The NYC FARE Act – One Year Later.

Almost a year ago, New York City passed the FARE Act, which prevents real estate agents from collecting broker fees from tenants when the landlord hires an agent to list their apartment.

The whole thing got a good amount of attention—people claimed that free-market rents would increase if the law was changed.

I’ve been a real estate agent in NYC for nine years, and I feel like the law has only slightly changed my business.

There are two types of apartments in NYC: free-market apartments, where landlords can charge market rates, and rent-stabilized apartments, which are stuck at relatively low rent amounts after the 2019 rent law prevented significant increases, even when a long-term tenant vacates.

Before the law changed, I actually received a good number of rent-stabilized apartments from landlords. I’d list these and charge the tenant a broker fee. Because the rents were so low, having the tenant pay the broker fee was never a difficult request. In fact, some of the deals I listed were so good that tenants would offer to increase their broker fees without me asking (I usually just charged about a month’s fee—I didn’t want a large broker fee to prevent the apartment from getting rented).

Not only would tenants offer to pay higher fees, but there was even a time, when listing a three-bedroom apartment in Williamsburg, that I had a tenant offer to bring me coffee. There was so much demand for these apartments that people would call and call me, sometimes even divulging their life stories about how important it would be for them to get the apartment.

Since the FARE Act passed, I’m no longer receiving a pipeline of rent-stabilized apartments to rent. I think some landlords are feeling squeezed in terms of expenses—their costs have risen, sometimes substantially. I hear landlords talk about how the cost of things like insurance, gas, water—you name it—is going up. While a $2,000 broker fee to rent an apartment isn’t huge, it’s still something. And if the apartment is already inexpensive and will rent quickly, why not save the money? I think some landlords are choosing to rent these apartments themselves more often.

Another change is that I don’t necessarily think landlords want to offer below-market deals—but they used to. Last year, when the law changed, I had one landlord tell me he was intentionally renting his apartments for a low amount—he “didn’t really care” because he had owned the building for a long time. He had always had agents list the apartments and charge tenants a broker fee. Once the law changed, and because of a few reasons he wasn’t able to rent the apartment himself, he wanted to hire me—but this time he asked: how much do you really think we can get for the apartment?

I told him the market rate for a one-bedroom apartment in Williamsburg, and we rented it for that amount.

Have I seen a decrease in the amount of rental business I receive? Yes, a little—but not a ton. I think I, and any other real estate agent, still provide value. We are in the market every day, dealing with tenants and seeing apartments. Not only can we show apartments, but we can also advise landlords on what might improve their units and properly screen tenants.

In the end, it does take a good number of trips to get an apartment rented—we do relieve some of that headache.

But even a slight decrease in business has encouraged me to focus on other avenues to make money in real estate—sales, both investment sales and co-op and condo transactions.