RentHop.com already provides a comprehensive repository of Manhattan rental listings, complete with the phone number, building address, and website for many hundreds of listings.  Our visitors are welcome to use this information to contact the landlords and schedule viewings without further assistance from our site.

We realize, however, that the logistics of scheduling viewings can sometimes be very stressful.  In fact, a large part of the value an apartment broker provides is to manage all of the moving parts, making something that is very hard a lot easier.  For apartment hunters who seek the full services of a licensed New York real estate agent, we are proud to announce our newest service.

RentHop.com is happy to assist you in contacting the landlords in order to schedule viewings. For no charge, Rent Hop will seamlessly forward leads to our trusted affiliate no-fee brokers with the understanding that our visitors desire only no-fee apartments.  The compensation will be fully paid by participating landlords, resulting in a large savings across the board for everyone.   The landlords fill their vacancies sooner, the licensed agents earn an owner-paid commission, and the renters pay no fee!

Entrepreneurs know that the key to most great innovation isn’t an incremental improvement on the status quo, or a slightly more efficient and optimized implementation of an old spec.  As Christensen writes in the infamous Innovators’ Dilemma, the real game-changers in the world are disruptive inventions.  When we began creating RentHop.com, the first truly free collection of no-fee apartment rentals, we suspected we were in the midst of crafting one such disruptive technology.  By finally breaking up the monopoly on landlord and building information, we naively thought we were disrupting a system filled with inefficiency, dishonestly, and dead weight.

But we were wrong.

Brokers Are Not Evil

Contrary to what many apartment finders believe, most brokers earn their fee.  In fact, there is a strange catch-22 that applies to any good apartment broker:  Renters are more likely to despise the harder working and more competent apartment brokers!  Remember, a great apartment broker makes something that is very hard a lot easier.

Imagine a renter who meets his apartment broker (who shows up early to ensure he is punctual), seamlessly views a half a dozen suitable candidate vacancies (and the doormen all welcome you eagerly), and signs a lease that afternoon (the broker brought the application form).  That renter will believe finding an aparmtent in Manhattan is painless and possibly even enjoyable.    It won’t be obvious the broker added much value, since the process seemed so easy, and because finding that $2,000 studio only took 4 hours all in, the broker certainly didn’t add $900 an hour of value!

Or did she?

Good Brokers Add Lots of Value

Before the apartment hunting day began, the broker carefully spent the last few weeks previewing dozens of apartments in her neighborhood of choice, personally visiting and photographing each unit, then confirming the amenity offerings with the super and doorman.  On the morning of the hunt, the broker called the management for each building, potentially traveled uptown to obtain some of the unit keys, and called each of the doormen to confirm the apartment was vacant and available for viewing that day.  She searches her company database for the application PDF forms and prints out a copy for each apartment she’ll be showing that day.  Finally, she maps out an itinerary that solves the infamous traveling salesman problem to the best of her ability, and includes a few optional nodes should the renter be an above-average speedy browser.

Circumventing Renters Simply Did Not Have a Good Alternative

At last apartment hunting begins.  The renter shows up 30 minutes late, apologizing that the previous broker meeting went overtime.  They spent 4 hours searching, and finally the renter says complains that the broker fee is too high.  The renter ends up finding a sublet with a college roommate (or worse, figures out a way to circumvent the broker and rent one of the apartments).  This process can go on for days or weeks until finally a qualified, able, and willing renter comes along to compensate our poor broker!

RentHop.com Offers True No-Fee Manhattan Apartments

Rent Hop offers free, no-fee rental listings for the New York City metro area.  By providing this information, we hope to accomplish three important goals.  First, hunters who insist on a do-it-yourself approach have everything they need in order to succeed in their rental search… but they will have to do all the broker legwork that too many people take for granted.  Second,  the renters who are determined to circumvent fees will no longer need to abuse honest brokers by utilizing their labor with no intention of ever paying any compensation.   Best of all, we offer a full-service broker option, only the broker will not charge you any fees at all!

We work exclusively with no-fee apartment listings, and most of our landlords have agreed to waive your broker fees as well.  By using a RentHop.com referred broker, visitors can be assured they will only see no-fee rentals, and that they will receive outstanding service from a New York licesned real estate agent whose interests are fully aligned with the apartment hunter!

Clearly this concept qualified as a disruptive technology, but contrary to popular belief, we do not believe we are taking any cusomters away from the standard Citi-Habitats or other traditional brokerages… if anything, we are reducing the number of abusive renters from circumventing their brokers!  We’d like to view ourselves as a specialized version of Craigslist, only without the dishonest listings, the bait-and-switch ploys, and the frustrating lack of transparent apartment information.

How Large is the New York Apartment Broker Industry?  We always hear that the non-agency mortgage-backed securities market is a  $800 billion dollar market, based on notional value (that includes CMBS, for the purists).  The whole loans market for outstanding residential mortgages exceeds $4 trillion in par-valued principal.  The hedge fund industry once topped $2.6 trillion in assets under management.  How about Manhattan apartment brokers?

First off, what do we mean by the size of an industry?  We don’t intend to calculate the PV of all the brokerages in the city.  Instead, imagine a world where no-fee apartment rental websites such as ours become incredibly popular.  In fact, the sites are so popular that every broker today who makes any commissions related to apartment renting instantly sees his or her income drop to $0.  How much total commission would be lost per year?

Method 1:  Licensed Rental Agents * Average Annual Income

The first attempt at estimating the size of the broker industry is to figure out the total number of agents who make a living helping tenants find apartments.  The advantages here are that we can cleanly capture the data by obtaining the number of licensed real estate salesperson and associate brokers from the New York Department of State.  Then with a modest sample size, we can find out what percentage of agents work in rentals, and then determine the mean income each rental agent earns per year.

How many agents work each year in a full-time capacity, handling apartment rentals in Manhattan?  Using our trusty eAccessNY tool for looking up licensed agents, plus some clever agent listings from key rental players, we conclude there are at least 3,000 rental agents working in Manhattan for a living (as in real analysis, we choose to lower-bound the estimate and show that the number fulfills our needs, rather than worry about careful estimation).

Now the more interesting number, what is the average rental agent income?  I got some information after talking to broker who’s data I trust a lot (he runs a well-respected brokerage and personally trained over 100 agents).  A good rental agent earns between $50,000 to $60,000 a year.  While I didn’t ask for statistical details on the “good” descriptor, we’ll assume $60,000 is a one-sigma positive agent.  He also said an “exceptional” agent makes $100,000, which I’ll peg as a two-sigma agent.  As we know, this is hardly a normal curve, as the big skews are on the positive side, so told, I’ll estimate the mean at $45,000 annual income for a rental agent.

But when a rental agent earns $45,000 a year, that means he or she really collected at least $90,000 a year in commission, under the standard 50/50 commission split.   Sadly, there is even more.  An in-house listing team can usually count on earning 5% per listing, meaning the actual annual commission collected per agent per year is closer to $90,000 / (.95) = $94,737, which we’ll round to $95K.  The broker also told me that while some agents have successfully worked as hybrid rentals and sales, the vast majority stick with one or the other (sales being higher on the totem pole, but requires more relationship management and reputation establishment).

If our calculations are close to correct, we are concluding that the New York Apartment Broker Industry grosses at least 3,000 * 95,000 per year!  Manhattan rental brokering has consistently been a $285 MILLION dollar industry!  That lower bound excludes all the web designers, lawyers, database admins, property managers, accountants, and others, but the typically 50/50 broker cut can account for a lot of the overhead payments.

Can we really save New Yorkers $285,000,000 a year?  That certainly is one of our goals, but first we’d like to suggest other methods that could approximate the same number, to be explored in the future…

Method 2:  Apartments in Manhattan * Annual Turnover * Broker Utilization Factor

Method 3:  Back It Out from the New York City Budget / Tax Factor

Rent Hop receives very frequent, often daily, updates on the latest apartment availabilities and prices from our landlords.  One trend we are clearly seeing is the growth of what many lay-renters would call “No Fee” apartments, even by landlords who would have traditionally charged a fee.

The technical real estate term is called OP, or “Owner Pays”, meaning the landlord will pay the broker fee on behalf of the renter.  This encourages full service brokers everywhere to show the apartment to all of their perspective clients, allowing the broker to advertise the apartment as a “No Fee” listing.  The renter believes he is getting the best of both worlds… the full services of an apartment broker coupled with no fee!

Why doesn’t a landlord simply lower the rent by 15% rather than offer up 2 months of OP (paying two months of rent as broker fee)?  Because the landlords need the brokers.  In both good times and bad, landlords understand that despite their best intentions, their internal leasing team and company website simply don’t bring in the breadth and depth of renters needed to fill their vacancies.  Landlords need the brokers who cater to renters from the entire spectrum of apartment hunters to find just the perfect match for any listing.  Therefore, the simple answer is, landlords know paying the broker 1 or 2 months of OP will be more successful in signing a lease than dropping the price by 8-15%.

Very few apartment hunters know precisely how much expertise, training, and education a New York City apartment broker must have to be licensed and in good standing with the NY Department of State.  In fact, most people we call “apartment brokers”  formally have a real estate salesperson license.  Every real estate salesperson works for an employing broker, who has a real estate broker license.  There are many different types of broker licenses, but all of them have roughly the same minimum credentials.

Now for the surprising part.  How many years of training does it take to become a licensed real estate salesperson, who you entrust as your agent to guide you through your housing needs, most likely your largest personal expense of the year?

The answer:  75 hours and a 70% score on a 75 question, multiple-choice exam.   The entire education can even be completed in an online class costing about $400.

To be fair, the 75-hour requirement is actually an increase from previous years.  Prior to Summer 2008, the requirement was significantly lower, at 45 hours and a 50 question exam. In addition, licensees must take 22.5 hours of continuing education classes every two years.

Still, it is important to understand that these are only minimum educational requirements, and that any decent broker has significantly more experience from years of handling real estate leases, purchases, and sales.  Also, most respectable employing brokers have very solid training and mentoring programs to ensure that their freshly minted salespeople are adequately prepared prior to handling their own clients.

Brokers, on the other hand, require significantly more training and experience.  They have at least 120 hours of classrom education and at least 3 years of real estate experience, either acting as salespeople or by working in a real estate related job that provides them with equivalent experience.  Chances are, in the apartment rental market, you will see many more salespeople than brokers; it is often considered less prestigious because the commissions on any given deal are much lower than in condo or co-op sales.  Still, there are certain excellent brokers who specialize in apartment rentals.

How can you tell if your agent is a salesperson or a broker?  You can check the Department of State public license search.

Given all the talk about the recession and financial “Armageddon,” how will New York renters be affected in the near-term? Well, let me say straight up that rental prices are down significantly year-over-year, with November rents for doorman and non-doorman prices down around 2.5 and 8.5 percent! [for more details, renters should refer to the TREGNY Manhattan Rental Report]. This downwards trend has been confirmed by CitiHabitats as well, in the Bloomberg article entitled “NYC Apartment Rents Fell in November, Vacancies Rose.” With all these changes, how will NY renters be affected? And will rents continue to fall? While Rent Hop can’t exactly predict the future of the economy, we hope the following tips will be helpful in your search:

1) Renters should take their time to look for the “perfect apartment.”

Renters should now be much more selective in choosing their apartments. Only recently, we’ve hit the perfect storm for rental weakness. While back in mid July/August there were lingering inflation fears from the higher oil and weaker dollar, these concerns have been dispelled. Increases in aggregate layoffs and lease rollovers [especially as we get past the "slower months" between November and March] should introduce excess supply into the market. Not only can renters afford to wait, but there should be more “bargain” apartments as the supply increases! Renters should also take advantage of potentially subletting if their horizons are shorter than the standard 1 to 2 years of a lease.

2) Management Companies have begun to lower prices and offer special deals.

In the listings that we track, we’ve found that landlords have become increasingly willing to not only lower prices, but also include “owner pays broker” or “one-month free” type deals. Renters beware, though! If you go through a broker and end up with a “no fee” apartment, you might be forfeiting the 1-month free. This one month amounts to ~7.6% discount over the 13 months. While there are a number of management companies still holding out, renters should take the opportunity to either negotiate or submit a lower “bid” in their application.

3) Renters should consider shorter leases given weakening rental markets.

While there is no doubt the economy will be stronger, short-term conditions still look weak in New York. Rent prices could easily decline through 2nd half 2009. As a result, it might be prudent to enter into a 1-year instead of a 2-year lease. First off, this gives the renter extra flexibility in case they need to relocate. Typically, lease contracts will either have a “lease termination fee [amounting to 1 or 2 months of rent]” or force the occupant to keep the contract [renters will have to pay until the lease ends]. If rents do continue to drop, subletting your apartment at market will cause a loss over the term of the lease! As an example, if you have 6 months of your lease left, and are paying $1,500 per month, you’ll lose $100 X 6M = $600 if you’re forced to rent out at $1,400. While Rent Hop isn’t here to help renters speculate, flexibility and optionality are always a plus.

Having asked dozens if not hundreds of New Yorkers about their apartment hunting experience, one interesting topic is whether you can rip off your own apartment broker.  There are various tactics and ploys that have been contemplated, attempted, and executed which we discuss below, but the one common theme in all of them is that you utilize a Manhattan apartment broker’s services and then avoid paying the 10-15% broker fee.

Let us clearly state that Rent Hop absolute does NOT endorse or recommend such behavior.  Cheating your broker is unethical and often results in breach of contract which will put you on the losing end of a small-claims lawsuit.  Broker dodging is also immoral, and actually perpetuates the inefficiencies of the real estate market.  While Rent Hop recommends and enables apartment hunters to find no-fee listings in the NYC area, we firmly believe that if you choose to use a broker and find your future home as a result, then your broker deserves to be paid.  In fact, one of the reasons broker fees are so high is precisely because they waste their time with apartment hunters who have no intention of paying fees, so the honest hunters wind up picking up the tab.

That said, we will discuss a few of the more creative tactics we’ve heard, and hope to convince you NOT to try any of them as the service we provide allows you to dodge brokers lawsuit-free and guilt-free.

Broker Dodging Tactics

One out-of-town apartment hunter took a new job in Midtown, and his company offered a 3-day house hunting trip.  Our hero spent the previous week researching lots of neighborhoods near work and booked a full day of apartment viewings, complete with both brokers and owners.  Sadly, one of the “owners” turned out to be a bait-and-switch broker, and even worse, that broker happened to show the best apartment of the day.   Feeling that the broker didn’t deserve a fee, this creative apartment hunter excused himself to go meet with his other appointments of the day, only to circle back to the apartment and slip the doorman $60 in exchange for the landlord’s phone number (and a promise to stay quiet about the broker).

That particular story has a happy ending (for everyone but the broker), but for each of those we have just as many stories about brokers who perform some due diligence and follow-ups on their clients.  All it took was a quick phone call from the broker to the building manager to confirm that the apartment hunter attempted a broker dodge.  Most apartment leases contain a clause specifically requiring the tenant to pay broker fees if a broker has a legitimate claim to said fees.

In one extreme case, our apartment hunter agreed he used a broker, but disputed the broker had any claims to a fee because his friend had already shown him the building prior to his broker’s introduction.  The broker fought back… in small claims court, which quickly led to an arbitration settlement, 100% in favor of the broker!  Unfortunately, most broker agreements are very precise in their language and cover just about all the bases for such boundary cases.  The bottom line is, either use a broker or don’t; the half and half approach can be dangerous.

One creative class of broker ripoffs deserves some attention.  Some hunters use an accomplice to rip off the broker, namely, your future roommate!  In this scheme, two roommates agree to live together, but only ONE goes apartment hunting with the broker.  Afterwards, the one that did NOT hunt with the broker approaches the management company and signs the lease.  That way, the two roommates use the broker’s expertise and listings, yet the only name the broker knows never appears on the lease and allows for an almost foolproof fee dodge.

Unfortunately, the most brilliant part about the tactic is exactly its biggest downfall…. one roommate’s name never appears on the lease!  That means the one person signing the lease for the presumably 2BR apartment is now solely responsible for the rent, and also the only one who can officially handle tenant matters regarding the apartment.  That’s a dangerous situation for both tenants, and should the two have a falling out or need to change their housing arrangements in a jam, many problems can crop up.  Think of all the risk being taken, just to save on a broker fee!

Rent Hop hopes to provide the moral, ethical, and lawsuit-free alternative to broker fee dodging to find your no-fee NYC apartment.  Please feel free to try our service, rather than go around ripping off hard-working brokers.

Off peak apartment hunting is a luxury many New Yorkers can never have, but those who can often hope to land a much sweeter deal relative to their peak season peers.  Specifically, off peak hunting means you plan to sign an apartment lease during a typically low traffic time of the year, such as the middle of the winter.  The logic is, although no one really wants to move in the painful cold of the winter, it is far preferable to competing with a huge wave of incoming Wall Street analysts and other fresh university graduates during the hustle of the summer.  Today Rent Hop explores the basic question:  Are apartments cheaper or easier to obtain in the winter months?

The chart below shows the leasing activity of each month as a percentage of the full year, taking publicly available statistics from one of our Manhattan-exclusive landlords and aggregating across all of the buildings under management.  According to the data, the amount of leasing activity in the month of July is 257% of the leasing activity in December, and more than the leasing activity in October and November combined!  In fact, the six months from March through August claims 62.2% of all the leasing activity, almost double the six months from September through February.

Of course, this doesn’t mean rents are necessarily lower in the off peak months.  Although the demand is lower, the supply of available apartments tend to be lower as well!  However, should you find a vacant apartment that meets your needs, the landlords are certainly more willing to negotiate, knowing that a suitable renter may not come along for another few weeks.  Even if you can not obtain a lower rent, you may be able to take possession of the unit earlier or later than what the landlord originally intended, pay a smaller deposit, or land other perks.

If your lease expires in the middle of the peak season, you can try to sign a 6-month or even 18-month lease with your landlord, in order to get the off-peak season.  Best of all, if you sign a one year lease on the off peak season, you will be off peak again the next year when your lease expires, discouraging your landlord from raising rents too quickly.

Right now, as we move into off peak season, some of our landlords are offering excellent perks on top of their no-fee apartments.  Claridge House (201 East 87TH ST), run by Milford Management, is offering one month free rent on top of their no fee apartments.   Stonehenge is offering one month of free rent for one of their one-bedroom units at The Olivia (315 W. 33rd St.), one month free for a two-bedroom at The Ritz Plaza (235 W. 48th St.), and one month free for several of their three-bedrooms at Stonehenge 65 (360 East 65th Street).  Another excellent Midtown no-fee apartment is a junior-one at Central Park Mews (117 W 58th ST), managed by ATA Enterprises.

New Yorkers often believe they are receiving a lot of valuable services from apartment brokers, and because of that, they conclude broker fees are both legitimate and well-deserved.  At Rent Hop, we agree that apartment brokers have been vital to the Manhattan rental market for decades, but in recent years the services have become increasingly more expensive and unnecessary.  To see why, let us enumerate all the services an excellent Manhattan broker traditionally provides:

1.)  Advice on desirable neighborhoods, telling you where you should live

2.)  Mathematical assistance, calculating what you can afford given your resources

3.)  Listings data, including building addresses and landlord contact information

4.)  Apartment filtering, showing only the units that meet your criteria

5.)  Hunting companion, holding your hand through the viewing and showing process

In exchange for these services, a typical broker will charge 15% of the gross contracted rent.  For a $2,000 studio, that amounts to $3,600 on a one-year lease, or $300 a month.  That means your effective rent has actually gone up from $2,000 to $2,300.  Of course, if you renew the lease directly with your landlord, then you won’t need to pay the broker fee in future years… but only if you really decide to stay there.  In our experience, job changes, roommate considerations, and landlord rent hikes cause many New Yorkers to change apartments much more frequently than they expect.

As we’ve mentioned on our resources section, Rent Hop provides information on NYC apartments and neighborhoods, affordability calculations and formulas to determine appropriate price ranges, a large list of over 1000 no-fee Manhattan apartments complete with addresses and landlord contact information, and detailed feature and amenity descriptions for each unit.  We also assist you in scheduling appointments with management companies to view apartments with our Landlord Contact feature.

Imagine paying $3,600 in broker fees every year or two for the rest of your Manhattan life, or feeling stuck in your current apartment because the broker fee for moving is too expensive!  Fortunately, we provide a completely free alternative, enabling you to avoid broker fees and happily hop between new apartments with ease.

One question we hear a lot is, “Why hasn’t Craigslist solved the apartment hunting process for Manhattan, like it has for many other cities?”

A lot has been written already on the Internet about how to improve Craigslist. In fact, many new websites have attempted to “beat” Craigslist, but the site still remains as one of the most popular and widely used forums for placing low cost or free advertisements. Unfortunately, there are very specific and unique problems when hunting for an affordable apartment in Manhattan using Craigslist.

First, Craigslist is not in the business of listing real estate or apartment availabilities. While they have admirably attempted to allow a few basic search features such as limiting the price range and specifying a general neighborhood, the filters are horribly insufficient. They sort listings by the posting date of the ads, not by relevance, and most ads do not provide real addresses or even cross streets. Instead, we at Rent Hop notice many apartment hunters prefer to search geographically, knowing the exact address of the building, and seeing it on a map.

In addition, in recent years, the competition among NYC apartment brokers has grown fierce, compelling a few brokers to take desperate and extreme measures to stay in business. Although most brokers are honorable and trustworthy, a few bad apples easily spoil the bunch with unethical and underhanded tactics. Here is how a typical Craigslist scam works. A broker posts NO FEE MANHATTAN APARTMENT in the ad subject, placing attractive looking photos and citing an even more attractively low price. Once you call the number, the broker tells you the apartment is available but won’t last, and you must immediately meet at his or her office to schedule a viewing. Once you arrive, the apartment mysteriously has “just been rented,” but the broker knows lots of similar apartments that might interest you… only they have fees attached! One good way to protect yourself from such a scam is to see whether or not the building address is on the advertisement. If the apartment is truly no fee, there is no reason for the broker to withhold it from you!

At Rent Hop, all of our listings come complete with building addresses, landlord names, and phone numbers. You can zoom into your favorite neighborhood in our interactive map search mode, and quickly filter for listings located exactly where you want to live. We have over 1000 no fee listings throughout Manhattan and the New York City area, and we promise that you will never be directed to an apartment broker when you call; you will be talking directly to the landlord, management company, or exclusive listing agent (if any of the landlords attempt to charge you a broker fee, let us know immediately and we will investigate).

Craigslist will probably be around for a long time and is still a great service to the community, but for now, it simply isn’t a great place to find no fee apartment listings in Manhattan.