—
You think your NYC broker is your “friend “or is actually working for you? You are also one of those who thinks “the seller pays the commission” when you buy a home? Well, think again. After buying 4 investment properties (without the use of a broker) and renting them out (without a broker) I have realized it’s a dirty business. Even though some brokers are doing an outstanding job and actually add value to a transaction; the majority just want to get their check. They have no fiduciary duty towards the client, they just want the deal to close and to make matters worse, legally they are not required to disclose certain aspects to their clients.
Real estate brokers will charge you 2 months’ rent to show you an apartment for lease. Yes, this is $12,000 charged to show (sometimes just once) a $6,000 2-bedroom apartment in Manhattan!
There are a few things to keep in mind when working with a NYC real estate broker:
1. Your broker does NOT want you to get a good deal
Your broker wants you to rent or buy something at the highest price possible. Every additional dollar you are going to pay means higher commission. Therefore, they do not have an incentive to negotiate that hard for you.
2. Your broker’s commission is negotiable
Broker try to make you believe that the 15% commission is standard. The standard is to negotiate that commission or have the owner pay it if he wants his unit to clear the market.
3. You can use more than just one broker
You can shop for brokers just as much as you’re shopping for a home. Have several brokers showing you around.
4. You might not need a broker
The value added by a broker may not be what you need for a particular transaction. When renting an apartment you really just need to find something that fits your needs and budget. Brokers split a 15% fee: 7.5% to the listing agent and 7.5% to your agent. Remember it is a saturated market and there are many more brokers than deals so try to negotiate the percentage your brokers will receive. You will be surprised by their acceptance.
5. Do NOT tell a broker your (real) budget
Start low and potentially go higher. Some apartments are similar at different prices in the same neighborhood and sometimes in the same building! That means that the apartment you just saw that was 1,000 square feet with a doorman, a gym and open kitchen for $6,250 is also renting in other similar buildings for $4,500. The only reason you’re seeing the $6,250 one is that you told your broker that you’re looking for an apartment “between $4,000 and $6,000”. Keep an open mind and make sure you work with a broker who will look out for your best interest.
6. There is always that “other offer”
90% of the time they’re lying to create a fake bidding war and have you bid against yourself. Don’t let them pressure you.
7. Your agent might go behind your back
If a home is listed at $4,000, it does not mean you can’t place an offer for $3,700. Sometimes, your broker will actually hold you back from getting a good deal. If you told your broker your budget is $4,000 monthly and that you are in a rush, they are going to share the info with the listing broker (reducing your chances to negotiate a lower rent).
8. Expect lies from your broker
There are 24,000 licensed brokers in New York and most of them do not get to close a deal per year. An old trick some dishonest agents do: advertise a “too good to be true apartment” but when you call this apartment is gone. Since they already have you on the line they will try to recruit you and have you work with them. The original apartment was just a target to catch you!
9. You can rent in great buildings without a broker.
We love “No-fee apartments” managed by management companies. You don’t need a broker here, so the “effective rent” ends up lower. On top of it, if you use a service like NestApple.com as your broker you will get paid the referral fee that brokers typically pocket. In essence, you get paid to rent! You need to make sure that your broker doesn’t walk you to the building or writes down your name, because the second he does, he will ask you for a commission you could have avoided.
—
What’s your take on what you just read? Comment below or write a response and submit to us your own point of view or reaction here at the red box, below, which links to our submissions portal.
◊♦◊
Sign up for our Writing Prompts email to receive writing inspiration in your inbox twice per week.
Photo: Shutterstock