The HRA Game is the latest installment of the Problem with Rental Programs. Note: This is a revised version of the original article. Items stated here may have changed.
The HRA Game
Housing programs are now administered through one central entity HRA. On the surface, this would seem a good thing except when that entity forgets it’s dealing with people’s lives and livelihood.
Messing With Broker Fees
Quick Fact: Broker fees – as it pertains to rentals– are usually equal to the rent. In some cases, it is higher. But for the sake of this article, we will be dealing with the equal to rent scenario. Years ago HRA decided it would set the broker’s fee for program apartment rentals. Brokers are now paid 50% of the rent.
Rental discrimination By HRA
Here’s the thing: If we secure the same apartment for a non-program tenant we get our full broker’s fees. Do the same work for a program renter, we get paid less. Talk about discrimination. The State says we cannot discriminate against people in programs. HRA says brokers get paid less for working with people in programs. Here’s the problem. People in programs are not a protected class. Therefore, no special consideration is due to them. Nonetheless, program recipients are treated as a protected class by the State and HRA.
Note: Discrimination is determined by intent. I’m pretty sure the intent is here loud and clear. That’s one person’s opinion.
Lets Review:
- People who are not in programs pay the going rate.
- Programs pay less for the same work as people not in programs.
- HRA sets the fee, not the broker.
And why would we work for less?
50% vs. 100% broker fee. Let me think. No not worth it. Too much effort for too little reward.
No Disclosure
This change was done without due process. No one informed brokers beforehand. This seems to be a practice of the State. Enact laws, changes, etc. but don’t tell the real estate companies. Most of us found out when we tried to get paid.
According to the HRA personnel I spoke to. We as brokers are supposed to contact HRA and ask them what is the procedure for dealing with program tenants. This is news to us.
Question: Has anyone tried calling these people and not be on the phone for what seems like an eternity? And if you manage to survive the long wait did you get a straight answer to your question? No, you got this answer, “Ask the client for the package. It will explain everything.”
Ever get an incomplete package? Sure you have. Even if you got a complete package it told you very little.
Delay of Payment if any
One thing the package fails to tell you is HRA could take as long as they want to “review” your paperwork. The paperwork submitted for payment. They do this after the tenant has taken possession of the apartment not before. If HRA finds a problem or disagrees with you don’t get paid.
STIFFED BY HRA
I had one case where I did not get paid by HRA. They rolled the responsibility of me getting paid back to the tenant. HRA told him to take time off from his job, go down to HRA. Then meet with his caseworker. All this so I can get paid for something already completed. This took a few visits resulting in the tenant refusing to take any more time off.
I never got paid. In talking to other agents I am not the only one that’s been stiffed by HRA. It would be nice to reverse the situation. Let’s see how HRA workers like having their pay rejected after working all week.
My Solution
My solution, inform owners that want program tenants they will be responsible for unpaid fees. This includes the 50% HRA does not pay. I put this in writing. If an owner refuses I don’t take on the apartment. I have been using this method for some time, only one owner balked at the idea. That owner has a policy of never paying a broker fee for any service. Fair enough, the owner found a tenant without my help and I didn’t waste my time.
Why do this? My opinion
At some point, a line must be drawn. The State doesn’t care about your quality of service equaling fair pay to you. You can’t ignore the mandate of accepting program customers. But you can pass on the burden of payment onto the owner.
If you do not take on program apartments where the owner will not guarantee your fee you have not violated the law. When asked do you work with programs? The answer is always, Yes. When asked do you have a program apartment? The answer is No. I do not have any program apartments.
You have done what the law requires. No discrimination took place. And you exercised your right not to work with anyone that will not meet your fees.
Programs may be HRA’s game but you don’t have to play it. At least not their way. Let’s continue…
Security Deposits Another HRA Game
Owners have discovered that the security deposits are not paid at closing. In its place are vouchers.
Said voucher allows the owner to request the “security deposit payment” after the tenant has left the apartment.
HRA In Charge Again
HRA request that the owner’s supply documents supporting their request for payment. After a review, HRA decides how much the owner should get paid. This based on HRA’s assessment of the apartment and your documents. NO, HRA does not inspect the apartment. The decision is subjective to their opinion.
Take Note Owners and Program Tenants
Under the program guidelines, owners that do not agree to these conditions have to reject the tenant. Some accept some reject.
Once again program tenants treated differently than non-program tenants.
Security Deposit Usage: Non-Program Tenant
In a normal transaction, the security fee, one month’s rent, and the broker’s fee are paid at the closing. When the tenant moves out the owner inspects the apartment. Excessive wear and tear on the apartment justify using the security deposit. The deposit is used to make repairs. Money left over is turned over to the tenant.
In cases where the security deposit is not enough to make repairs, the owner may sue the tenant.
No repairs mean the tenant gets back the full deposit.
National Association of Realtor
So what’s a broker to do? The state says we have to take on program customers but they don’t want to pay our rates. Forget about the National Association of Realtors –NAR – coming to the rescue. They let this happen. To date, they have not done a “call to action” on this matter. NAR charges a lot to be a member. You would think it would rise up to protect its members. And the continued flow of dues. But no, they remain silent. So why belong?
Disclaimer
Disclaimer: I am not a lawyer and nothing stated here is legal advice. This article applies to the five boroughs of New York. All information deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.
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