New to Real Estate · New York, NY · Member since 2024 · 12 posts · 4 votes
Recently, NYC Council has passed a bill, the F.A.R.E. act, that shifts the brokers fee to who ever hired the broker (Usually the landlord). I am curious to hear some early predictions on what effect this will have on the NYC markets. Will landlords who are barely profitable as it is sell? Will brokers be phased out? Assuming this cost will be reflected in rent, will it give landlords who don't use a brokers an advantage price wise?
In the end, will this act be beneficial to the landlords, or renters long term?
Short term, assuming the real estate lobby doesn't sue this to keep delaying/appealing, once it goes into effect there will be no more broker fees paid by tenant *unless they hire the broker*
Some long term effects I can predict already:
- Landlords now having to absorb broker fees will bake this into the rent (e.g. how "no fee" units typically are priced a little higher than other units)
- Real estate board will require another document (or checkbox) for tenants to sign stating that they're hiring the listing broker and responsible for compensating them for their fee *if* they apply and are approved
- Regular New Yorkers will have an even harder time to find an apartment because you cannot legislate/regulate away a housing crises...
The focus of government policy (regardless of how local) should be on addressing fundamental friction. Supply Vs. Demand.
Increase supply (or at least encourage development), and the prices will eventually come down (as we've seen in other large cities like Austin where the demand boom was followed by a supply boom - and now both sale prices and rents have gone down).
@Mohammed Rahman, interesting takes, I agree with you completely. I wonder if this will spark another sharp increase in residential developments like in 2021. (20,000 in 2020 up to 27,000 in 2021)