New York City is cracking down on brokers’ fees, but by all appearances, renting in the five boroughs is still the Wild West.
The Department of Consumer and Worker Protection proposed levying fines starting at $750 against brokers and landlords charging a fee to tenants who didn’t expressly hire the agent, Crain’s New York reported.
The practice was made illegal last year when the City Council approved the Fairness in Apartment Rental Expenses Act, a measure the Real Estate Board of New York is challenging in court after vigorously opposing it before its approval.
As the bill made its way through the Council, tenants showed up to hearings in droves to air their grievances about dealing with rental brokers, only to be slapped with a steep fee at the end.
Which brings me to my own apartment hunt.
Earlier this week, I was browsing StreetEasy for apartments in Brooklyn. I ran across a few listings classified as having two bedrooms, but upon further inspection, appeared to be only one bedroom.
One Williamsburg apartment, a railroad-style unit, had no window in the second bedroom, and the listing included photos of a previous tenant’s iteration of the primary room so it appeared to have two full bedrooms. Others were referred to as a half bedroom in the listing description or as apartments suited to “couples” — not roommates.
Renting in New York has always required a bit of acrobatics, mental and otherwise. Erecting flex walls to divide a one-bedroom into two, converting a closet into a bedroom and lofting beds to double a bedroom as an office are commonplace across boroughs, but particularly in Manhattan where space is tight and rents are astronomical.
But usually these adjustments are on the part of the tenant, perhaps suggested by a broker in the listing description. And they are, in some cases, undertaken surreptitiously to avoid reprimand from the landlord, as the city has legal requirements defining what constitutes a “living room” or “dining room” versus a “bedroom.”
I asked a few brokers about the rules of marketing a rental listing, and most said both REBNY and aggregators like StreetEasy don’t allow agents to advertise features of apartments that aren’t in compliance with the city’s regulations.
Whether these agents are disregarding the rules, or relying on technicalities that allow these classifications, is unclear. But my preliminary search did raise questions about who’s responsible for rental broker oversight and whether cracking down on fees will do anything to solve most New Yorkers’ gripes about rental agents.
Not so fast…
Residential firms are going to war over private listings.
Compass CEO Robert Reffkin launched the first assault earlier this year, when his firm introduced a new, company-only portal for agents to market their listings before putting them on the MLS.
The initiative, dubbed “Compass Private Exclusives,” was the manifestation of a plan Reffkin has floated for years and one foreshadowed by his full-throated campaign against the National Association’s policy requiring agents to list properties on the MLS within a day of marketing them. (NAR has since updated the rules to allow sellers to keep listings from being syndicated for a select period of time).
The executive’s attack on Clear Cooperation drew backlash from industry leaders who lambasted his argument — that sellers should have more choice over how listings are marketed — as self-serving and anti-transparency in the marketplace.
Despite the pushback, other brokerages started falling in line. By mid-April, Corcoran, Douglas Elliman, Howard Hanna, a Keller Williams franchise and Daniel Gale Sotheby’s International in Long Island had launched their own versions of private exclusive listing marketing platforms in some markets.
Then the listing portals started weighing in on the action. Last week, Zillow announced that, starting in May, it would ban publicly-marketed private listings from its platform, and days later, Redfin issued a similar proclamation.
But Andy Florance, CEO of CoStar, the parent company of Homes.com, fired back at Zillow, claiming the platform’s rules were about preserving its profits, not its principles. Florance also criticized Zillow for jumping in on the debate in the first place.
“Whether or not you support the Clear Cooperation Policy, it is never acceptable for a real estate portal to threaten agents this way,” Florance wrote in a note to agents posted on LinkedIn. “Real estate portals must remain neutral.”
NYC Deal of the Week
An apartment on Billionaires’ Row was the most expensive to land in the city register earlier this week, closing for $24 million. Unit 49 at 111 West 57th Street, developed by JDS Development, Property Markets Group and Apollo, spans 4,500 square feet and has three bedrooms and three bathrooms. The supertall also snagged the second priciest deal, the $19 million sale of Unit 70.
Read more
REBNY seeks to block broker fee rules from going into effect
Portal wars intensify after Zillow’s private listing ban
Elliman, Corcoran unveil private exclusive listing platforms