NEW YORK — There is a new push to reform real estate fees in New York City.
Many New Yorkers know that when you move into a new apartment, you have to pay the first month’s rent and security deposit, and then often have to pay the landlord’s agency fees, which amounts to a total of about three months. rent.
There is now a proposal to reduce the initial costs.
What are brokerage fees?
A broker’s fee is a commission paid to a real estate agent in exchange for assistance in leasing a unit.
In New York City, landlords often hire a real estate agent to fill a vacancy and pass the agent’s costs on to the new tenant.
Typically, a real estate agent’s compensation is 12-15% of the annual rent, but New York State has no cap on fees.
Although the city does not officially track the number of no-fee listings, the Real Estate Board of New York (REBNY) currently says that more than half – 54% – include broker fees.
“This percentage fluctuates throughout the year, but shows there is choice in the market,” said a REBNY spokesperson.
Some renters also choose to use a real estate agent when looking for an apartment.
NYC Council Member Introduces Fairness in Apartment Rental Expenses Act
For the second year in a row, City Council Member Chi Ossé has introduced the Fairness in Apartment Rental Expenses Act (FARE Act).
The bill does not limit or prohibit broker fees. Instead, it requires whoever hires the broker to pay for the broker.
“What other industry is there where someone else orders something or rents something, and then someone else has to pay for it?” Osse said. “Why are we so conditioned to think this is okay?”
The bill has 26 co-sponsors: the support of the majority of the city council. Consumer and Worker Protection Chairwoman Julie Menin and six committee members will decide its fate.
A public hearing will take place at City Hall on June 12.
Ossé says Boston is one of the few other cities with this rate structure, and he wants New York to emulate the rest of the country.
Ryan Monell, of the Real Estate Board of New York, says agents always add value because they simplify the process, no matter who hires them. He believes this bill would lead to chaos in the market.
“New York is its own animal, right? And I think it’s a misconception to assume that if this bill were to pass, it would automatically become what the rest of the country has,” he said.
He says that if landlords have to pay the fee, they will just increase your rent, but Ossé disagrees. He says the market determines rents, not landlords.
“If your landlord could have raised your rent tomorrow, he would have done it yesterday,” Ossé said.
“The costs won’t disappear into thin air, will they?” Monell said.
When asked if he would support some sort of cap on brokerage fees, Monell said: “I think the market… if you look at 99 percent of the quotes, it’s incredibly reasonable.”
New Yorkers say real estate agent fees make renting an apartment too expensive
CBS New York’s Mahsa Saeidi spoke with tenant Annie Abreu, who was born in Sunset Park and isn’t leaving.
In recent years, Abreu and her mother have struggled to find affordable housing, so they rent a room. Abreu showed it off in a TikTok video, writing, “So I decided to show you what it’s like to live in New York if you’re a low-income resident instead of middle or upper class.” It has been viewed almost 900,000 times.
“I should be able to find an apartment in my own neighborhood,” she said.
Abreu says renting an apartment is just too much money.
“Low-income people don’t have the option to pay three fees at once,” she said.
Saeidi searched for rental properties in the Sunset Park neighborhood of Abreu on a popular site. The search results showed that 19 apartments were charged real estate agent fees and only two apartments, including the most expensive unit listed, were not.
A spokesperson for the real estate websites Zillow and StreetEasy told CBS New York:
“StreetEasy & Zillow average 70% of the market share for the online real estate category in New York.
“According to research we published last year, at any given time around 50% of rental properties on StreetEasy are listed as ‘no-fee’; but this is not uniform across all price points. More affordable apartments at the lower end of the market are more common with agency fees than those on the higher side.”
“The fact that landlords can get away with this, and place that responsibility mainly on low-income tenants, is really ridiculous,” says Abreu.
Another tenant, Christian Garbutt, says a broker texted him asking for a $15,000 broker fee for a rent-stabilized unit that costs about $1,025 a month.
“I thought, no, no,” Garbutt said. “I got upset. I said to myself, this is taking so much advantage of people.”
The New York State Department, which is responsible for regulating brokers, tells CBS New York they have two open complaints about that broker. CBS New York reached out to that broker but did not hear back.
In 2023, the state received more than 700 complaints about real estate agents for a variety of reasons. Some claimed that the broker should not have collected a cent because they had not earned the commission. Of this group, the state has so far taken disciplinary action against 68 brokers.
There are nearly 60,000 brokers and agents in New York City. The vast majority have no complaints against them.
