When Seline Tan-Torres started hunting for a Brooklyn apartment earlier this year, she was ready for a tight market and high prices. What she wasn’t prepared for was a broker-fee bidding war.

Looking to move to Brooklyn from Chicago, Tan-Torres was hunting for something in her price range online when she saw a no-fee Williamsburg apartment on Meserole Street pop up for $3,200. She said she jumped on it immediately, reaching out to the broker and setting up a virtual viewing for herself and an in-person one for her brother. After they both saw the place and she submitted an application, Tan-Torres reached out to the broker to follow up.

“When I spoke to the broker again he said there was so much interest and they couldn’t increase the rent itself, so there would now be a broker’s fee included and they would give the apartment to whoever offered the most for the broker’s fee,” Tan-Torres told Brownstoner.

“I was so astonished and really disturbed by the practice, it was completely unethical,” she said, adding apartments should go to the most qualified applicant, not the one who could put forward the most cash on the spot.

The broker’s fee has been around for decades in New York City, and has just as long been considered a painful part of the rental process by tenants. In the new world of online listings, some thought the fee might become a thing of the past, but no such luck yet for renters.

old and new in Bed Stuy
Housing in Bed Stuy in 2022

During the pandemic, the fee — an almost uniquely New York rental quirk — fell by the wayside as landlords tried to fill apartments with little demand in the second half of 2020 and also following legislation prohibiting them. (A court clarified broker fees are legal in 2021.)

Citywide, no-fee apartments made up 72 and 75 percent of inventory in 2020 and 2021 respectively, according to StreetEasy. But with a now highly competitive market, the fee is back – and pushing the upper limits of the one month to 15 percent of yearly rent that is typical, Brooklyn renters told Brownstoner. As of late July, the number of no-fee apartments was down to 55 percent, Streeteasy said.

Tan-Torres said the whole experience of being hit with the fee on a no-fee apartment, and in such a seemingly exploitative way, made it feel like she “was moving to a city where the tenants were at a disadvantage and were being taken advantage of.”

“At the end of the day, even if we were willing to pay that broker’s fee in Williamsburg, I don’t think we’d want to live in a place that employs that kind of practice,” she said.

Back in February of 2020, renters had a glimmer of hope when new rent regulations were interpreted as making it illegal for tenants to have to pick up the tab on rental agent fees, instead handing the burden of payment to landlords. Those same 2019 rent regulations made it illegal for a landlord to collect more than one month’s rent and a security deposit on move-in and reduced application fees to $20 per person. However, the broker fee win for tenants was short lived, with the real estate lobby quickly filing suit and a judge ruling in favor of broker fees in 2021. There is no cap on how much a broker can charge, but in the past broker fees have tended to be between one month’s rent and 15 percent of annual rent.

Following the court’s ruling, as before, landlords can rent apartments themselves or choose to pay the broker fee (both are listed as no-fee apartments online), or they can leave the tenants to pay the broker. It’s not unheard of for a broker to double dip. The Internet abounds with people sharing stories about outrageously high fees, and some brokers also lament what is happening. On one Reddit thread, a self-described real estate agent said short of getting rid of brokerages, serious change needs to happen and the burden of payment needs to be lifted from the tenant (the argument against this has largely been that landlords would then pass the fee on through increased rental prices).

view of Brooklyn Bridge Park and waterfront
The Brooklyn waterfront in 2022

The Reddit poster said a possible way renters could deal with inexplicably high fees is to speak up and go over the heads of agents who won’t budge to the brokerages to tell them it’s unacceptable. “Write to lawmakers. Keep having conversations. The shitty thing though is that everyone needs a place to live, so without drastic changes or a steep decline in people trying to move to the area, nothing is going to keep greedy people from being greedy,” the commenter wrote.

But that’s not much solace for tenants facing the broker fees.

Bo White, a real estate photographer and soccer coach renting in Park Slope, found what he said was a relatively affordable two-bedroom apartment in Cobble Hill, but when he arrived there during a July viewing there were more than 50 people lined up. The agent then went on to surprise everyone with a $4,500 broker fee.

“The craziest thing to me about it all is that there are still people paying these fees. That apartment had 50 people show up outside before the open house started, and it was rented out the next day,” White said.

White had undertaken his apartment search due to his lease coming to an end, roommates looking to move out and fears of an imminent price hike. But with what he’s experienced so far during his apartment hunting, he is seriously considering staying put, hoping his rent doesn’t go up and finding new roommates.

“It’s just disheartening,” he said.

Jonah Burns, who is currently subleasing in Greenpoint, was considering moving to an apartment in a Long Island City complex in February and started a back and forth with a broker renting one of the building’s apartments. At the time, there was no broker’s fee on the unit and it was listed for $2,000. Burns decided to keep subletting, but when he resumed his hunt this month, he went back to the broker to check out the same LIC complex and a similar unit. Rents in the building had increased and there was now a 15 percent broker’s fee on the similar unit listed.

“It’s clearly discretionary and simply tacked on,” Burns said. Altogether, the new apartment was asking for a 15 percent broker’s fee of $4,000, plus first month’s rent and a security deposit. For Burns, who was a homeowner in another state before moving to Brooklyn, it didn’t seem to stack up.

Old and new in Williamsburg in 2020

“I have that money, but it just seems crazy. Moving from Wisconsin — things are obviously a lot cheaper there — I feel a little naive to the rental market here, especially with what’s going on with inflation, moving to where things are more expensive than I’m used to during this surge in inflation and in rental prices, I have no idea what’s real.”

Burns said he tried to get around the fee by approaching building management, but when the broker caught wind of that, he was upset and said he might have worked with Burns on the fee, but no longer would. Burns said that just proved the price was arbitrary and negotiable.

Looking for an apartment in Williamsburg, one Brooklyn tenant (who asked not to be named as he continued his search) received an email from a broker working for a well-known Brooklyn agency that specializes in rentals, which advised of a 25 percent broker’s fee. Like the apartment at the center of Tan-Torres’ bidding war, the apartment is rent stabilized.

The home hunter showed Brownstoner the email. It said the rent stabilized apartment is a “wonderful deal for the price, but just a heads up, I have been asked to collect a hefty broker fee 25% of the annual, or $12,000, which nets out to on average $5000/month over the 1st year of the lease. This won’t make sense for everyone, but if you might plan to stay in the apartment in future years it can actually make a lot of sense still.”

The email added, “Many of you have been asking if there is any way to jump the line with your application: Earlier lease start date is not possible because of the current tenants’ lease, and you cannot offer a higher rent price because the apartment is rent stabilized, so the only possible way would be to offer a higher broker fee amount and I doubt that anyone will be offering such.”

When Brownstoner contacted the agency to ask about standard practice with broker fees, they did not comment.

[Photos by Susan De Vries]

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