Bohemia Blog by Agent David McDaniel
MYTH: You CAN’T use a real estate agent to find a No Fee Apartment.
FACT: You Definitely CAN work with a real estate agent to find a No Fee Apartment. In fact, in the last year I helped 1/4th of my clients find NO FEE apartments. “No Fee” doesn’t mean the agent doesn’t get paid. When a broker helps you find a No Fee Apartment, the landlord is paying the broker fee. You may hear real estate professionals use the term OP instead (Owner Paid Fee).
TAKE-AWAY: If using a broker always ASK if they have NO or LOW fee apartments to show. It’s always great to compare those apartments to apartments with fees so you can be better informed about all of your options.
MYTH: No Fee apartments are No Fee because there is something wrong with them.
FACT: There are MANY reasons an apartment could be No Fee. Generally speaking, landlords often agree to pay the fee when they want to make sure the apartment rents A.S.A.P. If an apartment has been on the market for a while, the landlord may decide to pay the brokers fee so the apartment can be advertised as No Fee. There are several factors that could contribute to why an apartment stays on the market longer than expected.
1. The time of year. 3 and 4 bedroom apartments, for example, are very popular in the spring and summer. But in the winter months the demand for these apartments is less and often the landlords agree to pay the fee, or partial fee.
2. There is something less than ideal about the apartment. Apartments that are 5th and 6th floor walk-ups sometimes don’t rent as fast as identical 2nd and floor units for example.
TAKE-AWAY: If you’re set on a No Fee Apartment, the best months to move are November to February (Especially for 3 and 4 bedrooms.) The real estate market slows down a little during that time. During the spring and summer, No Fee apartments are generally harder to come by.
MYTH: NO FEE Apartments are always a better deal!
FACT: This is probably the BIGGEST misconception my clients have about No Fee Apartments. The landlords pay the broker fees for No Fee Apartments. Because of that, most landlords build that cost into the rent. Generally, No Fee Apartments are $100-$300 MORE per month than comparable units in the same area or even building. I tell my clients that if they are looking to move to a place for only 1 year, then No Fee definitely may be the way to go. It saves you from the large up front cost. BUT for clients looking to find the perfect apartment they can call home for years… well, those are the clients that sometimes benefit from paying a fee.
MYTH BUSTER MATH!!!
Client #1: Moves into a NO FEE 1 Bedroom for $1900.
Broker fee: $0
1st Year Rent: $22,800
Two years of rent: $45,600
Three Years of rent: $68,400
Client #2: Moves into a 1 Bedroom for $1700 and pays a Broker Fee
Broker Fee: $3,000
1st year Rent: $20,400. Including the Broker Fee $23,400
Two Years of rent: $40,800 Including the Broker Fee $43,800
Three years of rent: $61,200. Including the Broker Fee $64,200
In the example above Client #1 did not pay a broker fee and Client #2 did. After 1 year Client #2 paid $600 more for their one bedroom apartment factoring in the Broker Fee. BUT when you look at year 2 and 3 you can see how Client #2 is benefiting from a LOWER monthly rent by paying the Broker Fee themselves, instead of the landlord. Client #2 SAVED $1,800 after two years and $4,200 after 3 years!!!
TAKE-AWAY: Think long term! If you are looking for a place for 1 year only, it may be in your best interest to find a No Fee Apartment. You will save the upfront cost and it MAY even out. And if you are not finding the perfect NO FEE apartment you may want to consider opening up your options to lower priced apartments with a broker fee. If you are looking to stay at a place longer than 1 year, it may be worth the investment of paying a broker fee to benefit long term from lower monthly rent payments.
MYTH: I only have enough money for first month’s rent and security, so I can ONLY afford a No Fee Apartment.
FACT: There are many options to help make apartments with broker fees more affordable, even if you don’t have the funds readily available.
There is a company called Renter Key. Renter Key allows you to apply for a loan to cover the broker fee, rent and security! The application process is free and the percentage rate is calculated based on the amount you borrow, your credit score, and income. Check it out to see if it could be right for you!
When I moved three years ago Renter Key didn’t exist, so I paid the Broker Fee with my credit card. I then opened up a TD account and credit card because TD Bank was offering new card holders the option of transferring credit balances with 1 year 0% APR. So for a 3% service charge I had the luxury of slowly paying off my broker fee over a 12-month period with ZERO interest! (And I got a ton of American Express points for the initial charge!)
TAKE-AWAY: Know what services are available to help make moving more affordable.
MYTH: All Brokers are created equal.
FACT: From what I hear from my clients that is NOT true. If you don’t like the broker you are working with- DON’T work with them. Find a broker you trust and listens to your wants and needs.
TAKE-AWAY: If you are thinking about moving I would be happy to show you any apartment in your budget, including the NO FEE OPTIONS! Call or e-mail me today!