“state regulators said renters can no longer be charged broker fees, potentially upending the market and delivering the latest blow to an industry already reeling from new regulations and sweeping tenant protections.” - WSJ
Instead, Landlords will be responsible for paying fee should they use an agent. Clearly a huge gut punch to rental agents and landlords alike- but what will be the overall effects on the entire multi family market?
It’s clear that this law adds another (unpredictable) expense to underwriting and a major hassle at the least. In short, I would love to hear how others are digesting this information and it’s implications.
What am I missing? How will this effect valuations and investor appetite? Is this actually beneficial for tenants or affordability?
No, guarantee you nobody who makes under 100k uses a broker, and owners know this.
Is 15% a rip off yup.
Will this effect 90% of the rental agents who make $60k-$120k, and have to provide for their families, yes.
I've never used a broker, but I see benefit, especially in new buildings where you should hire marketing agents. But some instances are crazy, i had a buddy who wanted to switch apartments in his building and if he did he HAD to pay a broker fee for literally moving units in his building where he lived for 5-years.
As a previous renter in NYC I think this is the best thing since sliced bread. The previous broker fee structure really disproportionately affected the lower price range of renters. Newer larger buildings often had LL's paying broker fee anyways.
For those outside of NYC who may not know, the previous "arrangement" was that the renters paid the landlord's broker's fee so you're paying for a guy who has no fiduciary duty to you for the privilege of paying your new LL rent.
There was nothing like touring apartments in an NYC summer, carrying around your tax return and check book because if there was an apartment you liked you needed to sign a lease that fucking day. Oh surprise, you thought the broker's fee was one month? Nope its 15% of the years rent. And for the most part every LL hired some shlocky broker to do tours because he wasn't paying for it anyways so you were expected to pay this pretty much everywhere.
So the next year when your LL raised your rent you had to decide is moving (1.5K), potential double rent for a week or so (1-2K) and broker fee (4.5K- 8K on a monthly rent of 4.5K) worth the move. Luckily my last couple moves before I bought my place were in large/luxury "no fee" buildings and recently the market had moved slightly towards no fee rentals.
Anyways, most would agree the practice seemed backwards and sucked. Glad to see this ruling even if I don't rent anymore.