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“No-Fee”: Short Cut or Short End of the Stick?

by | Jan 22, 2016

No Fee. What gets New York City apartment hunters more excited than these two words?

Renters actively seek no fee apartments for many reasons. Perhaps they don’t want to work with a broker or pay a broker fee. Whether you’re a DIY type or someone who just dropped a fortune to follow Coldplay on tour, a no fee apartment may seem like the perfect solution. Regardless of your reasoning for wanting a no fee apartment, it’s important you learn what exactly you’re getting yourself into. My all time favorite read is Richard Feynman’s book The Pleasure of Finding Things Out. So let’s you and I find out what no fee really means.

Let’s set a couple things straight. No fee apartments were not created by brokerages and they don’t help your pocket book. In fact, they were likely devised to mislead you. Don’t think of no fee apartments like you would a sale at your favorite store. Prices are marked down in order to sell items that weren’t selling at full price. In reality, no fee apartments are properties priced above market value but with the no fee label to feign marked-down prices. In a market where an apartment can be listed and rented within 24 hours, these no fee labels provoke split-second decisions from uninformed consumers.

https://www.theagencyre.com/?utm_source=Julep&utm_medium=BannerAd&utm_campaign=OtherListingsSellingAptIf you had to choose between using a broker (and paying the broker’s fee) and getting a deal without using a broker, the former sounds like a no-brainer. Not so! These “no fee apartments are meant to lure you in because you think you’re getting a deal. In truth, if there is an internal leasing office, whether it be a management company or single building, you will be working with a person with broker duties, just without the title. Capitalism directs companies to always pass the costs on to the consumer. So those internal leasing agents (who, remember, don’t have the label broker) get paid by the building or management company. The only difference is those costs are meshed with the price of the property. You don’t even know how much is going to these agents!

The management company isn’t going to sacrifice its bottom line. Someone has to pay. Unfortunately, that sacrificial lamb is you, my friend. While you may think you’re landing a great deal, you’re actually paying above market value for what that apartment would cost you elsewhere.

If you choose the no fee route because New York brokers have a terrible reputation, don’t worry. There are great brokerages out there that will align with your incentives.

No fee apartments only represent a fraction of the city’s market. If you want to navigate the NYC rental [Han]solo*, go for it because it can be done. But you’re not beating the system.

*Timely relevant Star Wars reference

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