The No Fee Myth, by Kirby Sommers

Most renters opt for the "no fee" apartment route, either through a broker, a landlord, or a management company. But is this really a no fee apartment? Or, have you just paid a hidden fee?

Zigzagging my way through the snow and ice covered streets of the West Village I try to keep up with two local rental agents who have agreed to speak with me. I ask them a simple question:

Is no fee really no fee?"

"Renters are stupid! They don't know they always pay a fee!" Rental Agent A exclaimes. (I am going to keep their names out of this, if for no other reason than their personal safety!).

"Absolutely," Rental Agent B adds with a grin. "Renters think the landlord is gonna swallow up their fee? No way. I get paid and the renter pays me every time!"

I'm a born and raised, true to life, completely jaded New Yorker. Not the burbs, but Manhattan. The real deal. Jaded New Yorkers are not surprised by anything. I am wrong.

Their candid answers surprise even my jaded New York soul. It wasn't what they said. It was how they said it. But I digress, so back to what happened.

"How many people would you say call on your for fee ads?" I press on.

Agent B quickly answers: "None. My calls and appointments come from my no fee ads, some of them pay the fee after I show a crummy no fee apartment, but the truth is the tenant pays every time." He smirks.

"The base rent is higher when a renter signs a lease for a no fee apartment," I'm quick to point out. "Do you think your renters know they pay your commission?" I am now firmly convinced my Landlord Links are the best thing to happen for renters in New York City since the smoking ban of 1982.

"Renters don't know, no way," Agent A adds. These people want a free ride. But, you know, there's no such thing. And then if they stay in the apartment a second year, they pay the fee again! This time instead of coming to me it ends up in the landlords pocket. You think the owner is going to say: hey, you paid an inflated rent last year. I am now going to give you that money back. No way. What do renters know? Ahh, that's why I call them stupid! They pay this fee over and over again."

And these men, as much as their attitude made my skin crawl and re-affirmed why I am the ultimate anti-broker; renters always pay a broker fee, whether they know it or not.

For example, if the base rent is $2,000 per month and the broker's commission is 15% (which is calculated by multiplying the monthly rent by 12 months x 15) then you have to shell out another $3,600 -- a whopping ouch!

Using $2,000 as the insider rent that only the landlord knows about and adding that hidden 15% fee, the asking rent becomes $2,432.00. Over the course of your one-year lease term you slowly pay this hidden fee. Should you choose to sign a second year lease you will continue to pay a second fee that is now permanently built into your base lease.

In real estate lingo this is called pay as you go. Except no one ever bothers to tell you its coming out of your pocket. Instead you falsely believe you've rented no fee.

Which brings us to the question: is no fee really no fee? The answer is no. Like broker A said: There is no such thing as a free ride. Which means there is no such thing as "no fee."

Bottom line: the rent has been inflated for all apartments in the New York City with these hidden fees. And, unless you know the rental history of the building and the landlord's fee structure, you won't know what or how to negotiate the extra money they've added on to the asking rent.

The no fee approach has forced many people out of the city and kept many from renting in the city. If you're still hanging on and renting in Manhattan, then throw a "My-Rent-is-too-Damn-High" party, and don't forget to invite your landlord.

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