Rent Regulations Present New Challenges to Real Estate

Armando+Sandoval%2C+a+real+estate+agent%2C+is+unsure+how+the+broker%27s+fee+will+affect+the+NYC+real+estate+market

ANDREW BEECHER

Armando Sandoval, a real estate agent, is unsure how the broker’s fee will affect the NYC real estate market

By SOPHIE PARTRIDGE-HICKS, News Editor

For the 890 Fordham Lincoln Center students currently living off-campus, navigating the highly competitive and fast-paced New York City real estate market is difficult when finding somewhere to live. 

In an attempt to protect home hunters, the New York State Department of State (DOS) banned broker fees on Feb. 4, making it illegal for brokers to collect fees from tenants. Less than a week later, the Real Estate Board of New York filed a lawsuit and a temporary block against the ban that went into effect on Feb. 10. City renters and brokers alike are now left unsure about what comes next. 

Broker fees are commissions that real estate agents collect when they connect prospective tenants to landlords. For some brokers, it’s their main source of income, as fees can be as high as 15% of one year’s rent. 

When a tenant is interested in an apartment, they normally pay one month of rent as a security deposit, the first month of rent to the landlord and a broker’s fee — totaling three months’ worth of rent upfront. 

“The fee for the broker is sometimes unaffordable and even unjustified,” said Peter Thomann, Fordham College at Lincoln Center ’20 and a former licensed salesperson at Compass, a New York City real estate agency.

Renters in New York City are finding the real estate market increasingly expensive. Rashmi Singh, Gabelli School of Business at Lincoln Center (GSBLC) ’21, explained that when she and her roommates were looking for apartments, they used a broker to try and ease the process — but knowing that they would have to pay a broker’s fee impacted the apartments they could realistically consider. 

While doing away with broker’s fees is often seen as a move to protect renters, many have pointed out the dramatic impact the law could have on New York City’s 25,000 licensed real estate brokers.  

“These regulations will severely and wrongly impact the incomes of hard-working real estate professionals,” Jennifer Stevenson, president of the New York State Association of Realtors told  The New York Times

Without broker’s fees, landlords will have to shoulder the burden of advertising apartments and connecting with potential tenants themselves. Armando Sandoval, GSBLC ’21 and a practicing real estate agent at Highline Residential, believes that landlords will likely reflect this increased fee in rent prices. 

Sandoval also highlighted how difficult it has been trying to understand the effects of the potential changes on the real estate market. 

“They dropped this on us in a day, so it was really clunky,” Sandoval said. “We had to change how we do business; I was in the middle of showing clients different apartments and had to explain what was going on.” 

Like other real estate agents, Sandoval expressed his concerns that, with all the confusion, more of his time will go toward explaining the potential changes to his clients instead of helping them actually find apartments.

“For the students who are looking for their first apartment, always make sure to be mindful of fees,” Thomann warned, acknowledging how complicated the city’s real estate market can be. 

As of Feb. 17, the broker’s fee ban is still on hold and real estate professionals are continuing to conduct business as usual. However, with the potential opportunity to retroactively appeal broker’s fees, New York City tenants are waiting for a decision to be made.