7 ms·

While I do agree with the spirit of this, doesn't this mean that any fees that brokers require will be included in the rent?

ForHackernews 2y ago
Landlords can shop around and brokers will have to compete on price. A potential renter has no ability to pick a different broker.
voberoi 2y ago
The fee will end up somewhere. If it's in the rent, it's better to amortize the cost of the broker fee over a year vs. pay upfront. Between the fee + first month's rent + security deposit (+ sometimes an additional month's rent) it is common to have to front 10K - 20K just to get into an apartment here.
- jftuga 2y ago
  What are typical rents for 2 or 3 bedroom apartments that are located in safe neighborhoods?
  - underlipton 2y ago
    What constitutes a safe neighborhood? One's personal definition could mean $1000/m difference compared to someone else's.
  - voberoi 2y ago
    Easily $4K+
  - gnulinux 2y ago
    In very expensive cities like NYC, Boston, SF it'll be $4k+ for 1 to 2 bedrooms, $5k+ for 2 to 3 bedrooms. If you have 2 buddies and going on a $5500 3 bedroom in Boston, you'll likely be requested first rent + last rent + deposit + broker fee (=1 rent) = 4 * rent = $22k just to get the keys. That's $7300 per person. This is only to get the key, the next month you pay rent #2. If you're going on a $4k 1 bedroom by yourself (or with your partner) you'll be hit with 4 * 4=$16k upfront cost, or $8k if you're lucky and have a partner. Renting is extraordinarily expensive in big cities in the US right now. I'm sometimes surprised people can survive this market. I make ~$150k a year in a lucrative software engineering role, and rent is still too expensive for me. It's very difficult for e.g. teachers, researchers etc making ~$70k a year etc. Some cities will be cheaper, some will be more expensive. E.g. I know that Philadelphia is particularly cheap when it comes to cost of living. Chicago is expensive, but seems to be slightly cheaper than NYC/Boston etc...
    - standardUser 2y ago
      That's a bit outdated. NYC and the entire state of California have banned landlords from requiring both last months rent in addition to a security deposit, and the security deposit can be no more than 1 months rent. I imagine some other cities have done the same. Where I live, in a desirable Manhattan neighborhood with an old building stock, you can find a decent 1-bedroom for around $3500/mo and move in for a total of $7k. If you hunt for a deal and can make a few sacrifices, you can bring that down to $6k.
      - gnulinux 2y ago
        Oh that's very good to know, I stand corrected. I last moved late 2023 (Boston) and I was interested in market in a few cities around that times. It's always great to hear local governments can make progress for the people.
        standardUser 2y ago
        > It's always great to hear local governments can make progress for the people. Sometimes it seems like they are the only governments that can!
    - throwaway2037 2y ago
      Why is it so expensive to rent in Boston? I am surprised to see it in your list. The economy isn't nearly as large as NYC or SF(+nearby cities). The only explanation I can think of: NIMBY/BANANA: It is almost impossible to add new units (housing stock).
    - rangestransform 2y ago
      Renting is actually not that expensive in NYC relative to buying a condo of similar size and quality, I punched in numbers for a 2b2b in LIC and it’s just about a wash over 10 years
      - fragmede 2y ago
        Did you also model increase in net worth after 10 years given a semi-fixed income and excess money going to the SP500 vs the condo?
  - neom 2y ago
    https://streeteasy.com/for-rent/williamsburg/description:lorimer%20l%7Cin_rect:40.708,40.720,-73.962,-73.939 https://streeteasy.com/for-rent/williamsburg/description:lor...
- standardUser 2y ago
  A landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate the higher rent. The idea that it must "end up somewhere" doesn't hold water since the fee offered no value to begin with.
  - CraigRo 2y ago
    Tenants have more money, and there are more tenants who now qualify who might not have already saved up for a broker fee. I'm sure landlords have factored this in.
  - voberoi 2y ago
    You are right that the landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate it. I am not arguing that it will end up in the rent. I was only arguing that, if it did, that would still be a better arrangement. However, you are wrong that the service provided by the fee offers no value, and that the fee will not end up somewhere (even in a diminished way). - To landlords it offers upfront vetting, no required face time with prospects, and less work to land a tenant. We have a 1.4% vacancy rate in NYC -- apartments on the market will have hundreds of interested people and multiple applications. Landlords basically manage none of this. - To prospective renters who actively hire a broker -- and these do exist, I did this once -- it offers zero time on the prospect's part to look for, schedule, and research units. You tell the broker your parameters, they will do the research, and then set up a multi-hour tour of apartments. (Unless you are only looking at no-fee apartments, you are better off just hiring a broker so you get at least some value from it if you rent a fee-ful apartment) The value the fee provides to the people who care about it, will end up somewhere. This work doesn't go away. Many landlords and prospective renters will take on the work themselves, but many won't. These people will pay for the broker fee. Those broker fees end up with the landlord or the prospective renter. It is not my conclusion that eliminating the broker fee will result in higher rent. I think what will happen is: - The broker market will shrink. - Some landlords or renters will pay for it. In a nutty housing market like NYC's, there is actual value provided by brokers, to some people. Finally -- to be clear, I'm not arguing against the FARE Act. I am fully supportive of it and wish this happened years ago.
xxpor 2y ago
Or the brokers simply go away, like every other city in the country.
hooverd 2y ago
Maybe, but landlords like saving money and might opt to do away with the broker middleman rather than eat the cost.
mikeocool 2y ago
Landlords who have many apartments to rent every year have a lot more leverage over brokers than renters who are generally renting at the very most once a year. So when landlords are forced to pay the fee that have more optionality to negotiate the fee down. Even now, when a landlord has a lot of available apartments they need to move or when the market is soft (for example during peak COVID), they’ll typically offer a “1 month OP.” Meaning the landlord pays the broker a 1 month’s rent fee, and the broker markets the apartment to renters as no fee. Even if the landlord just roles that into the rent, it’s a savings over the 12-15% fee standard today. Also, landlords with larger buildings or geographic density are already figuring out that they can rent apartments cheaper with a few salaried leasing agents, instead of paying brokers. If more of them are forced to internalize the broker fee, more of them will figure that out.
- xp84 2y ago
  Not a New Yorker here, can someone ELI5 (briefly, I don't want to waste your time) what function brokers serve other than extracting money from people? I know a real estate agent at least takes care of a great deal of paperwork that must be done correctly in the transfer of title, and shows properties to buyers. But in terms of rentals, I've never needed a third party to do any of that, and I lived in 5 rental apartments in about 8 years. Landlords 'just' list their properties on the Internet, people find said properties and submit applications or go see them at a predefined time. I'm aware of property managers and have dealt with them in cases where the landlord doesn't want to bother interviewing tenants and stuff -- is a broker a subset of these functions? I think of a property manager though as also serving the function of arranging repairs and handling the whole tenant relationship. In my experience, a property manager does charge a percentage of the rent to handle all this, which kind of means it's passed on, but in terms of how the broader market contains competitors who aren't paying a property manager constrains how much it can be fully passed onto the tenant.
  - ics 2y ago
    In the past, there was some informational benefit for average Joe/Jane. Without internet, finding apartments, knowing which neighborhoods, buildings, or landlords were good or not was quite difficult. Whether the average broker helped with that I don't know, but those I know from that generation (pre-90s apartment seekers) the ones who used a broker did so for those reasons and were mostly satisfied. These days, most people I know exclusively look at direct listings and don't pay broker fees. The exception is usually when you are either more picky or in more of a rush. At my last apartment I paid a broker and it was indeed a place where the landlord simply didn't want to deal with vetting tenants and left it up to the brokers to get the info to impress them.
zjp 2y ago
No. Rent is a function of supply and demand in the market and not landlord input costs. There are houses in SF that would carry mortgages of like, 8-12k, but can only rent for 4-6k. This is why people say that land value taxes won't be passed on to the renter. It doesn't matter how much it costs you to hold property. Its market value is its market value.
QuadmasterXLII 2y ago
any fees that the brokers require will be zero because the owners will tell them to piss off

ForHackernews 2y ago

Landlords can shop around and brokers will have to compete on price. A potential renter has no ability to pick a different broker.

voberoi 2y ago

The fee will end up somewhere. If it's in the rent, it's better to amortize the cost of the broker fee over a year vs. pay upfront. Between the fee + first month's rent + security deposit (+ sometimes an additional month's rent) it is common to have to front 10K - 20K just to get into an apartment here.

jftuga 2y ago
What are typical rents for 2 or 3 bedroom apartments that are located in safe neighborhoods?
- underlipton 2y ago
  What constitutes a safe neighborhood? One's personal definition could mean $1000/m difference compared to someone else's.
- voberoi 2y ago
  Easily $4K+
- gnulinux 2y ago
  In very expensive cities like NYC, Boston, SF it'll be $4k+ for 1 to 2 bedrooms, $5k+ for 2 to 3 bedrooms. If you have 2 buddies and going on a $5500 3 bedroom in Boston, you'll likely be requested first rent + last rent + deposit + broker fee (=1 rent) = 4 * rent = $22k just to get the keys. That's $7300 per person. This is only to get the key, the next month you pay rent #2. If you're going on a $4k 1 bedroom by yourself (or with your partner) you'll be hit with 4 * 4=$16k upfront cost, or $8k if you're lucky and have a partner. Renting is extraordinarily expensive in big cities in the US right now. I'm sometimes surprised people can survive this market. I make ~$150k a year in a lucrative software engineering role, and rent is still too expensive for me. It's very difficult for e.g. teachers, researchers etc making ~$70k a year etc. Some cities will be cheaper, some will be more expensive. E.g. I know that Philadelphia is particularly cheap when it comes to cost of living. Chicago is expensive, but seems to be slightly cheaper than NYC/Boston etc...
  - standardUser 2y ago
    That's a bit outdated. NYC and the entire state of California have banned landlords from requiring both last months rent in addition to a security deposit, and the security deposit can be no more than 1 months rent. I imagine some other cities have done the same. Where I live, in a desirable Manhattan neighborhood with an old building stock, you can find a decent 1-bedroom for around $3500/mo and move in for a total of $7k. If you hunt for a deal and can make a few sacrifices, you can bring that down to $6k.
    - gnulinux 2y ago
      Oh that's very good to know, I stand corrected. I last moved late 2023 (Boston) and I was interested in market in a few cities around that times. It's always great to hear local governments can make progress for the people.
      - standardUser 2y ago
        > It's always great to hear local governments can make progress for the people. Sometimes it seems like they are the only governments that can!
  - throwaway2037 2y ago
    Why is it so expensive to rent in Boston? I am surprised to see it in your list. The economy isn't nearly as large as NYC or SF(+nearby cities). The only explanation I can think of: NIMBY/BANANA: It is almost impossible to add new units (housing stock).
  - rangestransform 2y ago
    Renting is actually not that expensive in NYC relative to buying a condo of similar size and quality, I punched in numbers for a 2b2b in LIC and it’s just about a wash over 10 years
    - fragmede 2y ago
      Did you also model increase in net worth after 10 years given a semi-fixed income and excess money going to the SP500 vs the condo?
- neom 2y ago
  https://streeteasy.com/for-rent/williamsburg/description:lorimer%20l%7Cin_rect:40.708,40.720,-73.962,-73.939 https://streeteasy.com/for-rent/williamsburg/description:lor...
standardUser 2y ago
A landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate the higher rent. The idea that it must "end up somewhere" doesn't hold water since the fee offered no value to begin with.
- CraigRo 2y ago
  Tenants have more money, and there are more tenants who now qualify who might not have already saved up for a broker fee. I'm sure landlords have factored this in.
- voberoi 2y ago
  You are right that the landlord can't just raise the rent to make up for the loss of this one time payment unless the market will accommodate it. I am not arguing that it will end up in the rent. I was only arguing that, if it did, that would still be a better arrangement. However, you are wrong that the service provided by the fee offers no value, and that the fee will not end up somewhere (even in a diminished way). - To landlords it offers upfront vetting, no required face time with prospects, and less work to land a tenant. We have a 1.4% vacancy rate in NYC -- apartments on the market will have hundreds of interested people and multiple applications. Landlords basically manage none of this. - To prospective renters who actively hire a broker -- and these do exist, I did this once -- it offers zero time on the prospect's part to look for, schedule, and research units. You tell the broker your parameters, they will do the research, and then set up a multi-hour tour of apartments. (Unless you are only looking at no-fee apartments, you are better off just hiring a broker so you get at least some value from it if you rent a fee-ful apartment) The value the fee provides to the people who care about it, will end up somewhere. This work doesn't go away. Many landlords and prospective renters will take on the work themselves, but many won't. These people will pay for the broker fee. Those broker fees end up with the landlord or the prospective renter. It is not my conclusion that eliminating the broker fee will result in higher rent. I think what will happen is: - The broker market will shrink. - Some landlords or renters will pay for it. In a nutty housing market like NYC's, there is actual value provided by brokers, to some people. Finally -- to be clear, I'm not arguing against the FARE Act. I am fully supportive of it and wish this happened years ago.

xxpor 2y ago

Or the brokers simply go away, like every other city in the country.

hooverd 2y ago

Maybe, but landlords like saving money and might opt to do away with the broker middleman rather than eat the cost.

mikeocool 2y ago

Landlords who have many apartments to rent every year have a lot more leverage over brokers than renters who are generally renting at the very most once a year. So when landlords are forced to pay the fee that have more optionality to negotiate the fee down. Even now, when a landlord has a lot of available apartments they need to move or when the market is soft (for example during peak COVID), they’ll typically offer a “1 month OP.” Meaning the landlord pays the broker a 1 month’s rent fee, and the broker markets the apartment to renters as no fee. Even if the landlord just roles that into the rent, it’s a savings over the 12-15% fee standard today. Also, landlords with larger buildings or geographic density are already figuring out that they can rent apartments cheaper with a few salaried leasing agents, instead of paying brokers. If more of them are forced to internalize the broker fee, more of them will figure that out.

xp84 2y ago
Not a New Yorker here, can someone ELI5 (briefly, I don't want to waste your time) what function brokers serve other than extracting money from people? I know a real estate agent at least takes care of a great deal of paperwork that must be done correctly in the transfer of title, and shows properties to buyers. But in terms of rentals, I've never needed a third party to do any of that, and I lived in 5 rental apartments in about 8 years. Landlords 'just' list their properties on the Internet, people find said properties and submit applications or go see them at a predefined time. I'm aware of property managers and have dealt with them in cases where the landlord doesn't want to bother interviewing tenants and stuff -- is a broker a subset of these functions? I think of a property manager though as also serving the function of arranging repairs and handling the whole tenant relationship. In my experience, a property manager does charge a percentage of the rent to handle all this, which kind of means it's passed on, but in terms of how the broader market contains competitors who aren't paying a property manager constrains how much it can be fully passed onto the tenant.
- ics 2y ago
  In the past, there was some informational benefit for average Joe/Jane. Without internet, finding apartments, knowing which neighborhoods, buildings, or landlords were good or not was quite difficult. Whether the average broker helped with that I don't know, but those I know from that generation (pre-90s apartment seekers) the ones who used a broker did so for those reasons and were mostly satisfied. These days, most people I know exclusively look at direct listings and don't pay broker fees. The exception is usually when you are either more picky or in more of a rush. At my last apartment I paid a broker and it was indeed a place where the landlord simply didn't want to deal with vetting tenants and left it up to the brokers to get the info to impress them.

zjp 2y ago

No. Rent is a function of supply and demand in the market and not landlord input costs. There are houses in SF that would carry mortgages of like, 8-12k, but can only rent for 4-6k. This is why people say that land value taxes won't be passed on to the renter. It doesn't matter how much it costs you to hold property. Its market value is its market value.

QuadmasterXLII 2y ago

any fees that the brokers require will be zero because the owners will tell them to piss off