How much would you pay a broker for a $1,100-a-month apartment if you knew the rent wouldn’t be jacked up year after year?
A broker in Queens was offering apartment hunters the deal of a lifetime: a one-bedroom, rent-stabilized unit in Flushing, well below market rate for the area. The only catch was a $15,000 broker fee to secure the unit. Under rent stabilization, modest annual increases are set by a city panel, shielding tenants from dramatic hikes.
That was the predicament facing 27-year-old Christian Garbutt while he was searching for an apartment last month, he told Gothamist. The apartment seemed great, but he couldn’t afford the fee — nor did he want to pay it.
But the $15,000 broker fee levied by Miguel Silva, a broker with the New York City branch of the real estate company Keller Williams, was too high for even his employers. In response to questions from Gothamist, they said they are returning some of the money to the tenant who landed the apartment.
Broker fees are standard procedure in the city’s highly competitive real estate market, even when tenants find the units online and do most of the work themselves. Typical rates range from a month’s rent to a higher percentage of the yearly total.
But as affordable housing dwindles, broker’s fees are rising along with rents, making moves more difficult and dependent on upfront cash, in a sector where laws and regulations remain cloudy.
Last month, Gov. Kathy Hochul criticized “excessive” fees when she announced a $260,000 penalty against a brokerage firm found to be demanding $20,000 from prospective tenants trying to secure a rent-stabilized apartment, a rare rebuke of the practice.
The New York Department of State, which licenses brokers, said in an email that it determines that fees are too high when they exceed “industry norms and standards” and do not relate to actual services.
The rules are murky, and no laws explicitly cap broker’s fees or define the difference between reasonable…
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