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Boston to consider copying New York by banning apartment broker's fees

With New York State banning real-estate brokers from charging fees to renters, Mayor Marty Walsh said today he's forming a group to look at apartment broker fees in Boston.

In a statement, Walsh said:

The housing crisis in our city requires a comprehensive, and multi-pronged approach to achieve our goal of creating and preserving new housing, while also ensuring that our housing is accessible to all residents. I am proud to pull together this working group to move us forward in determining how broker fees are impacting our renters and our housing market in Boston. This is another tool we are putting forward to tackle the underlying challenges of housing affordability in Boston.

Walsh said he will name members of the group by the end of this month and that he will "include a wide range of stakeholders."

Currently, it is legal for brokers to charge a fee for finding an apartment for somebody - who might then also have to pay the property owner first month's rent, last month's rent and a security deposit equal to one month's rent.

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Comments

It’s pretty customary for most small landlords to split the fee with the renter. Thanks Marty now us little guys will have to pay the entire thing just to rent out our 1-2 units.

I understand what they’re trying to do, but this city’s over regulation of everything hurts small business people more than anything.

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Voting closed 54

No landlord ever split the fee with me. Not one. Yes all small landlords. If anything big property management places there is no fee.

So suck it up buttercup or get out of the rental racket.

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Voting closed 16

What planet do you live on?!? Has anyone here ever split a brokers fee? Every version of this story that I’ve heard involves a broker charging a full month of rent to spend 20 minutes total showing you a unit and provide a standard template lease, all the while refusing to perform any type of service that might be convenient to the tenant.

It’s what has helped keep my wife and I in our POS 400 sq ft apartment for far too long

My question is how has there never been any pricing pressure on this market. Everyone knows that it’s a standard flat fee of one months rent, for a service that some start ups are ready to provide conveniently and affordably online.

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Voting closed 15

For your 1-2 units, why use a real estate agent?

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Voting closed 13

For a shitty 600sq ft $1500 apt no where near a T, I had to plop down a nice $6,000 - first, last, security, broker's. I'm lucky to have had that kind of cash available, but if you don't think that this has a major positive impact on renters, you're out of your gourd. Make the place you're renting nicer, and you won't see turnover every year!

Now they just need to couple it with what providence does and mandate that a landlord can only ask for first and security to move in.

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Voting closed 152

If greedy landlords can charge the exorbitant amounts they are charging renters, they can afford to pay the broker fee.

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Voting closed 12

''Make the place you're renting nicer, and you won't see turnover every year! "

How many units do you own? Of course, the renter is going to pay, one way or another. Sometimes, being a landlord is like being a baby sitter. Everybody today seems to want to get paid, but they don't want to pay .

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Voting closed 5

Cry me a river.

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Voting closed 73

You'll find renters and no one will pay a fee.

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Voting closed 83

lol what do you think brokers actually do? put the unit on craigslist and let it sell itself, make a copy of the application by taking a picture with their phone, and walk away with a nice 1600-2000 for fuckall nothing. and the landlords don't give a shit because the renter's paying it.

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Voting closed 13

First of all, brokers fees aren't a tax. You are free to rent your apartment(s) out without using an agent and avoid all those "evil" regulations.

Secondly, considering the rate at which rents have increased in this city over the past 7 to 10 years, and the windfall owners have enjoyed from it; I sincerely ask that you go cry me a river.

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Voting closed 16

of the small landlord who owns "1 or 2" rental properties in a city with one of the highest rents in the country? What about their plight?? They may actually have to do one or two days of work per year for their passive income?

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Voting closed 9

So why don't you reach out to the Mayors office and offer your participation in this group?

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Voting closed 31

So let's also put real estate agents who do rentals out of a job?

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Voting closed 3

Poor baby.

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Weird, because in decades of renting I've never had a landlord offer to pay the broker fee. Honestly, it's the main reason I switched to using Craigslist - maybe its time for the rest of these small landlords to do the same?

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Voting closed 48

The system is broken. There are brokers out there who don't do a single thing and collect their broker's fee because of the system.

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Voting closed 7

I have never, not even a single time, heard of anyone's landlord splitting the broker fee.

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Voting closed 25

This is not the solution. If it does come to this, instead of splitting the real estate agents commission I will be spreading that broker fee over the entire 12 months by simply increasing the cost of rent. This idea is dumb. Just something else for Marty to say he's doing to help the solve the housing crisis.

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Voting closed 5

The rent already increased. Every year. For a long time.

So why is it you would need the tenant to pay the fee?

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Voting closed 5

For every apartment I've rented in this city, as I'm sure pretty much else can relate to, I've spent weeks weeding through terribly-written craigslists ads, often put up multiple times by the same brokerage, only to call one and be told that they rented it out already two months ago, and that, by the way, they have some other 'great' apartments that they want to show you. If one of those is in fact interesting, the broker will meet you there for about seven to ten minutes. For this privilege, you can pay expect to pay one month's rent. For my last apartment, I was renting off of the September cycle, so I told the broker there was no way I was going to pay a month's rent to him and negotiated most of it away.

Of course, there was a halcyon earlier time in which I just responded directly to a landlord's posting, met him/her at the house, and we finalized the lease, and, yes, that can still be an option for 'small guy' landlords and condo unit owners.

All of this is to say that the potential ban on brokerage fees would eliminate a not-inconsequential cost burden that adds little to no value to renters.

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Voting closed 14

Boston doesn't seem as bad as NY, where you can pay up to 15% of your yearly rent in broker fees, but all it takes is for landlords to stop being lazy and actually rent their units out themselves.

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Voting closed 49

Rents will simply go up to account for the fee the landlord pays up front.

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Voting closed 4

Rents will simply go up, inexplicably, anyway. So why nickel and dime the renter? If you really need a broker to find tenants, pay the damn broker yourself.

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Voting closed 5

I bet rents don't go up.

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Marty has finally caught onto the Menino move of just co-opting whatever issue is in the news as his own so no one else can. It's good to be the mayor.

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Voting closed 3

I thought we lived in a capitalist country.

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Voting closed 4

With any luck, in the next couple of decades, we can make it so we're not.

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Voting closed 3

Brokers mostly just show up with the key but renters keep forgetting one important piece - it is the broker, not the landlord, who gets sued if some litigious POS decides to make a quick buck and start crying discrimination over some made-up reason. Landlords will not stop using brokers and you’ll still pay the fee, but instead of paying it up-front it will be priced into your monthly rent, most likely with steep interest.

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Voting closed 4

The so-called "housing crisis" is caused by two things: Too-low supply and too-high demand. This will decrease supply - by making it harder for landlords to rent apartments, and dissuade potential landlords from offering apartments to rent (eg, shifting apartments to condos). And it will increase demand - by making it cheaper for people to rent. You're increasing the gap, not narrowing it.

I despise parasite realtors getting $2000 to unlock a door as much as anyone. But this isn't going to achieve the policy goal.

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Voting closed 6

These realty groups make tons of cash. There will be no shortage of owners looking into these companies to help them rent and sell. Prices may simply rise for renters but Real Estate groups will still thrive.

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Voting closed 26

"This will exacerbate the housing crisis and make apartments more expensive by making apartments cheaper." Brilliant.

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Voting closed 38

Restricting price leads to less supply, which leads to shortages.

This program would effectively limit the price of apartments - which is great for the people who can find apartments. But it's not going to increase the number of apartments in the city - it's going to decrease it. It'll be better for landlords to turn an affordable apartment into a yuppie condo. I'm pretty sure that's not the aim of the program.

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Voting closed 5

Caveat - we ended up buying with help from family because it turned out to be cheaper than finding a lead-safe apartment.

During our rental search, it would have cost us $10k out of pocket to move in to most places. First, last, security, plus broker fee. That's insane for a family and would have wiped out most of our savings. $7500 to move in is still not great, but it's surely better than $10k.

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Voting closed 4

Walsh is simply doing anything he can to rollback the 1992 ballot initiative that outlawed rent control.

Aren't broker fees in the rental business a pretty free market? It's not like there's a dominant system like MLS that landlords are locked out of, if they opt to not use a broker who charges a fee.

Also in some condo buildings, there's a fee for moving in/out. The broker fee can help a landlord cover that.

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Voting closed 5

This smacks of excessive regulation. People don't HAVE to use a broker (per comments above about Craigslist) but if they do, someone has to pay the broker for their work. Is there plenty of sliminess in the whole broker/landlord business? Oh for sure. But mandating that a certain business can't charge a fee seems pretty unfair and will do nothing to put more housing on the market.

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Voting closed 12

Last time I rented a new place, I did all the searching for apartments work for myself and the agent, who I had never met before, just unlocked the door when I went to look. And then I paid him $2000+ for showing up and unlocking a door. Sure, he did some work himself posting the listing, but that was work for the landlord and the landlord should have paid it.

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Voting closed 36

He probably had to show the apartment multiple times, pre-qualify you, answer questions about the lease, do a background and credit check, get you approved, collect payments, get you moved in, split the pre-tax commission in half with his broker, and every other issue that comes up when dealing with personal sales. Boston has a high cost of living and landlords aren't desperate. There's 150,000 college students here and a robust job market. These forces influence market conditions. If landlords are forced to pay the fee, they will raise rents and the broker fee will be built-into the higher rent price.

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Voting closed 9

You're contradicting yourself. You're saying landlords aren't desperate but they can't afford to pay the brokers fee.

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Never said they couldn't afford it. If you were a landlord in Boston and this law passed, would you A) pay a broker 1 month out of pocket or B) raise rent $250/month so you don’t absorb another cost? See where I’m going with this?

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Voting closed 2

What you may not know is that the poorest people in shelters often get grants to pay move in costs. The brokers should be doing background checks to justify their worth to the landlord, but nothing other than a credit check is usually done. Although I have very bad credit and never had a problem. I learned that the most affordable apartment are rented by the landlord directly. Look in the actual newspaper. Real old school landlords don't use craig's list.

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Voting closed 2

People don't HAVE to use a broker

Every rental situation I've pursued in this city has required a broker. I have gone to magement several times to rent a new unit where I already knew the apartment history or unit layout generally to just sign a lease without a broker and they will force me to talk to a broker who is happy to just provide my lease and still ask for a brokers fee.

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Voting closed 5

The brokers don't necessarily "find an apartment for" the renter, you find an apartment yourself online, the landlord has "hired" the broker to show it and handle the paperwork, then the renter is stuck paying the broker's fee.

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Voting closed 8

Broker fees aren't being outlawed in NY State. Rather, the practice of requiring prospective tenants to pay a broker fee is now banned. Someone searching for an apartment can still choose to hire a broker to represent their interests -- but that is a choice rather than an unavoidable requirement.

FWIW the scare tactics about this leading to higher rents are just that. Rent levels are going to be set by market demand for apartments, not unilaterally by landlords looking to replace income from broker fee kickbacks.

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Voting closed 29

When I lived in DC, there were no broker fees for renters, and landlords and agencies both used craigslist. I had no idea renters could be so screwed until I moved here.

Since the internet exists, there is no reason why a renter would ever need to use a broker. Therefore, the choice to involve third parties is the landlord's, and so the landlord should pay for the service they are hiring, instead of offloading it onto the people who are lining up to pay them rent. Brokers provide zero added value for renters. Use them if you want, but then own the cost that you incur by doing so.

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Voting closed 8

Ever notice whenever NYC or SF passes a law or a ban on something, Boston always follows suit? Even if the circumstances there are different than here. Smoking bans - check (except marijuana of course because that's so hipster). Plastic bags - check. Straws - check. Realtor fees - coming soon.

Gee, New York also passed laws granting driver's licenses to undocumented immigrants and restrict police cooperation with ICE. Let's pass that too so we can also lose Global Entry and other trusted traveler programs.

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Voting closed 6

New York also passed laws granting driver's licenses to undocumented immigrants and restrict police cooperation with ICE. Let's pass that too

This, but unironically. What's wrong with learning from what other cities do and implementing some of their good ideas?

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Voting closed 24

If you are going to quote me - do the whole thing about the consequences.

New York also passed laws granting driver's licenses to undocumented immigrants and restrict police cooperation with ICE. Let's pass that too AND ALSO LOSE GLOBAL ENTRY AND OTHER TRUSTED TRAVELER PROGRAMS - This is what the Feds are doing to New York citizens.

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Voting closed 3

Sorry you might have to take your shoes off in the airport security line in exchange for not sending children to ICE concentration camps. It must be really hard on you. Thoughts and prayers to your family in these difficult times.

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Voting closed 17

And your bleeding heart along with being ok with no consequences for staying in the country illegally is exactly what's going to give Trump another 4 years. I hope that makes you happy. More people who 'can' vote (citizens) don't want open/unchecked borders. (Amnesty, whatever - all the same - open borders).

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Voting closed 7

Rent control and NIMBY politics has wreaked total havoc on NYC and SF real estate. I don't know why anyone would think they are model cities for what to do to fix real estate.

Seattle and Minneapolis are much better models. Granted they have more to work with, but they aggressively overhauled zoning and went on a building boom. Seattle has even seen rents falling. That's the answer, not this stuff.

Good intentions don't always mean good outcomes.

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Voting closed 5

There is no rule you have to use a RE broker. You pay to play. There is no rule you have to live in Boston.

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Voting closed 4

"If you don't like it, leave" is not a valid argument.

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Voting closed 7

Just a thought that occurred to me: if we ban broker's fees to tenants, there might be a positive side-effect: Perhaps landlords will be a little less likely to evict current (rent-paying) tenants, if the landlord knows they might have to pay the broker's fee themselves when searching for a new, replacement tenant.

I'm not sure what all the effects (including unintended consequences) of this change might be, but it seems reasonable that if we lower the financial barrier to finding an apartment, the number of homeless might drop at least somewhat. Not every homeless person is penniless, or mentally ill, or addicted -- some of them just have limited funds available.

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Voting closed 7

My $2,400 month Hyde Park apartment needed first month, last month, security deposit and broker fee which is $9,600. I don't have that kind of money sitting around so I took it out of my 401k. If I have to move again, I do not know what I will do.

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Voting closed 8

There are few things that make me furious like everything related to the Boston rental market. I have moved close to 10 times (including in and out of an apt after 3 months that burned me for a $1500 fee) and the amount of money collected to show me a unit for 3 minutes is absurd.

I'm not confident in this measure going the way renters want it though (though probably not as disastrously as the cry for rent control would be in the long run)

My guess it will go like this:

1. Realtors still have a near monopoly on listings
2. Base rental fee will just be higher, including the fees now…
3. …which means your likely raise in rent next year had a higher starting point
4. …which could mean you're just going to push overall amounts paid higher than they would otherwise be

I think if they wanted to impact up front cost, it'd probably be better to have cut requirements about last months rent instead.

At the end of the day, the problem is still supply and demand. We need way more housing. Full stop. The rest is spitting in the wind.

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Voting closed 4

Because the cost of a broker fee would suddenly cause the landlord to lose money on the property or break even?

Rent has risen way more than inflation and continues to do so. That easily covers the cost of the brokers fee. Or they can just not hire a broker.

Landlord paying the brokers fee is not intrinsically tied into the rent.

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Voting closed 4