Whether you are brand new to NYC or have been a long term resident, finding a new rental apartment to live in has never been easy in NYC. There are tons of listing sites to browse and terminologies to learn. One term you will consistently hear and see throughout is 'No Fee Apartment'. We define what it means, what to look out for and what you are really looking for in the end.
The Meaning of No Fee Apartments
In the simplest terms, when an apartment listing is tagged or displayed as being 'No Fee' on any listing site or even a brokers website, it means, if you rent that apartment from the person who listed it, as a renter you should NOT have to pay the one time upfront few thousand dollar fee that is also known as the broker fee. Keep in mind, this is supposed to be the case in theory but in practice there is no guarantee because it is at the discretion of the person behind the listing. Beware that false advertising, bait and switch is a common occurrence the NYC rental market because hiding behind the guise of the 'no fee apartment' filter is a great method for brokers to fish for new business.
When Is The No Fee Apartment "Real"?
If the person behind the listing is a landlord or property manager who is the direct source of the listing, you are in good shape to trust the validity of the listing. This means you are dealing directly with the source, a surefire way to cut out the middleman which ensures there are no broker fees. Think if you were to rent an apartment from a family friend or someone you knew directly, is there any middleman person involved? Is there a third party payment involved? This is the best case scenario and what to keep an eye out for when conducting a no fee apartment search. The difficult part is to figure out if the person is actually a broker versus a landlord/property manager. It is hard to tell sometimes based on the name on the listing and listing sites do not differentiate whether the person behind the listing is a broker or an owner/landlord. The listing sites have no incentive to provide this distinction to renters because they generate money on a per listing basis as we previously laid out in a separate post. We can't even get started with Craigslist because the lister information is hidden.
When Is The No Fee Apartment NOT Accurate?
If the person behind the listing is a broker/agent, there is going to be a catch. Simply put, nobody works for free. In a cutthroat industry such as the NYC rental market with high broker fees in the thousands of dollars, no one does free work out of the kindness of their hearts. Buyer beware on platforms such as streeteasy, naked apartments, renthop, apartments.com, zumper and any other large listings platform who makes money charging brokers a listing fee. Let's explore the different scenarios when a broker is behind the no fee apartment listing.
Broker Fee Is Baked Into The Rent Price
In the NYC rental market where inventory moves fast and demand far outweighs supply, the power dynamic shifts in the landlord/property managers favor. Meaning, there is no reason for the owner to eat the costs associated to the broker fees because the apartments market itself. In certain instances, the owner will allow for the broker to bake in their brokers fee into the overall rent price because everyone knows that the most common search out there is the 'No Fee' search. In order for a listing to appear under the results, they need be able to strip out that one time upfront lump sum payment. This allows for the landlords property to appear in results it otherwise would not have. This is common occurrence for rental apartments in condos and coops where the broker is listing a unit under 'no fee'. The other common occurrence is when a brokerages takes exclusive control over listings for a rental building. They charge landlords an 'OP', which is Owner Paid but ultimately the prices need to get jacked up to compensate for the broker fees.
Brokers Are Taking Incentives That Would Otherwise Go To The Tenant
This is how a lot of rental brokers in NYC make the bulk of their commission dollars. A property manager puts out an incentive, similar to a sale or coupon, on an apartment in the form of "free months of rent". The brokers all get a whiff of this incentive and then immediately start to place ads on listing sites to fish the public for leads. All the while, the incentive is smack on the property managers' website. The disconnect in the whole situation is that of course it is difficult for renters to discover the source website themselves because no one is marketing directly on behalf of the property manager directly to the consumer. In instances such as this, which is standard occurrence, a broker will advertise the apartment under 'No Fee Apartment' and then take the incentive away from the renter as their broker fee. Here are some examples of property managers providing incentives on their own websites even though they also allow for brokers to post the same listings elsewhere on their own.
What NYC Renters Are Really Looking For Is 'No Broker'
The meaning of 'no fee apartment' is inherently flawed. Over the years, the term has been bastardized because there are so many loopholes around listing platforms for brokers to hide their fees in. What renters are looking for today is for a broker NOT to be involved and for a direct connection between renter and property manager or landlord because in the end, a third party broker is another extra mouth to feed. At a few thousand dollars per broker fee per apartment, it accumulates to a massive amount of money, a few hundred million dollars a year in broker fees commissions.
Where Can You Can Find Direct to Property Manager Rentals?
At the heart of transparentcity.co is a marketplace that consists only of buildings that are no broker and direct to property manager. Property managers are also looking for ways to get directly in front of prospective renters without the middlemen. Browse the platform for your true no fee apartment and save thousands of dollars in broker fees 100% of the time.