fee if you want to rent the apartment.

With that said, many busy professionals in NYC hire their own dedicated agent to assist them throughout the entire rental process. An agent who works for a tenant is called a tenant’s agent. In most cases, a tenant’s agent is compensated by splitting (also known as co-broking) the total rental broker fee you pay on an apartment between him or her and the landlord’s agent.

Am I Required to Use a Broker When Renting an Apartment in NYC?

What Are the Pros and Cons of Using a Broker to Find an Apartment in NYC?

Do No Fee Apartments Really Save You Money in NYC?

No. However, the vast majority of rentals in NYC will require you to pay a broker fee to the listing agent even if you don’t have your own dedicated broker helping you with the search. The typical rental broker fee in NYC ranges from 1 month’s rent up to 15% of the annual rent.

If you have your own rental broker, the amount of your total broker fee paid will usually remain the same.

The difference is that it will be ‘split’ between the agent representing the landlord and the agent who is helping you on the search.

If a broker fee is 15% of annual rent, it would be split 7.5% / 7.5% between both agents. The act of two agents splitting commission is called cobroking (often referred to as co-broking, cobrokering, co-brokerage, etc.).

Keep in mind that sometimes apartments listed as no fee will actually offer a fee from the owner (i.e. Owner Pays or OP in industry parlance) which only brokers will see in the broker database. OPs are typically 1 month’s rent.

It depends. The ‘no fee’ marketing tactic is often designed to mask the true cost of more expensive apartments. There are a few ways this can be accomplished.

For example, a landlord who has recently renovated an apartment building may drastically increase the rent but list the units as ‘no fee’ with an artificially low monthly rent by offering a specified number of free months contingent on signing an 18 month or 2 year lease.

Here’s an example:

Rent Prior to Renovation: $3,000
New Proposed Rent: $3,500
Free Months: 0.5 per 6 month lease term, minimum 18 month lease
Advertised Rent: ($3,500*16.5) / 18 = $3,208/month

In the example above, it’s easy to see that the optics of a $3,200 ‘No Fee’ apartment will be more attractive to renters compared to fee apartments asking up to ~$3,500.

Although the landlord is offering free rent credits, you’d still have to pay the full $3,500/month figure for every month with the exception of those that the landlord is paying on your behalf.

In other cases, a landlord will list a unit as ‘no fee’ and jack up the monthly rent in hopes that a prospective renter will still assume it’s a good value since there is no broker fee.

If an apartment is asking $3,400 a month with a 15% broker fee, the true monthly cost factoring in the broker fee is $3,910/month.

In this example, the landlord may list their apartments at $4,000/month with no fee in the hopes that prospective tenants who are looking to avoid paying a broker fee at all costs will reach out to the leasing office directly and pay the higher rent.