The Broker: Avoidable or Necessary Evil

I'm apartment hunting, and newspapers and craigslist haven't yielded much. I'm thinking about consulting with a broker. Any advice?
Claire, Greenpoint

Before you go find a broker, know that we've heard many success stories of people who found apartments on craigslist or through owners without having to pay any fees. So if you hang in there, you might just find a fabulous place.

Also, walk around the neighborhood you want to live in and look out for rental or sales signs (sometimes they are just stapled to poles or bus shelters) and try to deal with owners. Talk to your own landlord about other properties. Management companies also usually have their open apartments posted on their websites.

But, if you're in a crunch, brokers can facilitate your search greatly. When picking a broker, keep a couple of things in mind:

-A friend of Gothamist suggested going through craigslist's "broker no fee" listings, not to look for apartments necessarily, but to find broker's with no-fee apartments. Then schedule an appointment and see what they can offer.
-Broker's fees in New York are high. Most make you sign something up-front disclosing their fee policy. Broker's fees run anywhere from 10-18 percent of one year's rent which, depending on the apartment, can be upwards of $3000.
-We recommend making appointments with more than one broker. Sit down and chat with them a little first. If they are schmoozy, smarmy, and trying to push you into making a decision fast, ditch them. If they're willing to be accomodating and have a couple of places in mind, hear them out. Also: Does the broker seem excited about the places he's offering? Has he seen them before? Does he know the building owner and/or the super? Or, does he rely on his computer to tell him what's available?
-You're better off going to a smaller real-estate agent. Most neighborhoods have agencies that specialize just in that neighborhood, and you're more likely to find someone who is knowledgable about the specifics (Which laudromat is best? Where do you buy your groceries? Where's the closest pet store? Where can I get a cheap dinner?) and about which streets are safe. Some of the bigger real estate companies are less personal and have so many listings that they don't know their properties or the neighborhoods well, and mostly just want to make the sale.

Our recent experience (and indeed some statistics we've read) indicates to us that the process is a bit easier if you get some help, but that perseverence and some luck can produce a great apartment without a fee.

Contact the author of this article or email tips@gothamist.com with further questions, comments or tips.

By Erin O'Brien in Miscellaneous on June 10, 2004 2:24 PM

Comments [rss]

syzygy

Are you quite sure you think the broker's trying to trick you by showing you cheap bad places and then showing you good ones you can't afford?

Would you spend the extra hour walking around seeing bad apartments with a stranger who thinks you're part of a conspiracy to rip you off and deny you fair housing? And then spend another hour showing them nice places they can't afford?

You must be pretty special to have a broker want to spend all that time walking all over town with you with no real prospects of being compensated for it.

Umberto Eco

Another note of caution re brokers: they commonly use the tactic of initially showing the worst apartments available within the price range you specify, then show you a decent place in the range $200-$500 above that, making you think that you have to shell out the extra rent for a liveable place. To avoid getting duped like this (it happened to me and other friends who moved to the city in a time crunch) do some homework first and find out what you can really get for your desired price and insist they find similar deals.

Milan Kundera

The two times I've looked for apartments in the past 9 months for living in have been grueling. It took 2 weeks of hitting the streets and lots of dissapointments, but I eventually found nice places both times in the craig's list "shared housing" section. My general rule is that it will take you 2 weeks of hard work and you can find something good at a good price. Mostly you will not like the place and sometimes you will be rejected as an applicant, but there are good ones out there. Everytime just as I decide to give up and go broker (broke?) I find something... So stick in there and make decisions fast. Cash on hand, etc. good luck!

janelle

personally, i managed to find a steal (price and square footage) w/o a broker. but if you absolutely must have an apartment - sans imperfection or inconvenience - and live in an It-neighborhood, a broker might be worthwhile if you intend to stay put for several years, making the fee more of an investment rather than a convenience charge. verdict: it's totally avoidable.

Erin

Thanks, Wes! I feel a little better now about deciding to go with a broker. And at8ax, only a little bit of an apostrophe fetish. There is one in my last name, after all.

at8ax

"broker's"? "agency's"? I guess the plural noun is out of fashion. Or Erin has an apostrophe fetish.

Wes

Getting a no-fee apartment for more than one year might not make sense.

For example, let's say that an apartment is worth $1500. Tack on a 15% broker's fee, and you have an extra $225, for a total of $1725/month for the first year. For the second year, assuming no raise in rent, you're paying $1500.

Let's say that the same apartment is listed as no-fee. Frequently what happens when you see a no-fee place is that you think, well, it's no-fee, so I can pay a little more. Landlords know this. It's a pretty efficient market, simply because there are so many people vying for the same spaces. Let's say that the landlord ups the price by 10%, which makes the apartment 1500+150=1650 for the first year. Now, assuming no rent increase, you pay the same amount the second year.

So if you stay in the place for 2 years, getting it through a broker is cheaper than getting it no-fee. (1725*12+1500*12=38700 through a broker versus 1650*12*2=39600 through no-fee)

The mistake people make is in assuming that the apartment price pre-broker is exactly equal to the apartment price if it were listed no-fee. Why would this be true? The market is predominantly brokered, which means that the landlord would be screwing himself if he doesn't jack the apartment price up to meet that of others of comparable value.