What does a “No Fee” Rental Mean in the NYC Rental Market
You will come across “no fee” apartments when searching rental sites in NYC. But what does a “no fee” rental actually mean? Apartments come with all kinds of fees. In addition to rent you need to prepare for application and credit check fees, as well as security and rent upfront. But “no fee” in terms of rentals has a very specific meaning.
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So What Does “No fee” Actually Mean?
The “fee” referred to is actually the broker’s fee. So if a rental or apartment is listed as “no fee” it means you don’t have to pay for the broker a commission.
This can get confusing because you will often see an apartments listed by a broker advertised as “no fee”. How can this be? Brokers have to get paid somehow, right? Well they do get paid. However, in this situation it is not the renter that pays. The landlord would shoulder the fee.
Important: If you have your own rental broker to take you around to view NYC apartments and you come across a “No Fee” listing, you should be clear what this does and does not mean. The “No Fee” term does NOT mean that you don’t have to pay your own agent a commission. It just means that the listing broker would not be charging you a broker fee.
No Fee Vs OP Vs. Collect Your Own Fee
Now things start to get really confusing. Sometimes, a rental won’t have any listing agent and you may see the term “OP” in the ad (OP stands for “Owner Pays”). This means the landlord, property owner, or the management company is paying the broker who represents you.
Occasionally, these properties will also have listing agents (i.e. agents representing the landlords). Some landlords are willing to cover the fees for both the listing agent and your broker. Unfortunately, this practice of the landlord paying the commission for both sides is becoming increasingly rare, as it requires the landlords to pay 15% of the annual rent in brokerage fees (7.5 percent to each broker)
Most landlords will only pay for their listing agent, which means you have to pay the commission for your own broker if you’re bringing one to see an apartment. In the industry, the term for this is called “Collect Your Own Fee”. If you see this term in an ad, it means that the listing agent is being paid by the landlord but you as the renter would still be responsible for paying your own broker.
Rentals Ads That Don’t Say Anything About Broker Fees.
When you search most rental sites you’ll notice that there won’t be any indication about brokerage fees. So you may not see terms like “no fee apartments” or “no fee rentals” in their description.
As a general rule, if you come across a listing that’s being represented by an agent, you should assume there’s a brokerage fee. Ask the listing agent about these fees so you can prepare ahead of time.
Note that on Frele.com, we make sure we disclose on every single listing whether or not the lister is charging a brokerage fee or not. Transparency should be the name of the game!
Don’t Assume “No Fee” Will Save You Money.
It pays to know who is covering the broker’s fee because it allows you to anticipate additional costs and avoid extraneous expenses. Don’t assume that not paying a brokerage fee will always save you money. Sometimes the rent will be higher on properties that are “No fee”, since the landlord may simply increase the price to make up for the fact that they are the responsible party for paying a broker a commission.
For more NYC rental tips, please go to frele.com/learn.
This article was written by:
Phil Horigan, NYC Real Estate Veteran
Founder, Frēlē, the free and honest NYC rental marketplace
Producer, Phil’s NYC Rental Tips [YouTube Channel]
Blogger: flowfreely.com
Instagram: @philiphorigan
Phil has been a licensed NYC real estate agent since 2004 working for some of the top real estate brokerage firms in the industry. He founded Leasebreak.com in 2013, and Frēlē in 2017. Frēlē and Leasebreak are free and transparent rental marketplaces to search for or post apartments for rent in NYC
Go to frele.com to search for NYC apartments (free service).