Understanding NO FEE Apartments In New York City

Renting an apartment in New York City is expensive and challenging. With the highest average rental price in the country, an extremely competitive marketplace where there are simply more renters than apartments, and a plethora of search options which can be confusing to those unfamiliar with the rental process, first time renters and those on a fixed budget can find renting a daunting process. Everyone is looking for a good deal.

One way that renters attempt to cut their financial expenditures is by concentrating their search on the “no fee” apartment. But it is important that renters understand, the term “no fee” means different things to different people. In the simplest terms, a “no fee” apartment is one where the real estate broker’s commission or “finder’s fee” is paid by the owner rather than by the renter. Popular in times where supply is greater than demand, the owner would let brokers know that they were willing to pay the broker’s commission in order to tempt brokers into pushing their units. Since brokers were barred from charging the commission twice, they would be able to advertise the units as “no fee” which in term, tempted renters. If the owner agreed to pay a portion of the commission, you might see ads stating “low fee” since the renter would only be responsible for the portion of the commission not covered by the owner.

The popularity of the term “no fee” led other real estate entities to follow suit and use the term in their advertising. Management companies and private owners who would not have been able to legally charge a commission anyway, started advertising their units as “no fee” in order to compete. Since technically, there was no broker’s commission attached to the deal, an apartment rented through a management company or private owner was in fact a “no fee” apartment.

As technology changed and more people were turning to the internet to find an apartment, other types of real estate entities emerged. Data base services or “listing” services developed, providing a potential renter with details of landlords and management companies with available units. These types of services provide a sort of “be your own broker” rental service allowing the potential renters some of the same information and access previously available only to brokers. While the properties listed with these services don’t have a broker’s commission or fee (since they are rented without the benefit of a broker), the service itself carries some sort of usage charge or membership fee.

If you use the newspaper classifieds or online advertisers to find a “no fee” apartment, you will come across each of the above types of entities. It is important that you remember the following:

• A broker who advertises “no fee” apartments may also have low and full fee apartments. If you are adamant about only looking at no fee units, make sure that you specify this to avoid wasting your time and theirs.

• No fee doesn’t mean free. If you subscribe to a data base or listing service you will still be required to pay the membership or service fee. The term “no fee” refers to the lack of a brokerage commission.

• A “fee” is a commission, even in “no fee” units you will still be required to pay for your credit checks and application fees. These charges are rarely refundable.

Of course one of the best ways to find a “no fee” apartment is to purchase a copy of our very own The Nouveau Native’s No Fee New York!

originally posted July 7, 2006