An apartment broker serves as an insightful resource during the apartment hunt. Working with a broker can help you save time and uncover exclusive properties. However, brokers come with a fee, so it’s important to consider whether this service is worth the cost.
What is a broker fee?
A broker fee is an amount charged by a broker for their services. Brokers may work in a variety of industries including housing and finance. A real estate broker earns a fee for assisting either the buyer or seller with the sale or purchase of a home. Brokers in finance earn a fee for trading commissions, managing assets, or handling mutual funds. Apartment brokers work with renters specifically looking for an apartment. This type of broker earns their fee when they assist renters or property managers with the process of renting apartments.
How much are apartment brokers’ fees?
An apartment broker’s fee is usually 15% of the apartment’s annual rent. If you’ve previously worked with a real estate broker to purchase a home, this may seem high. The broker fee for a buyer’s agent is usually between 2% and 3.5%. However, you should keep in mind that the total fee assessed is much lower for an apartment than for a home.
The average two-bedroom apartment in the United States rents for $1,758 a month. This would make the average 15% broker fee $3,165. At an average tenancy of about three years, this fee breaks down to just $1,055 a year. The average sales price for a home in the U.S. is $374,900. This would make a 2% broker fee $7,498. Since the average homeowner stays put for about 13 years, this breaks down to about $577 a year.
If you’re apartment hunting in a less competitive market, you may find your broker fee much lower. In these types of markets, brokers often charge the equivalent of your first month’s rent. Some apartments will offer to cover the broker fee. These are typically advertised as “no-fee” apartments. Carefully evaluate the price of a no-fee apartment versus one where you pay the broker yourself. Sometimes, the price of the broker is simply rolled into a higher rent payment.
When do I pay the broker fee?
Broker fees are typically charged when you sign your new apartment lease. Until this time, you may still change your mind and retain your broker for assistance with a different unit, which would ultimately change your final fee. As you’re budgeting for your new apartment, you should add your estimated broker fee to other upfront expenses that you pay at your lease signing, like a security deposit, pet deposit, movers’ fees, and your first month’s rent.
You only have to pay your own broker’s fee if you execute a lease using your broker’s assistance. You don’t have to pay a broker fee simply for looking at rentals. If you feel your broker isn’t providing the type of assistance that you need, you can part ways at no charge before you sign a lease.
What does an apartment broker do?
There are two types of apartment brokers. Some work on behalf of the landlord. These brokers are also known as listing agents. If the property you’re interested in uses a broker, you’ll have to pay their fee unless the property specifies otherwise.
You can also hire an apartment broker to work on your behalf. This type of apartment broker will talk to you about your needs, wants, and budget and seek out appropriate listings on your behalf. The broker then schedules viewings that work with your schedule and helps you narrow down your options to the right unit for your needs.
How can I lower my broker’s fee?
Broker fees are often negotiable. If a property manager has several empty units to rent, they may agree to waive the fee for their own broker or cover the fee for yours.
You can also negotiate a lower fee with your broker based on the condition of the apartment that you’re renting. If you’re taking a unit that’s been on the market for a long time, needs repairs, or has less desirable features, consider asking for a lower fee. In a slow market, your broker may also be willing to lower their fee simply to keep you on as a client. It’s always worth asking whether the fee is negotiable and comparing different brokers to get the best deal.
Do I need to use a broker?
In a highly competitive market like New York City or Boston, a broker can save you a significant amount of time navigating properties. With so many options, variations, features, and waiting lists, it can be quite difficult to find the right unit without some help. A broker is less essential in a smaller market.
What are the benefits of working with a broker?
An apartment broker typically has a great network of connections they’ll use to find the latest apartment rentals. A broker may have early access to units that will never hit the market for renters who are taking a DIY approach. If you have particular needs and can’t find the unit that you’re after by searching on your own, a broker may be the only way to get into the property that you really want.
A broker can also help you navigate tricky rental situations like a short-term lease, sublet, or long-distance move. If you need to find the right unit in a short amount of time, working with a broker can help you speed up your search and execute a quick and efficient move.
Understanding the ins and outs of working with an apartment broker will help you decide when to hire one and what kind of fee to negotiate. Used properly, a broker may help you get into a great apartment. However, you shouldn’t overlook the possibilities that you can find one on your own.
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