According to the DOS, NYC landlords are now responsible for covering their broker’s fees. To be clear, this means that when a landlord hires a listing agent, the landlord must also be the one to compensate that agent. If real estate agents representing landlords are caught accepting fees from tenants, they will now be breaking the law.
However, if a renter hires an agent to take them around from building to building, that agent – who is representing the tenant in this scenario – can still charge the tenant a fee.
The real question is whether there will be a future for real estate agents who represent tenants. With the knowledge that you can now rent through a listing agent directly – without having to pay a fee – will hiring your own agent be worth it?
Until now, broker’s fees have ranged from one month to 15% of the annual rent (which is almost two months). Tenants have been responsible for covering these fees in addition to the industry-standard first month’s rent and one month security deposit (some landlords do charge first, last and security).
It should be noted that some landlords have always paid broker’s fees – but this is not the norm, especially with small building owners. And when landlords have covered the commissions, they’ve only paid a one month fee.
NYC apartment seekers have always had a better chance of negotiating fees by going directly to listing agents. But the best case scenario would be getting the fee down to one month.
Now, going through the listing agent means not having to pay a fee at all.
According to The Real Deal, “The Real Estate Board of New York (REBNY) is exploring legal action” to reverse the interpretation. The trade organization has encouraged its members to contact the DOS in an attempt to reverse the decision. One senior at REBNY also argued that forcing the landlords to compensate their agents would simply lead to an increase in rents.
On Friday, February 7th, The Real Deal published an article stating that REBNY and a number of brokerage firms are planning to sue state regulators in order to block the new bill.