The most difficult part of New York City apartment hunting is getting started. I drifted towards anything that seemed like it would take steps out of my search because how was I supposed to know what I don’t know about? “No-fee” sounds like heaven with a hyphen. After all, several of my friends had told me about ridiculous broker’s fees and one had even thought that a broker’s fee was three months rent. (If that seems excessive to you, it’s because you’re right. Broker’s fees tend to hover between 10-15% of a full year’s rent. They are NOT three months’ rent, which equates to 25% of a full year’s rent, and they are definitely nothing to fear). In fact, apartments listed with broker’s fees can sometimes be the better choice.
The designation as a “no-fee” apartment just means that if there is a broker, the fee is being paid by the landlord to incentivize renters. What that could mean is that the landlord is having some trouble selling the place. It could also mean that the fee has been factored into the price. Think eBay. “Free shipping” does not always mean cheaper. Factor in the cost of shipping and you might find that you could pay less one way or the other.
Not only can it save you money, but knowing what costs and prerequisites to expect can also eliminate the scariness. For students, one of the most vital pieces to this whole puzzle is figuring out a guarantor and any student you talk to that rents an apartment in New York City knows who theirs is. Generally a rich relative (landlords usually want a guarantor to earn 60-80 times the monthly rent per year), a guarantor is the person who agrees that if the renter cannot pay rent for whatever reason, the guarantor will be accountable. Because of the responsibility and vote of confidence by the guarantor, a landlord can feel secure with a renter and that is good for all parties involved. After all, having a risky renter means that a landlord might not get paid and in such a competitive market, a landlord will nearly always be able to find other renters that aren’t as much of a risk.
Hard-pressed to find a guarantor in the family? Don’t stress. Generally, landlords don’t need to see a guarantor from every single renter. They just need to see that someone earning a secure combined amount is backing the renters as a group. Rooming with a couple friends that have applicable guarantors will usually suffice.
Sadly, however, if a renter or group of renters demonstrates what the landlord considers to be a moderate risk (lacking guarantor or having low credit), the renters may be subject to rejection or forced to put down exorbitant security deposits. A security deposit means that if a renter does not pay for some reason or if there is damage to the apartment during their stay, the landlord can take the money out of the security deposit as payment. When the renter decides to move out, they get their money back. However, renters dealing with security deposits should be very careful and document the state of the apartment with photos early on so that they are not charged later for damages. A friend of mine from Singapore had a six-month security deposit levied on him simply for not having a guarantor in the U.S. and though he will presumably get the money back, having to make such a costly deposit at one time can be absolutely nerve wracking.
As always, please be careful when dealing with these large sums of money. There are countless scammers out there as well as countless stories of people who have been duped out of their hard-earned cash. Know whom you are talking to, make sure you get to view the actual place you are going to be living in, and know what you are paying for.
A one-month security deposit is absolutely normal when signing the lease. Prior to that, there can be application fees or what is known as a “good-faith deposit.” A good-faith deposit says that a renter is serious about that particular apartment and is given along with their application. If the renter’s application is accepted, the landlord will usually lock the door on the apartment and no more showings will take place. If the application is not accepted, the renter should receive their good-faith deposit back, but this is ONLY IF the application is not accepted for some reason. If a renter simply decides they don’t want the place after all, they don’t get the deposit back (after all, it’s there to signify a commitment to the apartment).
In New York City’s housing market these deposits, commitments, and arrangements happen at such a quick pace that while my roommates and I were apartment hunting with a broker, we found that three of the five places we were going to see had been locked up just a few hours prior. That being said, the ability to jump on the opportunity to get a good apartment is crucial. Having all your paperwork together can mean the difference between looking at your future place and looking at a locked door. Have your materials together, give yourself enough time to comfortably search, and be decisive when you find the place that is right for you.