The scenario: You are getting ready to move to New York City and are going to look for a rental apartment there. New York is a great city – vibrant, rich in culture and diversity – but you need to understand from the outset that it also has one of the most difficult-to-navigate real estate markets in the world. Finding an apartment that you like and that you can afford, particularly in Manhattan or Brooklyn, can be an experience best described as one filled with “shock and awe.”
But, you don’t have to go it alone. There are 27,000 real estate agents, salespeople and brokers waiting to help you in all five boroughs, with more than half of them in Manhattan. (For the purposes of this article, no need to worry about the difference in the titles; we’ll refer to all of them as brokers to make things easier.)
Is using a broker absolutely necessary? No. Is it expensive? Yes. Will it save you time and aggravation? Certainly, if your broker is good at the job. And will it save you money? Quite possibly.
Why does New York have a broker system when so many other cities don’t? According to Gary Malin, president of Citi Habitats, a 20-year-old Manhattan-based firm that has placed 20,000 people into apartments in the past two years, “It’s because of the sheer density – everything from walk-ups to super luxury high-rise buildings. Most property owners just don’t have the staff or the wherewithal to handle rentals by themselves.”
A Word About the Rental Market in New York City
The real estate market in New York moves at the speed of light and has its own language, its own rules. First, the speed. Malin tells us that in order to get the place you want, you have to come to every apartment you see ready, he says, “to act on the spot – any delay will mean you’ll lose it.” New York property owners require a staggering amount of paperwork, and that paperwork needs to be ready to go before your hunt begins. (More on that later.)
And as for NYC real-estate speak: You’re going to see listings that refer to “junior 4s” – a one bedroom apartment that has a (usually tiny, often doorless and windowless) extra space that can be used as a home office, for storage etc. And buildings described as pre-war means they were built before World War II and are generally considered to have more charm than some more recent vintages.
Another peculiarity of the NYC market is that you really can’t start looking for an apartment any earlier than 30 to 45 days before your anticipated move-in date. Available apartments are rarely listed sooner.
What Will a Broker Charge?
Brokers’ fees vary from firm to firm but are most often 15% of the annual rent. It is possible to find some lower rates (in a special deal for readers of real estate website BrickUnderground.com, for instance, you can sign up with a broker who charges a lower fee than the standard 15%.) Other brokers may also charge less than the standard or, since some may receive their fee directly from the property owner, there will be no fee at all.
What does 15% mean in real terms? A $2,000/month apartment will require a $3,600 fee that must be paid when the lease is signed. At the same time you will be required to pay the property owner one month’s rent, sometimes two. You must have all of those funds ready at signing, and everything needs to be paid with a certified check (no personal checks accepted).
“For anyone new to New York, brokers’ fees come as quite a shock,” says Teri Rogers, founder of BrickUndergound. That’s one reason so many newcomers avoid using a broker. “They start off in New York renting a sublet they find through a friend or online, or rent a room in someone else's apartment.”
Why Should You Use a Broker?
You are paying your broker for his or her experience, knowledge and access – all extremely valuable. Malin explains that some brokers will find you an apartment that has a rent lower than what you might find if you do a no-fee search, and if you compare the broker’s fee to the rent money saved, you may come out ahead.
A broker may have listings that you won’t find in a DIY search on the internet. A good broker will ask the right questions from the start and determine just what your priorities are – what is your realistic budget for rent (most New Yorkers figure on spending at least 30% of their net income on rent); do you want something close to where you work; do you want to be in a neighborhood with lots of restaurants and bars or in one that is more serene; are you going to share with a roommate; do you have a dog and if so, how big is Fido?
A savvy broker will also guide you through the required paperwork – all the financial information you’ll need, such as an employer letter, pay stubs, income tax returns and more. If you do not have an income that is 40 times as much as your rent, most landlords won’t even consider granting you a lease so you will need a guarantor, or co-signer, who will have to submit a staggering amount of paperwork as well. The broker will help you with this often thorny situation (guarantors unfamiliar with the New York market may balk when they see that they have to submit more information than they did when they bought their own home).
Your broker will schedule appointments, go with you to look at apartments and help you to submit the applications required by the property owner. He or she will be right alongside you at lease signing. Your broker will be your advocate every step of the process and even once you’ve found an apartment, a broker can be a great resource for information on moving, on local transportation, on any questions that a newbie might have.
How Do You Find a Good Broker?
Probably the best path to a broker you can trust is via recommendations from friends, relatives and friends of friends. Use social network tools to find people who have had good experiences with their New York City search. Make sure that the company the broker represents is a member of the Real Estate Board of New York; be suspicious of any deal that looks too good to be true – because it will be.
If you already know what neighborhood you want to live in, search out a broker who has had experience there, or, even better, one who both lives and works there.
Be wary of brokers who want you to meet them in the street and seem a bit shady about information about their office. And never fall for the “bring cash” request.
The Bottom Line
Unless you are among the chosen few who will be able to find an apartment without shedding either sweat nor tears (e.g. your sister is moving out of her affordable apartment and has arranged with the property owner for you to take over the lease), you may want to consider using a broker who will navigate the system for you.