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A New York City realtor charged a tenant a whopping $20,000 broker’s fee for a one-bedroom Upper West Side apartment initially listed for $1,750 a month, claiming ‘it will make sense in the long term.’
The unit was first listed for rent at $3,750 a month on real estate website StreetEasy before its price significantly dropped, according to the New York Post.
Both figures are still well below Manhattan’s average rent, which reached a record $5,113 a month in July. The apartment is also rent-stabilized, meaning any future rent hikes would have to be within the Big Apple’s Rent Guidelines Board, which allowed a 3.25 percent increase for one-year long leases this year.
The apartment’s agent, Ari Wilford with Manhattan-based agency City Wide Apartments, however, also told prospective tenants the listing’s one stumbling block: the broker’s fee is listed at $20,000.
‘He said, ‘Looking at the rent-stabilized price and looking at the broker fee, it will make sense in the long term,’ which, at the end of the day, it does. But at the same time, it’s like, wow, that’s a lot of money for a broker fee,’ the apartment’s tenant, who wished to remain anonymous, told The Post.
The occupant added that he was able to lower the five-figure fee by $500 before agreeing to the deal, dipping into his savings to afford it.
City Wide Apartments broker, Ari Wilford, listed an Upper West Side apartment available for $1,750 a month with a massive $20,000 broker’s fee in July – an unusual practice in New York City, despite increase in rental over the last year
The apartment, which was initially listed for rent at $3,750 a month on real estate website StreetEasy, is owned by Solil Management
The pad is described as ‘a rustic 6 story prewar elevator building in close proximity to Central Park and Frederick Douglass Playground,’ according to its owner Solil Management.
It was further revealed the apartment wasn’t going to be fully ready by the time the renter would move in, which allegedly was July 1.
The tenant had to place his belongings in a storage unit for a week and wait until the fresh layer of paint was finally added, The Post reported.
High demand for Manhattan apartments is keeping the market tight, with July’s listing inventory for rentals down 44 percent from last year’s level.
The typical apartment spends just 26 days on the market before being snapped up by a renter, down 48 percent from June and less than a third of the standard turnaround seen a year ago.
The median rent for a studio apartment stood at $3,000, up 23 percent from last year, while median rent for a one-bedroom rose 30 percent on the year to $4,000.
However, a five-figure broker’s fee is abnormal even in an ultra-competitive rental market, according to real estate experts. Usually, broker fees are the equivalent of one month’s rent or at most 15 percent of a year’s rent.
‘I’ve never seen that and it’s not something I’d do. All my fees have been 15 percent,’ Marvin Michel with Douglas Elliman told The Post.
Another broker, Dolly Lenz, told the outlet that the tenant ‘could probably get the money back’ if he filed a complaint.
One individual who toured the apartment on the Upper West Side said he was no longer considering renting the pad after learning its $20,000 broker fee. He added that the pad’s lighting wasn’t up to normal standards.
‘I just thought it was the most ludicrous proposition,’ the potential renter, who also chose to stay anonymous, told The Post.
Local community website Hell Gate claimed another agent at the same agency as Wilford – City Wide Apartments – also listed a massive broker’s fee for a pad in the Upper East Side, which was also rent-stabilized and available for $2,250 a month, in June.
One prospective renter turned down an opportunity to rent the apartment with a $10,000 fee, the website reported.
Average and median Manhattan rents have only gone up since last June and it is not good news for New Yorkers
The New York Department of State, which provides licensing to real estate brokers, says that there is no specific range to limit broker fees.
‘However, a broker’s fee must represent charges for actual services,’ spokeswoman Mercedes Padilla told The Post.
‘Real estate licensees are obligated to act with honesty in their dealings with the public, and cannot perpetrate a bait-and-switch, charge exorbitant commissions that have no reasonable relationship to the work involved in earning the commission, or have undisclosed conflicts of interest.’
She further said the ‘department takes licensee conduct seriously and investigates complaints filed on a case-by-case basis.’
DailyMail.com has reached out to Solil Management, City Wide Apartments and StreetEasy for comment. The Upper West Side apartment’s agent, Ari Wilford, was also contacted for questions.
Meanwhile, according to a report from Realtor.com in late July, renting is now cheaper than buying a starter home in three-quarters of the top 50 US cities — a stark change from a few months ago, when buying typically cost less.
In New York City — across all five boroughs, not just Manhattan — the median rent of $2,989 compared to the median monthly home payment of $5,081, meaning the typical renter paid $2,092 less every month.
National home prices increased 19.7 percent in May from a year ago, after surging 20.6 percent in April
One study found that New York City is seventh in the nation in unaffordable homes, with the median home priced at $578,000, requiring a salary of at least $129,459
During the COVID-19 pandemic, many New Yorkers fled the city, and rental prices plunged as desperate landlords tried to lure willing renters into their units with special deals.
Many property management firms offered deep discounts or sweeteners, including multiple months of free rent, to entice renters to sign new leases.
Real estate consultant Jonathan Miller, who prepared the Elliman report, said last month that once the vaccine came out and disrupted the narrative that the city was ‘unsafe,’ not only did some residents choose to return, but so too did other New Yorkers who had been driven out by previous rent hikes looking to take advantage of the new discounts.
Miller added that as mortgage lending remains tight, there are fewer people able to qualify for homes in the suburbs around the city, forcing people to join the crowded pool of apartment hunters in the city.
‘More and more people have been pushed into the rental market, bringing up competition and rental prices,’ Miller explained.
The average rental price in Manhattan hit another all-time-high last month, as higher mortgage rates and home prices drive potential homebuyers into rentals
As rental prices broke records in May, New Yorkers also began sharing videos of long lines stretching across street corners of people looking to view some of the more affordable apartments in the city.
The competition for apartments is only exacerbated by a decrease in supply, as the listing for apartments in Manhattan continue to remain low.
In July, the listing inventory of 6,669 was far below last year’s level of 11,794, according to the Elliman report.
The vacancy rate of 2.08 percent was also well below last year’s rate of 6.07 percent.
Discounts have become almost non-existent, with the average discount from listing price at 0.2 percent, down from last year’s rate of 1 percent.