In The Public Eye
Words From the Bubble
In The Public Eye
Words From the Bubble

The Rental Application Fee: Another Reason Rents Are Too Damn High

The rental application fee, some charge them some do not. That is the choice of the broker.  The choice to deal with someone who charges an application and other fees is up to you.

Rental Application Fee

Before you set off to find that dream rental you need to understand the fees you may encounter. More and more real estate companies are looking at charging rental application fees. Management companies have been doing it for years. “This is the cost of doing business with them.”

Right now you have to be asking yourself, what are these fees? How do they work? What is the benefit to you if any? Let us examine these fees as well as others.

Who Charges This Fee?

Quick Note

There are two entities that charge rental application fees. These are real estate companies and rental management companies.

Note:  Some rental application fees are rolled over into the rent. Most of the time it goes into the real estate company’s coffers.

A word about apartment locators

Note: Apartment locators charge you a fee for a copy of “their listings”. I never recommend dealing with them. See: Apartment Locators: Do you really need to use this service?

Management Companies

I have yet to come across a management company that does not charge an application fee. I have seen fees as low as 25.00 dollars and as high as 100.00 dollars or more.
 
The fees are usually non-refundable. It is important that you understand that non-refundable means non-refundable. If you don’t get the apartment you don’t get your money back, none of it.

Other Non-Refundable Fees

Other non-refundable fees you may encounter; a credit report and background check. Management companies and some real estate companies prefer to run their own checks. This can happen even if you have an up-to-date report ready for them to read.

The Reason Why

There are some good reasons why these companies want their own report. Believe it or not, these reasons are there for your protection.

  1. Your report belongs to you; you control what can be read.
    1. Usually, that means just the summary.
  2. No one is allowed to keep or copy the report unless you allow it.
    1. Even if you are willing to allow a copy to be made this may be declined.
When the rental company purchases the report it belongs to them.  Yet, they charge you for it. Why they charge you is beyond me. That’s one of the accepted nonsensical practices that exist.

Photo Id

Some companies request a photo ID. If you read my article–Required Rental Documents–you know what they can and cannot request. Have you read this? No time like the present. Well, after you finish this article.

A Fee To Become A Customer

I have heard and dealt with horror stories of customers who claim that “so and so” real estate company charged them a sign-up fee—sometimes called a retainer. 
Do not confuse this with a rental application fee. This fee is for you to be taken on as a customer. You still will pay an application fee.
I do not recommend that you work with a company that charges a fee to become a customer. They make it easy for you to give up your money. Difficult to get it back if you find a place without them or change your mind.

The Rental Application Fail

One company I dealt with wanted to charge my customer a rental application and credit report fee. Both were non-refundable. My customer had no problem with the credit report fee. The application fee was another story.

They wanted the application fee even though my customer had filled out my–free no charge–just as good as theirs–rental application. I questioned this fee.  The response; this is how her office worked. No application fee, no apartment.

I explained this to my customer who promptly walked away from the apartment. Unfortunately, this left a bad taste in her mouth. She decided to avoid all real estate companies and search on her own.

Get It In Writing

Reputable companies that charge fees will have you sign an agreement.  The agreement states what will happen to your fee if they locate an apartment and if they don’t.
In some cases, the fee or part of it may be applied to your 1st month’s rent. Some apply it to the broker’s fee. Or it may not go towards anything.
 
Read and understand what you are about to sign. Ask questions until everything makes sense, don’t just get the gist of the thing. Completely understand it. The following is why.

The Writing in Stone

  • No law exists stating that money must be returned to you if you sign an agreement stating that you understand the money is non-refundable.
  • There is no set dollar amount for a rental application.
  • No set dollar amount for a background check or credit report.
  • No law states you have a right to know why you were rejected for a particular apartment.

Was this article informative? Great. Let me hear your thoughts on it. Leave a comment. Let’s start a conversation.

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 is deemed accurate but not guaranteed. Always check the real estate laws in your part of the country.

Comments, Questions, Suggestions?

Was this article helpful? Did you learn anything new? I would like to hear your comments on this and any other article on this site. Take a moment, and leave a comment or suggestion. Let’s start a conversation today.

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