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The New York Times
Friday December 5, 2024 The Metro Section |
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An E-Run Around Broker's Fees-Internet Lists Offer a Cheaper Way to Find Apartments
by Randy Kennedy Engulfed in half-unpacked boxes in her new apartment, Laila Panahinia wondered whether the laws of physics would permit her a couch. "Maybe I could wedge one in here", she said, pointing to a hopelessly bried stretch of wall between her galley kitchen and single bed. "Or maybe not. Ha ha ha." Yet despite everything-the closet-like dimensions of her new studio in Murray Hill, the weird dun-colored paint job, the $1,200 rent for a fraction of the space she had in Tuscon, Ariz., for $310-Ms. Panahinia was a very happy woman. She had not just captured that most elusive of all Holy Grails in Manhattan rental real estate: the no-fee apartment. It is a matter of no small import these days, when high demand and a low vacancy rate have driven rents to a dizzying heights. Ms. Panahinia, a 24 year old forensic scientist recently hired by the Police Department, could have easily gone to one of Manhattan's 22,260 (believe it or not) licensed rental brokers or agents. But they would have charged at least 15 percent of a year's rent ($2160 in the case of the Murray Hill studio) or as much as 20 percent ($2880). In fact, as she signed the lease for her apartment last month, three brokers rushed too late into the manager's office, with crestfallen clients who also wanted it. But Ms. Panahinia had taken a risk and arrived by another route: she had called up two fledgling companies called apartment referral services, which are aggressively trying to beat the brokers at their game by selling E-mail lists of available apartments for a flat fee. For an increasing number of New York 20-somethings with salaries that rarely reach above 30-something, the services-which generally charge from $99 to $185 for lists that are updated daily-have become more of a necessity than an alternative. "Paying a regualr fee in this market is just too, too painful," said Ilissa Wood, 22, an account coordinator for a public relations agency. "I mean, in another city you'd probably be paying for a car with that kind of money. I couldn't do it." In almost every other large city, even those with expensive rental markets like San Fransisco and Boston, referral services have long been the rule. Many are even free for apartment-seekers; they charge a listing fee to landlords, who are often in competition for tenants, an idea one New York landlord laughed at and called "surreal". (...) While there are no hard numbers on the percentage of apartments rented through services, even brokers acknowledge that the listing business has taken off recently, driven by the tight market and remade with the help of the Internet. Many services at first depended primarily on faxes, with fewer than half their clients asking to receive the lists by E-mail. But now most conduct nearly all business on-line. 
Referral services conceded that they have had incredible difficutly getting through to hidebound landlords. "Four years ago when I started all I got was: 'What are you talking to me about? Do I know you? Good-bye!'" said Barry Feinsmith, the owner of The Apartment Store, one of the oldest of the services.
But in his first year Mr. Feinsmith slowly built a database of cooperating landlords who owned 500 buildings. It has since grown to about 2,800 buildings. He said the difference between what he does and what traditional brokers do is diminishing rapidly, and he called brokers a "very expensive escort service." "With a market like this," he said, "9 times out of 10, they're seeing the apartment for the first time when you're seeing it." So what do customers think? If the experiences of a dozen who were picked at random and interviewed over the past two weeks are any indication, the apartments listed by the services were no better or worse than those shown by traditional brokers, whom most prospective tenants also consulted to hedge their bets. Most of the dozen found apartments through the referal services, or though friends or lucky finds in the newspaper... Both listing services and brokers, they said, offered a mix of the adequate and the ludicrous, with the ludicrous prevailing. Ms. Wood, who saw a dozen apartments with her roomate through The Apartment Store, recalled one studio in particular. "We walked in and were like, 'Oh my God.' The closet was in the bathroom." They saw other units that were beautiful... Owners of the apartment referral companies said they must overcome a peculiar mindset that seems to infect renters in New York: they are dumbfounded by the huge fees, but they secretly believe they will never find a decent apartment without paying one. "They think that everything good in this city has to be outrageously expensive," Mr. Feinsmith said. Mr. Heidberger (a broker) insisted that, sadly, it is true. "I'm the first person to concede that it costs a lot to get an apartment in this city, and I sympathize," he said. "But you're better off forgoing one vacation for a year to get an apartment that you're really going to enjoy for several years." |
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