After managing a site dedicated to no-fee apartments in New York City for so long, one of the more frequent visitor questions we receive is, “How do I negotiate with the broker or landlord for a lower rent than the asking price?” Fortunately, we have seen many useful techniques for rent negotiations from all three points of view; the landlord, the renter, and the broker. For the first time ever, we are publishing the Rent Hop Guide to Apartment Rent Negotiation!
Bottom Line, Shoot for the Win-Win
While this may seem obvious, it’s shocking how many people fail to understand a basic negotiating principle. The key to most successful negotiation is to find points of mutually acceptable concessions. This point is advocated and belabored in the famous book Getting to Yes: Negotiating Agreement Without Giving In by Fisher et al. While critics claim many real-life negotiations are indeed a fixed pie where any gains for one party is a direct loss to the other, real estate transactions are so mutli-parametered that they often contain room for win-win negotiations.
Qualify for the Apartment
As a renter, understand what a landlord ultimately wants from a lease agreement: a tenant that reliably pays rent on time without causing any problems and has little risk of defaulting on the lease. While a landlord certainly seeks to maximize the expected amount of rent collected, if your financial status appears to be very risky then you won’t be a desirable tenant even if you pay the asking price! The landlord would usually prefer a renter who demands a lower rent and has no chance of defaulting than a renter paying full price but only a 50% chance of paying by the 2nd month!
For those who are superior credit risks, you definitely have some negotiation leverage. In our experience the following techniques roughly ordered by effectiveness can be implement to bargain for a win-win deal:
1.)Â Sign it now
Landlords know most leases terminate on the end of the month, and want to begin leases on the 1st of a month. If the apartment is vacant now and you begin your lease on the first of the next month, they know they will lose the rest of the month in rent (they get nothing while the apartment sits empty). If a renter is willing to begin the lease on the 15th of the current month, then you save the landlord half a month of vacancy, which is approximately 4% of a year of rent.
A quick back-of-the-envelope calculation will reveal why this tactic works so well. If you are a landlord offering a 1BR in West Village for $3,000, then on April 9th, you get two applications. One is from a renter willing to pay full price and begin a one-year lease on May 1st ending on April 30th the next year. Another renter is willing to begin the lease on April 15th but only wants to pay $2,900 a month, also ending on April 30th the next year. By taking the “full-price” renter, you would end up with $36,000 by April of the next year. For the lower price but early renter, you would get about $36,250.
One last reason this technique works in the renter’s favor is the tendency for landlords to be risk averse. In the previous example, the landlord may be even more inclined to lower the price for someone immediately moving into the apartment simply because the landlord does not want to risk the vacancy dragging out for another month or more. A paying tenant in the apartment is worth far more than uncommitted leads.
3.)Â Two year lease
Most landlords are freaking out about falling rents. If you offer to sign a 2 year lease, then many landlords, especially the smaller ones, will jump at the chance . A few management companies even explicitly offer to give an extra month of free rent for leases that are longer than the standard 12 months. As an added bonus, by signing say, a 16 or 18 month lease, it is possible to put yourself into an off-peak apartment hunting cycle.
(For assistance negotiating leases or other New York City rental issues, feel free to email nofee@RentHop.com or visit our new york apartment website, RentHop.com)
