Why would I have to pay a fee to find an apartment? This is one of the most common questions we hear from people whom have never lived in NYC, or one of the other cities where broker fees are commonplace. The information below will explain fee vs. no fee apartments, why not all no fee NYC apartments are created equal, and how you can get the best deal on a rental apartment in the New York metro area.

What is a Broker Fee, and How Much Is It?

One of the most common lures used in New York City real estate listings, one you ll see again and again in every type of media, is the promise of no fee apartments. In these cases, that simply means that you don t have to pay a broker s fee in order to sign a lease.

The practice of using a broker to find a rental apartment is not common in much of the United States, so it s not surprising if you ve never heard of it. And the NYC market is one of the only places where it is customary for the tenant (not the landlord) to pay for the broker s services when you sign a lease.

Brokers in New York City typically charge from 8.5% to 17% of the annual rent on your apartment at the time of the lease signing, so finding a no fee apartment can potentially save you thousands of dollars. Broker fees in Manhattan tend to be higher than in the outerbouroughs, and in New Jersey.

An inexpensive $1500 apartment in Manhattan typically has a fee of $2700 that the tenant must pay to the broker! No fee apartment listings are great, of course, but be careful: the term can mean two different things.

Watch Out for Hidden Costs with that No Fee Apartment

It sounds counter intuitive, but many no fee NYC apartments that you see advertised online or in the newspaper are actually obtained through a broker. Does this mean that these brokers, and their brokerage firm, with all of its overhead, have decided to work for free, out of some altruistic urge to help stressed-out apartment seekers? No, of course not.

Real estate brokers charge a fee for their services, which usually consists of finding, alerting you to, and showing you, apartments (they have the keys; they let you in the door), and then helping you with paperwork, and acting as a liaison between you and the apartment s owner. That s how they stay in business, by charging a fee for these services. That s fair, as you can t expect them to work for free.

Brokers will also offer no-fee apartments, but that just means that the building s owner is paying their fee, not you. If the owner is paying the fee, why should you care? Because the owner is probably adding it into your rent, or offering fewer concessions.

Often, you can get the a better deal on the same no-fee apartment when you talk to the owner directly, than when you go through a broker. The money the owner is not paying to the broker for your no fee apartment could instead be applied to an extra month of free rent, or a reduced rent, for you.

There are two exceptions to this:

• When a brand new rental building opens, it is common for the landlord to hire a brokerage to run their leasing office. You may not realize it, but the on-site leasing agent is often actually a broker, not an employee of the building. This is fine, as it is part of the building s initial marketing costs to hire them. As long as you are going directly to the leasing office (and not letting another broker take you there), you will be getting the best deal.

• When a company has two divisions: a property management arm, and a brokerage arm. If the company is managing the building for the owner, and not charging a fee, you will be getting the best deal. Just be careful if they try to show you other apartments. they may not be in buildings that they manage, and therefore you might not be getting the best deal. Always be sure to ask if they manage the property, or having the exclusive rights to lease it.

Beware the Bait-and-Switch

Most NYC brokers only make money when you actually sign a lease, thus it s certainly in their interest to find you an apartment as quickly as possible, so they can move on the next client.

This is both good news (the broker wants to find you a home as much as you want to find a home) and, potentially, bad news, because the same broker also is usually not interested in spending time showing you lots of apartments. Unlike sales brokers, many (but not all) rental brokers are not looking to build a long term client base with referrals. For them, it s a numbers game, so if you don t sign quickly, they move on to the next client. If you decide to use a broker, and you find one who sticks with you, listens to your concerns and seems to be truly trying to help, stick with them!

A common complaint about finding an apartment in NYC through a broker is the rampant use of bait-and-switch tactics. We ve heard (and, in the past, experienced) more stories than we can count about apartment seekers showing up to see a place that sounds terrific, only to be told that it s no longer available, and then subsequently shown far-less-terrific apartments while we re here.

Many first-time New Yorkers, and even more experienced NYC apartment hunters, will sign a lease on a less-than-ideal apartment out of frustration, and desperation, simply because those are the only apartments they ve seen.

Go Directly to the Owner and Avoid Paying a Fee

To get a truly no fee apartment, you have to cut out the middleman--the broker--entirely and work directly with the property manager or owner. This way, you pay no brokers fee AND the owner pays no brokers fee, giving you an apartment at the fair market price, with no extra costs, hidden or otherwise.

Fortunately, technology has made it easier than ever to find a NYC apartment without using a broker. More and more landlords are making that information available to the public via the internet, and they are seeing the benefit of dealing directly with the tenants and cutting out the middleman. All of the apartments for rent you see here on Urban Edge fall into this category.