When you’re searching for a rental in New York City, you’ll often come upon apartments that are listed as “no-fee.” You’ll also come across plenty of apartments that make no mention of a fee at all. Huh?
If you’re new to renting in New York City, you’ll soon realize how complicated the rental market is here. There are many nuances and gotchas. Chief among those is the difference between no-fee apartments and standard apartments. But don’t worry — we’re here to help.
1. What Is a Fee?
In the world of New York City rentals, the “fee” refers to the dollar amount you pay to the broker who helped you find your apartment. The “fee” is short for “broker fee.” If don’t know, now you know!
These fees are how brokers earn their living. They incentivize the broker to help you land an apartment ASAP, and thus explain why brokers can be so persistent once you’ve contacted them.
The fee can range from 8 percent of the full year’s lease — equivalent to one month’s rent — to 15 percent of the full year’s lease. Although shelling out an additional month’s rent can seem like a hard pill to swallow, don’t think that your broker is making out like a bandit. They have to share the fee with their brokerage and anyone else involved in the transaction (for example, the listing broker who represents the apartment.
2. So What Does No-Fee Mean?
Does no-fee imply there’s no money in it for the broker? Nope. When a broker helps you find an apartment, they’ll always get paid a fee. It’s just a question of who pays it.
If the landlord or property owner pays the fee, then the apartment is advertised as no-fee. If the landlord does not pay the fee, the apartment is advertised as requiring a fee, and the burden of paying that fee falls on you.
Pro tip: If you find an apartment without a broker’s help and go straight to the landlord, there is no fee. To do this, you often have to scout out apartments before they are even listed on sites like Naked Apartments or StreetEasy.
3. When Will the Landlord Pay the Fee?
A landlord will only pay a fee if they need help finding a tenant. It’s essentially a marketing tactic a landlord will use when they want to fill the unit quickly or make the unit more appealing to a prospective renter.
Think of it this way: Every month that an apartment goes unoccupied, the landlord is essentially losing money. Let’s assume the average rent in Manhattan is $3,400. If the apartment sits unoccupied for a month, the landlord immediately loses $3,400. If it continues to sit unoccupied for six months, that’s a loss of $20,400. Ouch.
With the help of a broker, the landlord can potentially fill the unit faster — which explains why they’d be willing to pay the fee on behalf of the renter.
4. When Do I Pay the Fee?
If an apartment does not need a broker’s help to get rented, a landlord won’t pay the fee. In rental markets where there’s high demand and low inventory, landlords have the upper hand and can bank on their units being rented out quickly. In these sorts of hot markets — typically highly coveted neighborhoods in Manhattan and Brooklyn — it can be harder to find no-fee apartments. Most often, renters will have to pay the fee.
No-Fee vs. Fee Tips and Takeaways
While it seems like the financially savvy move to search for exclusively no-fee apartments, it’s can be wise to keep your search broad. You could find a great apartment that, even when including the fee, is a good deal when compared to all no-fee apartments.
Pro tip: No-fee apartments often have higher rents than apartments with fees, as a baked-in way to help the landlord cover the cost of the broker fee.
Regardless of how you choose to filter your search, there are some handy pages on Naked Apartments that can help you find what you are looking for. You can use this tool to adjust your max rent to account for a fee and help determine whether you want to search for a fee or no-fee apartment.
If you do decide to go down the no-fee route, check out these no fee apartments in Brooklyn and these no fee apartments in Manhattan. [LINK?]
No Fee vs. Fee Recap
- Fees incentive brokers to help you find an apartment ASAP.
- A fee is only owed when you use a broker. When you rent directly from a landlord, there’s no fee.
- If the landlord pays the fee, the apartment is advertised as no-fee.
- If you pay the fee, the apartment is advertised as requiring a fee.
- Great deals often require you to pay a fee. Don’t limit your search to no-fee only.