Tell me if you heard or said this one. “Broker’s fee, I don’t believe in paying a broker’s fee.” Or maybe this one. “Broker’s fee! I don’t pay no stinking broker’s fee.” Okay, so that last one I made up but people have been saying the first one for some time.
This article is for all those who think agents and brokers should work for free.
First Class Jerk
I had one person tell me this after he had his wife search for an apartment. After the showing–with his wife wanting the apartment–this jerk tells me he doesn’t believe in paying a broker’s fee. Could he afford the fee? Sure he could. He felt brokers don’t deserve to be paid for their work. In the same breath, he complained that he was due money for a job he just completed. I explained this to the owner and she rejected the person for the apartment. No, she didn’t do this for me. She felt that if he was willing to deny me my pay he would do the same with her rent. Wise woman.
Management Companies Ads
Apartment Available No Broker’s Fee!!!
Signs and ads from management companies state this proudly. People who have an aversion to paying a broker’s fee flock to them. I don’t blame the management company’s inventiveness in attracting customers. They’re just playing up to the people who believe real estate professionals don’t deserve to make a living.
FRBO
Can you get an apartment without a broker’s fee? Sure can and guess what? No real estate person will complain. Owners can rent to you without paying a broker’s fee. It’s called For Rent By Owner (FRBO)
No contract exists between the broker and the owner. This means no broker’s fee. In all other instances, the answer is No. So how can a management company rent an apartment without a broker’s fee?
No Broker’s Fee, Really?
The sign does indeed say “No Broker’s Fee”. New York State requires management companies to have a licensed real estate professional run the company. This person is called a broker. Make no mistake this person will get paid. How you ask? I will get to that but first, let me lay the groundwork.
The Groundwork
Remember the sign? It didn’t say anything about an application, credit report, or background check fee. There is no limit to how much these fees will cost. But you’re still not paying a broker’s fee, right? You’re thinking, “I got a great deal.” So did the management company. Their fee not only came from you but from everyone in the building or complex.
A Piece of the Action
Management companies get paid to manage the building. Their fee is set in the contract the management company has with the owner. The owner sets the rent to cover all operating expenses of the building. Paying the management company is an operating expense.
And who pays the rent. You do.
The never-ending fee
Your payment of the rent doesn’t end until you leave the apartment. The management company gets a part of that rent. In effect, you are paying the broker’s fee every month. You and every other tenant in the building. Compare that to a person in a non-managed building who paid a broker’s fee once.
That doesn’t matter though, you got the apartment on your own. You don’t see the need for a real estate company. No one needs to represent you in your real estate transaction because you got this. Right?
You Paid A Broker’s Fee
To anyone who thinks getting an apartment through a management company avoids the broker’s fee think again. Management companies exist to manage buildings and to get paid for it. One way or the other you are paying a “broker’s fee”. No matter what it’s called.
Quote: “A rose by any other name is still a rose.”
A needed service
To all the people who have the mental toughness to handle managing a building. I have nothing against you. In fact, I wish I had your mental toughness. It takes a lot to handle the complaints and other headaches that come with managing a building.
To you, I and other Real Estate professionals have respect for what you do.
To the people who think real estate professionals don’t need to get paid. You think we have deep pockets. That we don’t have bills like everyone else. Somehow we are in good with the utility companies and well, everyone we do business with. Therefore, we don’t need to get paid. But you, you do deserve your pay. Really! You actually believe this crap.
Walk a mile in the other person’s shoe
Well, to you that feel real estate professionals are superfluous and don’t deserve to be paid for our hard work I say this. I pray there comes a time when you feel the callousness of this act returned to you. A time when you need to pay a bill. Get something for your loved one for that special occasion. And when you go to get paid the person looks at you and says, “Pay you. I don’t pay for what you’ve done”.
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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