In NYC, brokers are fighting for 10-15%, not 6%
New York is one of only two cities where landlords can hire brokers and require renters to pay them. This may be changing — but not if the industry has its way.
While real estate agents across the country fret over the future of 6% commissions, brokers in New York have taken to the streets to fight for rental fees worth double that.
At issue is a New York City Council bill that would end the longstanding practice of landlords hiring agents to help them fill vacancies — and requiring tenants to pay them, to the tune of 10-15% of the annual lease amount.
What's the deal? "[In] what other industry does that exist, where someone else orders something or hires something and then someone else has to pay for it?" Councilmember Chi Ossé told CBS News. "Why are we so conditioned to think this is OK?" Boston is the only other city in the nation that allows the practice.
Not surprisingly, real estate agents see things differently. The Real Estate Board of New York (REBNY) says landlords will pass the cost along to tenants by raising rents — a painful prospect in a city where it costs an average of $10,000 to move into an apartment (first month's rent, security deposit and broker's fee), the New York Times found.
Broker fees were banned in the Covid era but restored after REBNY filed suit.
Rallying at City Hall, amid a bigger picture of industry challenges: As Slate somewhat snarkily reported, hundreds of brokers from Sotheby's, Douglas Elliman, Corcoran and others answered the recent "call to arms" from REBNY and the New York State Association of Realtors by wearing matching hats, shirts and "lots of high heels for a street protest" as they rallied to express their point of view. "This bill will kill my livelihood!" one sign said. Said another: "Agents are tenants too."
The bill, which is close to securing a veto-proof passage, doesn't ban broker fees or even limit them. It just requires the person who hired the broker to pay them.
There was a lot of talk about the value of a broker, echoing discussions about buy-side agents on the non-rental side of real estate. Slate connected the push against rental broker fees to the NAR settlement that will "end the customary 6% take for Realtors," President Biden's war on "junk fees" and Department of Justice efforts to investigate NAR.