A Farewell To NO FEE and the Clients Who Love Them

Real Estate Agent with Level Group

In Manhattan an estimated third of your income can be expected to go to housing. As one of the most expensive places to live in the United State finding an apartment for rent in Manhattan can be hard. So when it comes to finding an apartment everyone has an opinion on how to get one. Commonly people use brokers (real estate agents) in Manhattan. The typical fee charged has been 15% of one year’s rent. This said in the last 2 years when the recession hit hard in Manhattan many landlords were offering to pay a reduced fee to the broker of one month's rent plus give the tenant 1-2 months free. An extreme example of this happened in the Financial District where landlords would have very long lists of availability because of heavy layoffs, landlords offered up to 3 months free on extended lease terms. So in theory tenants were saving thousands of dollars.

So what about today's market in Manhattan? With very few people obtaining mortgages and new hires and students beginning to return to the city renters are in for a sad surprise. Not only is the O.P. gone but so are the free month’s rent. Renters looking to move are finding less and less to pick from the No Fee market even as new buildings open up. Places like 505 West 37th Street are completely leased out of studios and their 1 bedroom apartments are now starting at $3300. Silver Towers who was once the hardest hit on the West 42nd Street strip where once offering incentives that kept their apartment prices low. Now their studios are starting at $3000 per month. Even with 2 months free on 14 months free the majority of Manhattan renters cringe at these prices even though they are still renting.

I mostly handle luxury buildings but recently through referrals I have been showing quite a few regular elevator and walk-up buildings. There are virtually no land lords (the ones that are I would feel comfortable showing) are offering any incentives. Rents still may have a little wiggle room but no more than 10% asking rent. So what do you say to client who refuses to pay a brokerage fee? Simple, "Sorry, but I do not think I can help you."

A client who wants to shop endlessly and is not willing to pay for services due is not a client at all. In a typical 9-5 office setting it is illegal for an employer to up and say "You know what? I love what you are doing for me and the company but this week I'm not going to pay you because I really just don't feel like it." In an industry where very few of us receive salaries or hourly wages it is important to remember that we do provide a very valuable service in Manhattan placing people into homes they are comfortable in.

Comments (1)

Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Interesting how the rental market works there in NYC -- in AZ the landlord is the one who pays the fees -- but for rentals the fees are so low, almost no Realtors will work them -- mostly left to property managers who manage the property to handle.

Aug 07, 2010 01:36 PM