Now the brokerage fees are too high!
A real estate agent recently collected nearly $20,000 in fees on a cheap Upper West Side pad.
The one-bedroom unit was originally advertised for $3,750 per month on StreetEasy, but the agent told potential tenants it was actually rent stabilized and would be a bargain — only $1,725.
That’s well below Manhattan’s median rent, which hit a record high of $4,150 a month in July. And any future increases in the apartment’s rent would be capped by the city’s Rent Guidelines Board – which this year approved a 3.25% increase for one-year leases.
Then the agent, Ari Wilford of City Wide Apartments in Manhattan, dropped the other shoe. The broker’s fee would be $20,000.
“He said, ‘Looking at the stabilized rent price and looking at the brokerage fees, that will make sense in the long run,’ which ultimately it does. But at the same time, it’s going to make sense. It’s like, wow, that’s a lot of money for brokerage fees, ”recalls the tenant, who did not want to be identified.
The tenant said he was able to get Wilford to reduce the fee by $500 before closing the deal, taking some of his savings to pay it.
The apartment is in what the owner, Solil Management, describes as a “rustic 6-story pre-war elevator building” near Central Park and the Frederick Douglass Playground.
Despite the huge cash outlay, the block wasn’t even going to be painted until the tenant’s move-in date of July 1.
He said he paid even more money to store his things for a week so the owner could add a fresh coat of paint.
Finding an apartment in New York has become so grueling that potential tenants are lining up to secure tiny spaces. No more pandemic price drops and bidding wars even breaking out on some units.
But a broker’s fee of $20,000 is unusual even for today’s rental market, experts say. Typical fees are usually one month’s rent or a maximum of 15% of one year’s rent.
“I’ve never seen that and it’s not something I would do. All my fees were 15%,” said Marvin Michel with Douglas Elliman.
Broker Dolly Lenz told the Post that the practice “probably isn’t kosher” and that if the tenant complained loud enough, “could probably get the money back.”
A person who visited the Upper West Side apartment said the $20,000 fee was an indisputable exit for him – in addition to what he said was low natural light in the room. unity.
“I just thought it was the most ridiculous proposition,” said the potential tenant, who did not want to be named.
Another City Wide Apartments agent also demanded exorbitant fees for an Upper East Side railroad apartment, which was also rent-stabilized, with a monthly rent of $2,250, according to a report on the hell gate website in June.
The potential tenant refused to pay the reported $10,000, the site said.
The State Department of State, which licenses real estate agents, said there is no law that sets a limit on brokerage fees.
“However, a broker’s fees must represent charges for actual services. Real estate licensees are required to act honestly in their dealings with the public and may not perpetrate bait and switch, charge exorbitant commissions that bear no reasonable relation to the work involved in earning the commission, or have undisclosed conflicts of interest,” spokeswoman Mercedes Padilla said.
She added that “the department takes the conduct of licensees seriously and investigates complaints on a case-by-case basis.”
Tenants were given a brief reprieve from paying brokerage fees after the State Department ruled in 2020 that under rent legislation passed in 2019, landlords should pick up the cost. After a legal challenge by real estate industry groups, DOS reversed its position in May 2021.
Wilford declined to comment. His boss, Michael Jacobs, did not immediately return a request for comment, nor did Solil Management.
Additional reporting by Jennifer Gould