Breaking A Lease?

Breaking the Lease?

Have you or one of your friends ever been in this situation? You signed a 12-month lease 3 months ago. All of a sudden, your roommate bails or you’re forced to relocate. Can you break your lease without repercussions? The short answer is – no.  However, there are ways to mitigate the damage. First, let’s take a general look what you or the landlord can / cannot do. NOTE, however, that we at RentHop.com are not lawyers, nor are we giving legal advice. Be sure to do your own due diligence or contact a legal representative with any questions. In general, though, a lease cannot be broken by either landlord or renter (unless expressly written into the lease).

The landlord’s rights:

• The renter cannot break the lease unless the landlord agrees. An interesting tidbit goes with this. If the renter happens to die, their inheritors need to assume the lease.
• In general, you cannot assign a lease to another person. In an assignment, the new tenant assumes most (if not all) of the responsibilities of the original tenant. Assignments differ from sublets. In a sublet, the original tenant is still liable to the landlord.
• If the renter “breaks” the lease by abandoning the property, the landlord can rent the property out again or take possession of the contents.
• If the renter refuses to pay, the landlord can take the renter to court.
• For a building with > 4 units, a landlord can reject a sublet with reasonable grounds. However, a landlord cannot reject a sublet on unreasonable grounds (for example, because of racial discrimination).

The renter’s rights:

• Under most circumstances, the tenant can sublet his apartment (as long as he is liable for the lease if the sublessee defaults).
• The landlord cannot break the lease or change the rent for the duration of the lease.
• If the property changes hands, the new property owner needs to honor the lease.
• If a renter abandons a property and the landlord manages to find a new tenant. The landlord cannot collect rent from both tenants.

Given these nuggets of information, being locked into a lease may seem unfair. But the lease is binding on both sides. You wouldn’t want the landlord to kick your out on a whim right? Nor would you want to be out on the street because a property changed hands. So what can you do if you need to move out before your lease ends?

I’m in one of these situations – what can I do?

1. Read your lease and rider very closely to see if you are given any additional rights.
2. Speak with the landlord!

• Some landlords are friendlier than others and may be willing to let you break the lease. For example, rents may have risen dramatically, and the landlord will benefit if he can find a renter quickly. In the depths of the recession in 2008, some landlords even had special clauses that let tenants break their leases should they lose their jobs.
• Otherwise, if you can find a new tenant, the landlord might be willing to let you assign the lease (provided – of course – that the rents you’re paying are the same).
• In general, unless you’re subletting from a co-op, you can sublet the apartment.
• Some landlords may be willing to help you find a new tenant. In this case though, you’re liable for the lease if they don’t find one (risky option).

How do I sublet my apartment?

The time of year, the remaining term of the lease, and the market rent vs the lease rent will affect your ability to sublet your apartment. Finding a tenant in the winter will be more difficult than during the prime June/July/August months. In addition, if the market rent is lower than your contract rent, you may lose money if you choose to rent out the apartment below your contract rent (but this is still way better than letting your unit sit idle). To get a good sense of where you want to price your apartment, check out the listings on RentHop.com for your location/size. To advertise your listing, definitely post on RentHop as well as craigslist.

For further reading, take a look at the tenant’s rights guide on the Housing and Urban Development site.

Wow.  We always knew that the New York real estate scene had some fairly shady characters.  Forget about the dozens of landing page sites that come and go each year.  They are the small fish that clutter our search results.  We click on them occasionally, but the friendly back-button saves us from any damage beyond a quick ten-second glimpse of the content lacking, ad-filled pages.

Anyone who spends serious time in the Manhattan real estate sector knows that things are just VERY different here than anywhere else in the country and world.  There is no real MLS / IDX, or anything close to a centralized repository of all listings.  Open listings are the norm as opposed to exclusives, and brokers eagerly play along.  Best of all, anyone who digs deep into the various real estate dynasties will discover a complex web of relationships, partnerships, and in some cases feuds between blood relatives.

A few brave souls have attempted to untangle and make sense of the mess, but for every upstanding startup in this space, there are a seemingly equal number of con-artists out to make a quick buck.  Last month, however, we discovered an entirely new reason to enter the business.  Russian spy Anna Chapman was the mastermind behind NYC Rentals dot com.  I never quite understood her true motives, even after watching her pitch interview.  Needless to say, it’s rather disturbing that the NYC rental space has now become the cover occupation for international espionage!

In light of such discoveries, it may be time to introduce ourselves a bit more comprehensively.  Specifically, there are a few holes in Mike Grynbaum’s NY Times RentHop article.   For the first time ever revealed on our site, we unveil three great mysteries.  Yes, we originally discussed our ideas over sushi, and while I’d love to think I’m an up-and-coming cook, we were dining at the Murray Hill Today at 32nd St. and 5th Ave (now called Ichiumi, and from what I hear has seriously declined in quality).  We were working at hedge funds at the time, D. E. Shaw & Co. and Traxis Partners.  As for my abilities as a salesperson… the jury is out, but I’ve done enough transactions to learn that logic and emotion are both irrelevant compared to fostering trust!

One of the greatest economies of scale phenomenon Manhattan renters utilize each year is the convertible 1BR, aka the flex-2.  While an individual renter looking for a nice Midtown or Downtown studio will pay $1800-$2200, a pair of renters looking for a two-bedroom can save huge amounts of money splitting the right type of apartment.  And that type isn’t a true two-bedroom, which ranges from $3600-$4100 and offers a spacious living room along with some of the best views in the building.  The best savings come from the convertible 1BR, a special kind of one-bedroom where it’s possible to build a temporary partition wall and convert part of the living room into a new bedroom.

The idea sounds so simple, yet these convertible 1BRs are a bit of a rare find and must meet a few important criteria.  They are so popular that most landlords and brokers actually clarify whenever a one-bedroom happens to be convertible (they are flexible enough to be turned into a 2BR, hence a flex-2).  Sadly at this time, our own NYC rental apartment search engine allows for filtering on 1-bedrooms+ or 2-bedrooms+, but there is no specific filter for the Flex-2.

What does a flex-2 mean?  Most importantly, the landlord or buildings must allow temporary walls, or at least will agree to turn a blind eye if you put up a wall and promise to take it down without leaving a trace (wall companies can put up simple walls with doors starting at $1200 and up, with extra for sound-proofing, L-shapes, and T-shapes).  The living room must be large enough to support the new bedroom, and also not block access to the original bedroom (otherwise you wind up with the dreaded railroad two-bedroom).  Lastly, the bathroom needs to be accessible from outside both the original and converted bedrooms, otherwise one roommate will need to trespass every day for showering, brushing teeth, etc.

If all goes well, two renters can bag a flex-2 for about $2400-$3000, plus the amortized cost of the wall (add $100-150).  They might be left with a tiny living room (and no windows in it), the kitchen and entrance area might lose all sources of natural light, and the roommates may quarrel over whether an equal payment of the rent is still fair.  However, in total, they will have found decent Manhattan housing for about $500 less than the cost of a comparable studio.  Sadly, as the New York Times writes this weekend, the flex-2 may be coming to an end.

As the city aggressively enforces a long existent but widely ignored code, walls are falling across Manhattan, radically altering the housing landscape for scores of young professionals. Thousands of renters are being told that the walls that have been put up over the years without approval from the Department of Buildings must come down. And new renters are being informed that if they wish to divide a space, they will need to rely on bookshelves or partial walls that don’t reach the ceiling.

To be fair, the walls apparently were never legal in most cases.  What has accelerated enforcement is a new stance finding landlords liable for certain tragedies that occur because of the walls.  Specifically, manslaughter penalties if the wall violates fire codes.  A partition and isolate a room to lack fire sprinklers, or may block emergency exit routes.

Unfortunately, the death of flex-2′s will certainly price many roommate pairs out of Manhattan for the foreseeable future, and will hurt landlords who can no longer collect a flex-2 premium on their apartments (and the flex-3 and junior-1 apartments should take a hit as well).  If you happen to live in one of these apartments, you probably don’t need to panic just yet.  In fact, we’d recommend keeping quiet if you have a wall.  Why bother asking your landlord a question when you really don’t want to hear the wrong answer?  Stay silent, enjoy your wall while you can, and start browsing next season’s IKEA catalog for some tall Billy bookshelves or Asian folding screens.

The team at RentHop was recently walking around Chelsea, and managed to snap some great shots of the area. We figured it would be a good segue into an article about the area. After a brief introduction on the boundaries of the neighborhood, we’ll move into its history and what it has to offer to the inhabitants. Finally, we’ll talk about finding an apartment in Chelsea and what the costs are.

Where is it?

Chelsea is located south of Hell’s Kitchen and the Garment District and north of the Meatpacking District. More accurately, the neighborhood has been defined as the area between 14th and 34th street + west of the river. You can always check out the available apartments in Chelsea here. In addition, if you access our map-based apartment search, you can see a great overlay of the region.

History

British Major Thomas Clarke named his Manhattan house Chelsea, after the manor of Chelsea, London. The original “Chelsea” home resided on 23^rd Street, between 9^th and 10^th where it eventually grew from a large garden into a full-fledged residential neighborhood. During the mid 1800s, the newly built Hudson River Railroad industrialized the area. Towards the 1900s, the neighborhood was dominated by the Irish, and housed longshoremen who worked at the warehouses on the nearby piers. The neighborhood drastically changed moving into the 21^st century, and has now become an alternative shopping destination to SoHo. In addition,  there has been an influx from the arts community – and the area houses the Rubin Museum of Art, the Chelsea Art Museum, the Graffiti Research Lab, and the Dance Theatre Workshop.

Chelsea Hotel

What the Neighborhood has to Offer

Location, location, location. Chelsea is sandwiched between Hell’s Kitchen to the north and the Meatpacking district to the south. For those who enjoy nightlife – the Meatpacking district is where it’s at. The area is packed with restaurants and nightclubs catering to young professionals and hipsters. It also contains a number of high-end boutiques such as Diane von Furstenberg, Christian Louboutin, and Alexander McQueen. For those who enjoy good eats and affordable food, Hell’s Kitchen has that. The area is flooded with affordable restaurants of all types, including a block full of 99-pizza establishments.

AMC Loews - Chelsea

Aside from the surrounding areas, Chelsea itself is not to be scoffed at. It is home to a number of landmark buildings and areas such as Chelsea Piers, Chelsea Market, and Hotel Chelsea. You can shoot rounds of golf at Chelsea Piers (home to a large sports / entertainment complex) or visit Chelsea Market for a number of food vendors such as bakeries, groceries, fish vendors, fruit merchants, and wine sellers. Chelsea has a wide variety of food options, ranging from the cheap/affordable chains (Chipotle) to the high-end Morimoto. Finally, while a little old, there is a great AMC Loews Theatre in the center of Chelsea.

Transportation

Like most areas of Manhattan, you’re always close to a source of public transit. The ACE and 123 lines run through the center of Chelsea, both having stops on 23^rd street (on different avenues). Both lines give you flexibility to reach most of the city, though you might need to switch if you’re headed up to the Upper West Side. Finally, like most parts of Manhattan, taxi’s are around every corner.

Where to Live

While Chelsea generally has a higher percentage of owner units over rental units, you won’t have trouble finding an apartment. There are a number of Luxury high-rises in the area, including the Olivia by Stonehenge, and the Ohm NYC. We also have a number of other landlords like B&L and Jakobson. Definitely check out our apartment selection on RentHop.

Luxury High-Rise in Chelsea

A walk down Chelsea

Goldfarb announced today that starting next week, they will stop paying OPs (broker fees).  Along with the Brodsky “1M free or 1M OP” policy and steady incentive reductions from Stonehenge, this latest news significantly reduces the no fee luxury highrise options in the Midtown West and Columbus Circle area.

Even landlords in Financial District and Battery Park City, the incentive powerhouse neighborhoods since the 2008 recession, have begun experimenting with reductions.  Solaire and Verdesian, the flagship Albanese properties in BPC, have hiked up rents and stopped giving renters one month free (they will still pay broker fees).  Metro Loft NYC, which manages The Crest (67 Wall) and 17 John, have scaled back their free rent offerings across the board.  Tenants last year scored 3 months free on an 18 month lease or 2 months free on 14 months.  Although Metro Loft is still one of the most generous in all of FiDi, their latest blasts offer only 1 month on 13 months, or 2 months on 18 months (they still pay broker fees in addition to the free rent).

We always knew this was coming.  Landlords spent the last two years adapting to the Manhattan housing downturn and are constantly on the lookout for an end to the longest renters’ market since 2001.  However, this is not necessarily the end of the good times for renters.  Around this time last year, we saw the same experimental reductions from a number of landlords.  After a few weeks of long vacancies and little traction, the landlords eventually gave up and joined the bandwagon of OPs, free rent, and other giveaways.

This time may be different.  Barring the last few weeks of EUR related jitters, the S&P 500 was 30% higher this year compared to early May last year.  Manhattan housing sales from the first quarter of 2010 were double 2009, and the job market for financial professionals is making a healthy rebound.  Also, the sheer number and breadth of landlords betting for a rental rebound is much higher this Summer.  Instead of a few brave pioneers attempting to go against the free rent grain, we are seeing several popular, multi-building landlords pulling back their incentives, allowing them to avoid the prisoners’ dilemma problem.  If some landlords are paying broker fees and others are not, the brokers will take all their clients to the OP-paying landlords.  However, if a large group of major landlords all cease their incentives simultaneously, brokers have no choice but to take their clients to collect-your-own-fee landlords.

Whether we are truly at the end of a total no-fee Manhattan remains to be seen.  Check back on our deals page as we update the latest offerings in the RentHop NYC Apartment Rental deals section.

Every real estate brokerage wants to differentiate themselves from the competition.  The heads of any firm will tout their unique dedication to excellent customer service, their high integrity and moral standards, their hard work ethics, and their innovative operations.   All of this conveys zero bits of information, as Guy Kawasaki’s opposite test shows.  Just as every software company claims they will build something fast, scalable, and easy-to-use, no real estate brokerage says “our firm believes in crappy customer service, sleazy operations, and lazy agents.”

To actually gauge corporate culture, the most important feature to examine is the incentive structure, aka, the commission splits that determine how the agents are paid.

Traditional Brokerage Model

In a traditional brokerage, an agent splits roughly half of each commission with the house.  That is, a $3,000 commission check will normally result in about $1,500 paid to the agent.  The firm provides office space, training, mentoring, a website, IT infrastructure and support, branding, advertising, and most importantly, client leads.

This is still by far the most popular model today, and has historically been the most profitable for the owners of the firm.  For the agents, the advantages are numerous.  New realtors usually receive free training and mentoring, and may be matched with a more experienced agent for the first few months.  Also, potential clients who call the firm’s general phone line or enter the physical office will be matched with an available agent (which tend to be the less busy, newer members of the industry).  For the veterans, a traditional firm often provides slightly more attractive commission splits, recognizing that the agent obtains many of her own leads independent of the firm.

Discount Brokerage Model

In a discount brokerage model, the agents tend to receive less than half of the commission split.  In some cases the agent doesn’t receive a percentage of the commissions at all, but instead an a la carte fee for services performed.  Either way, the firm plays a much bigger role generating leads than in a traditional brokerage.  Examples include ZipRealty, Foxtons New York (now out of business), and Redfin.

The primary advantage for agents is that they do not need to spend as much time farming for client leads.  Instead, the firm uses their Internet presence and rebate offers to woo potential buyers and renters, and as a result the agent is willing to accept a lower than normal commission.  As an example, a home buyer who registers with ZipRealty and buys a home for $300,000 might be offered a 20% commission refund at closing from their buyer broker.  With a standard 6% sales commission co-brokered between the listing broker and buyer broker, the client would receive 20% of 3% refunded, or $1,800 refunded at closing.

High Split Models

The latest twist in brokerage models is almost the opposite of a discount broker (from the agent’s point of view).  Here, the agent gets significantly more than 50% of the commission split, and in some cases reaches 90% or more of the commission.  As expected, agents earning such high splits do significantly more of the work in finding clients and closing deals.

In New York City, a number of high split commission firms have gained traction in recent years.  They typically offer very limited office space, if any, and do not have a retail storefront for attracting walk-in leads.  Agents are expected to work from home on a day-to-day basis, but the firm often provides some technology support such as email accounts, a website, and some listing management tools.

Two types of real estate agents benefit heavily from joining these firms.  First, veteran agents who generate their own leads benefit from the high commission splits.  Also, agents who want to commit part-time benefit from the flexibility of working at home and only working on their own sourced deals.

Currently the biggest players in Manhattan are Pari Passu Realty Corp, The Level Group, and Charles Ruttenberg Realty.  A typical rental transaction may pay a $3,000 rental commission to the brokerage, where the agent keeps $2,500.  The agents also often pay a small monthly infrastructure fee of $100-$300.

A New Census!

I’m sure many of us have seen the flyers laid out across tables in coffee shops or have gotten the survey mails (yet another form to fill out in light of the soon-to-be-due taxes). It’s time again for the decennial census. While estimates are taken every year in New York, the full census counts everyone. Of course, all that information is currently being collated (a long and lengthy process). The final results should shed a more accurate light on household sizes, and demographics.

A study into the recession based on Census data

Of course, thinking about the census, one has to wonder about the demographic changes in New York during the financial crisis of 2008 (and the aftermath in 2009). Luckily, the Census estimates each year can shed some light on what happened. We’ll finally be able to answer some burning questions, such as:

Did the population decrease or slow down (did people leave the city)? Did people living in Manhattan really leave and move to the outer boroughs? Did all those people living in 1-bedrooms or studios by themselves really shack up with their friends and start sharing apartments?

Based on anecdotal evidence (such as our friends and neighbors), we might be able to take a crack at some of these questions. However, just using the Census website, we can get actual estimates on demographics in Manhattan (New York County) versus some of the outer boroughs (Queens, Bronx, and Kings [Brooklyn] counties). It turns out the government provides easy access to all sorts of free information. We turn to the following sources:

* American Community Survey - http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS

* Vintage Population Estimates - http://www.census.gov/popest/counties/counties.html

Did people move out of the city? Where did they move to?

We’ve all heard stories about cash-strapped families and youths moving out of Manhattan into the surrounding boroughs. We might even have unlucky friends who were forced to move back home out of the city. Is there any truth to it? Well first, lets take a look at the population trend of New York City versus the other 100 largest counties in the country over the last decade. The graph below shows the year-over-year population changes of Manhattan vs the other counties.

New York vs Other 100 Largest Counties Pop. Growth (%) Source: Census Population Estimate

Wow! Expected, but to this magnitude? While New York county (Manhattan), held its own in terms of growth, it took a nose-dive between 2008 and 2009 relative to the other 100 largest cities. Note that the sharp up-tick in population in 2001 (and the subsequent slower growth) may have been due to base-effects from a lowered population in 2000 (after the events of 9/11). So clearly, part of the >3% vacancy rate we hit sometime in 2009 was from people leaving the city – combined with excess inventory from new buildings coming online.

But let’s take another look – that of New York versus the boroughs. Here, we answer our second question. Was there a surge of population into Manhattan during the “booming” years of 2003 – 2007? And then a subsequent movement out? We use the same data-set and end up with this picture:

Manhattan vs Other NYC Counties Source: Census Population Estimate

Yes indeed. Not including the large spike in Manhattan population in 2001, Manhattan seems to have “taken away” population from the boroughs early in 2000. However, when 2008 hit, a complete shift happened. In fact, it seems the boroughs (Kings County [Brooklyn], Queens County, and Bronx County) grew while Manhattan shrank. Of course, some of the slow-down in overall growth started in 2008 – which we might be able to explain by inflation and higher costs early in the year. After all, didn’t oil hit ~$130 before plummeting 70-some % later that year?

Did people move out of their single apartments and shack up with friends?

To answer this question, we turn to the most recent data from the American Community Survey. Unfortunately, they only have full-year data through December 2008 (which is mingled with data for the entire year). As a result, we can’t draw the most accurate conclusion – and will have to wait for the 2009 data to come out. However, taking a preliminary look, we really can’t conclude that people started “shacking up” with their friends.

Manhattan Households / Household Sizes

We can expect household size data to be somewhat dampened and lagged by the standard 12-month lease terms. However, just a preliminary look doesn’t suggest people moved in with their friends. In fact, it seems that between 2007 and 2008, people actually moved out to live on their own. Surprising isn’t it? Depending on the new data that comes out in the next few months, we might be able to debunk the rumor that people have been moving in together to save on rent.

As more data comes out, RentHop will be taking a closer look at the demographic changes over the last decade in New York (and the outer boroughs). We’ll be following up as the census data gets finalized. Stay tuned!

I’ve lived in Hell’s Kitchen for about four years, and with the recent NY Times article about the 99-cent pizza shops in my area, I couldn’t help but write a piece about what Hell’s Kitchen has to offer. Prior to Hell’s Kitchen, I had lived in the Financial District. While FiDi had its charms, it was a little too quiet for me personally (and aside from the walk to Chinatown, it didn’t have enough food establishments). Hell’s Kitchen is a little bit different. While you get all the resources of Time Square, you’re not really at the center of the tourist trap.

Hell’s Kitchen

Close to the Time Square, but still quiet.

Hell’s Kitchen ranges from roughly 34th Street to 57th Street, between 8th Avenue and the Hudson River. It can be considered a part of the larger Midtown West / Midtown area. While it used to be a center of underworld activities (especially the Irish American Mob), it has now been completely gentrified into a neighborhood with great food, activities, and amazing access to transportation.

Most people think the proximity to Time Square would make the area loud and touristy, but that’s not the case. In fact, the two or three avenue shift is enormous. Once you get past 8th avenue, the area transforms. No more loud billboards or crowded streets. As it turns out, the taller buildings in the area block sight of Time Square from the ground level (though if you lived in one of the high-rises, you can still get a decent glimpse). If you live on one of the side-street off of 9th, you can’t even tell that you’re near Time Square.

First the food

It’s not called Hell’s Kitchen for nothing. The NY Times talks about 99 cent fresh pizza, and 2 Bros Pizza, but 42nd Street & 9th Avenue is actually host to a number of extremely budget (but good) places. These include: 2 Bros Pizza (which actually has everything from fried chicken to broccoli), $0.99 Fresh Pizza (the original 99-cent pizza on the block), Villa Cafe (a newcomer with the best sitting area – inside during the winter), and finally, Papaya Dog (with a slew of budget hot dog/sandwich options).

$0.99 Fresh Pizza

2 Bros Pizza

Villa Cafe

Papaya Dog

Moving up 9th Ave, you end up with a slew of sit-down restaurants (all with great prices). A quick search on menupages gives a glimpse of what else the neighborhood has to offer. In fact, just on 9th Ave, I can name 10 Thai places, a few great burger places, and a 24-hour diner (in case you get a late-night craving). Of course, you also have the infamous Restaurant Row on 46th Street.

In between the sit-down restaurants and the 99-cent establishments, the area is also filled with a casual dining options – such as Chipotle and Lenny’s (in fact, on the same block). If you like deserts, there is a Tasty Delite (actually, of my friends, I might be the only one who likes this place), Pinkberry, and Red Mango.

Second, what can I do in the area?

So what’s there to do? Well, in most cases, you’re not partying where you’re sleeping. Chances are, you can always travel to where you really want to go (most people I know aren’t going out 7 nights a week – so there’s no reason to have the action right outside your doorstep). However, you’re still close to a number of select bars in the area.

Apart from that, however, Hell’s Kitchen is right up against the Hudson River. If you like biking, there is a bike trail right along the Westside Highway. Also, believe it or not, Port Authority also has a bowling lane inside. If you lived along the upper border of Hell’s Kitchen (in the 50′s), you’d be within a brisk walk form Columbus Circle / Central Park. Also, the two Time Square movie theaters are right down the street on 42nd (along with a Dave and Busters).

Third, easy transportation

What can I say? You’re at the hub of it all. With Port Authority right around the corner, you’re only a hop away from the 123 (Green), ACE (Blue), NRW (Yellow), 7, and of course – the Shuttle to Grand Central. If you take the bus, the M16 takes you straight to Penn Station. The only pesky area to get to is the Upper East Side (since you have to do a subway transfer), but most places in the city are only 20-30 minutes away from Hell’s Kitchen.

Finally, where do I live?

Luxury High-Rises in Hell's Kitchen

Anywhere – whether you want the quaint walk-up or the luxury high-rise. Both Brodsky and Stonehenge Management have buildings luxury high-rises in the area (on 9th). Most of the high-rises in Hell’s Kitchen offer fantastic views of Manhattan. Because there are only a few tall building dotting the area, high-up apartments on the west side will get an amazing view of the river. For a luxury high-rise, large studios might run you from ~$2,000 and up. One bedrooms might be in the upper $2 to $3 thousand ranges (this may differ depending on square-footage and concessions – such as 1 month free).

However, you don’t have to live in a Luxury High Rise. There are always vacancies with landlords who own affordable walk-ups. You can get studios from around $1,400 and one (or very small 2-bedrooms) from $2,200. Check out the selection of no-fee apartments on RentHop to get a better sense of pricing.

A Manhattan apartment broker is a middle man.  However, despite all the sleazy stereotypes, many grounded in truth, the best middlemen add tremendous value.  Sadly, mediocre brokers add little or no value, and a handful of bad brokers  reach “negative value add” territory (even if their services were completely free you’d be better off without them).

Why is there so much variance in quality?  It’s a bit puzzling to most people, because most New Yorkers think brokers are simply a very high-level API and front-end into a database of listings.  It’s true, brokers would be overpaid if they earned thousands of dollars per afternoon as a human MySQL Query Browser + key card.

Head Hunters

To help illustrate the value add, we’ll look at another market filled with inefficiency and middlemen: the job hunt.

As stressful as the quest for a dream apartment can be, finding the dream job is even more taxing.  New Yorker’s stay at their jobs longer than they do their apartments, making the cost of a bad decision particularly painful (the only more elusive pairing is the perfect spouse).   Employers are like renters, scanning hundreds of brief descriptions (resume screening), inquiring dozens for more details (phone interviews), and then granting a small handful a personal audience (on-site interviews).  When the right match finally arrives, there is the uncomfortable negotiation phase.

What would the perfect headhunter do to add value?  They would:

1. Be competent and proficient in the relevant job domains offered
2. Politely reject resumes from candidates who simply don’t have the proper background
3. Mock interview each job hunter first to ensure the resume isn’t full of lies / exaggerations; prep him for brainteasers, programming questions, case studies, and those awful “estimate # of ATMs / OTBs / copy machines / doormen / apartment brokers in NYC” questions
4. Perform due diligence on employers to make sure the job matches the description
5. Have solid relationships with many companies, being the first to know of new openings.
6. Be detailed and thorough enough to highlight each candidate’s uniquely redeeming qualities.
7. Be the exclusive representative for a broad network of exceptional current and future job hunters
8. Mediate a pareto efficient compensation package for each employee / employer pair

Back to Reality

Sadly, a headhunter this great doesn’t exist (if she does, give her my resume).  However, any apartment broker worth his salt does all of these things.  They build relationships with landlords, doormen, and supers.  They visit apartments and reject bad ones without even bothering to photograph or advertise them.  They carefully write descriptions that highlight unique features.  They have enough broad knowledge to know a fair clearing price in rent negotiations.  They qualify renters.  They save everyone time, and they do this knowing that most clients waste their time.

Why the Bad Reputation?

Despite everything a great broker does, apartment brokers and headhunters universally have awful reputations.  The bad apples are too lazy to do their jobs properly, so they cut corners.  They don’t preview the apartments, they post fake photos instead that they found online, stole from another broker, or have absolutely nothing to do with the real unit.  The descriptions are ultra generic, or worse still, the apartment doesn’t exist and it is a pure bait-and-switch (and it’ll be obvious because when you visit the apartment with that broker, it’ll be his first time seeing it as well).  Ironically, because these are the same brokers who magically have the lowest priced apartment on Craigslist, you are more likely to come across one of these rotten apples if you yourself are too lazy to look for a good broker!

At RentHop, our in-house source of NYC Apartments, our philosophy is to force the broker’s to prove they are good by judging the quality of their postings.   We have recently completely overhauled our backend algorithms to specifically flush out low quality brokers and listings.  For the purists, I’m well aware that the “Broker Turing Test” is very hard to solve, but we’ve found some amazingly great heuristics over the years… Stay tuned in the coming weeks!

Over the past month, we’ve had a lot of users come to us looking for only “no-fee” apartments. However, after speaking with them, we realized there was a misconception of the whole fee/no-fee concept. Today, I’m going to write about the different apartment/listing types you’ll encounter, what exactly no-fee means, and why fee apartments may actually be better if you’re looking for a bargain.

What exactly is a no-fee apartment?

First, remember that you can only end up paying a fee if you work with a broker. There are two ways you can find a no-fee apartment.

1) If you’re going through a broker, you may encounter a no-fee unit if the owner is offering to pay for the broker’s fee. This phenomenon is relatively new. Before the recession of 2008, most owners didn’t pay for the fee.

2) If you’re going to an owner directly, you’re not going to pay the fee anyway (because you’re obviously not paying a broker fee if you’re not using a broker).

Then what is a fee apartment?

Well, if that just described no-fee apartments? What are fee apartments?

3) Just like in category 2), if you went to a non-exclusive apartment (called an open listing) through a broker, you’ll have to pay a fee.

4) Sometimes, you can only go through an exclusive broker who works with a certain landlord. Some of these landlords have chosen not to pay for the broker’s fee – shifting the burden onto the renters. If you want these apartments, there is no way around the fee. Why doesn’t the landlord offer to pay the fee? Because if the broker’s fee is a % of the first year’s lease, it may encourage only long-term tenants.

Why a fee apartment could be better

When most renters think of paying a fee, they cringe in disgust. Many won’t even consider a fee apartment. It turns out this causes the fee apartment market to be less efficient – where you can find decent bargains. Also, when most people think of a “fee”, they only think of 2) and 3) – not apartments in category 4). In short, keep an open mind when looking for an apartment. Don’t be turned off by a fee – after all, a $1,500 apartment with a 1-month fee ($1,500 * 12 months + $1,500 fee over the lease) costs the same as an apartment for $1,625. If you’re looking for an apartments, we have listings from all the categories, so check it out.