What Is The Myth of No Fee?
If you look at any search for NYC rental listings, you will see FEE and NO FEE. What do these terms mean? How important are they to an apartment search? Ask anyone who has renegotiated a lease or been denied after paying fees to apply to an apartment, fee and no fee are a big deal. This post should shed some light and answer the question that most real estate agents and landlords hope you don’t ask: What is the Myth of No Fee?
What Is The Myth of No Fee?
Fee is simple enough. If you find an apartment you like, you pay rent and you pay a fee to the broker who listed it. There are a multitude of variations on fee structure and how the funds are divided and there is a more detailed explanation here. What most renters are lured by is no fee. It’s seems simple and it’s easy to see the attraction, but how does it work?
No fee is a bit more complicated than it appears. No fee seems to indicate that there is no brokers fee applied to the cost of renting the apartment. In actuality this may not always be the case. No fee can be truely no fee when a renter is renting directly from a landlord or management firm. However, anytime there is a broker involved the no fee designation should be evaluated. Why would a broker put in hard work and valuable time to rent an apartment for no compensation?
No fee usually means that there is a brokers fee baked into the monthly rental price. This can be good if a renter plans to stay in a unit for a year or two and wants to aviod a large upfront cost of moving by differing the fee over a breif period of rental. No fee is a great option for those who may not have a lot of liquidity or may have a change in residence on the near horizon. The question is why would anyone pay a fee? That leads to deeper queiry: What is Myth of No Fee?
What is the Myth of No Fee?
The Myth of No Fee (as the Cunard Team likes to call it) is idea that when a fee is baked into the cost of monthly rent, a renter pays that cost forever. There is an upfront savings of cash with no fee. However, when it comes time to resign leases the following year the renter is negotiating from a price that includes a brokers fee. It is rare that a landlord will allow a renter to pay less in year two or three than in year one. In most cases landlords apply the 2.5% – 3.5% average rate of inflation to the rent as an increase year after year. This creates a great rent roll for landlords and off-sets the cost of paying a broker to properly market their space.
What is the Myth of No Fee? – The myth is that there is no fee. Sometimes there is and sometimes there isn’t. There are many factors that come into play to determine how fee’s are structured and more answers can be found here. If you have questions about fees please reach out to the Cunard Team today to find out the details of the New York rental market or schedule a viewing of our exclusive listings today.