brokerage fees paid by....?

Question

Here in Boston renters pay the brokerage fee, the same applies in New York and I hear San Fran does it this way also.  I see landlords being able to pass on that cost as a sign of strong demand and likely low vacancy.

What other cities pass the brokerage fee on to renters and do you agree or disagree the ability to do so is a sign of the market condition?

Account Closed · Answer

@Richard Schneider

I would like to believe a broker fee being passed on to the tenant is a sign of low vacancy or high demand or generally how that area operates.

I know in western Massachusetts there was no broker fee charged to me as the tenant even though there was an agent involved, I guess I can assume the landlord paid it however much it was. Out there there was plenty of supply and not as many realty agencies as Boston has.

Doug Melcher · Answer

Today in Boston, most landlords are paying the rental fee. The large amount of new construction in Central Boston has caused the pendulum to swing to the tenants side. Many buildings now offer 1-3 months free rent, pay the broker's fee, and offer "sign and drive" deals with just $50 to 1000 down as deposits. I am encouraging many smaller landlords who are stuck with winter vacancies right now to take smaller, or no deposit if the tenant has excellent credit and a great landlord reference.

Mike Hurney · Answer

@Richard Schneider Welcome.

I was working with some developers of Apps and Sites that do Rentals and Rent guarantees, I agree that based on vacancy rate Tenant or Landlord pays.

Personally we advertise on CraigsList and don't charge our Tenants any more than First and Security. (but the Tenant check process is a bitch;-)

However Commercial is a whole different world.

You looking to BRRR in another city?

Rich N. · Answer

it swings with the times.  When its low vacancy, the tenant pays.  When vacancy is high, the landlord pays.  If its just so-so, then they both pay 1/2 fee.  Now does the Agency double dip?  I don't know and hope not.

Of course, location is huge.  In Boston central, a tenant is expected to pay first, last, sec dep and fee.  Well, when the rent is $2K a month....they have to come up with $8K

In the burbs, you usually go with without an agency and go with first and last and maybe partial of security.....more like 1200+1200+600 for $3K

Michael Lee · Answer

Each state has the broker fee being paid by whatever is in writing.  Usually in a sales transaction the seller usually pays the commission fee(s) at closing. I believe that it can be anybody as you both agree on it before closing of a sale.  A fee on a renter is whatever is agreed upon by all people involved.

Good luck to you!

Russell Brazil · Answer

Actually in Boston many agents are able to collect a fee from both the renter and the landlord.

DC/MD/VA only the landlord pays the fee....but rhea vast majority of rentals are done by the landlords themselves. Most agents in the DC area won't touch a rental.