Real Estate Agent Fees Explained
An Explanation of No Fee, Half Fee and Full Fee Apartments
In your housing search, especially if you are looking on Craigslist for an apartment, you may see apartments listed under Full Fee, No Fee and Half Fee titles. You may wonder :what is the difference between these places? There is a difference and it is important to know what this difference is.
What is a Finder's Fee?
For the service of locating an apartment and leasing it to you, a real estate agent charges a finder's fee equivalent to one month's rent. In exchange for this fee, the real estate agent should first consult with you regarding your housing choices. That is, lead you someway through a discussion about the Principle Factors: Size, Location and Price that govern your housing search and ask many questions that narrows the list of solutions to the most likeliest. And then properly secure the property for you.
If you are not sure of which Principle Factors you are willing to compromise on, you can ask your agent to help you explore all sets of options. For instance, you may think you you want to live in the Back Bay or Harvard Square no matter what, but once you see what your money gets you there, you may find yourself willing to compromise on location. You'll likely make this compromise after you see what your money gets you in Allston or Brighton or Somerville or Medford.
Helping you discover what is actually good in the market is the trademark of a good real estate agent. In a sense he becomes your Jiminy Cricket. A voice that stands outside of your own voice but one that serves to help you make good decisions.
All real estate agents charge a finder's fee equivalent to one month's rent--the good ones give you more value of service than they charge in fee. Be advised that 99% of the property on the market for rent is rented through a real estate agent, less than 1% of the property available can you get without any agent of any kind being involved.
A No Fee Apartment
Despite the name, No Fee apartments are NOT apartments where the real estate agent works for free. These apartments are offered to you without requiring you pay a fee because the landlord or property management company has previously offered to pay the real estate agent the whole finder's fee.
When you see apartments offered as No Fee, you should be aware that the owners or managers are trying to be as competitive as they can be. Especially in Boston proper, the majority of No Fee apartments are old and have not been updated in at least 15 years. Some may sport 50 year old kitchens and bathrooms. There are some No Fee apartments that are new and updated, but the management company has built the fee into the price: meaning if the apartment is worth $1200/mo, the landlord offers the property to the market as $1300 NO FEE. You essentially pay the $1200 for the Finder's Fee over the course of the first year at a rate of $100/mo. This is a marketing tactic, and this tactic works.
Half Fee Apartments
For Half Fee apartments, you end up splitting the real estate agent's finder's fee with the landlord or management company. I consider a Half Fee rental to be the purest form of rentals, since it constitutes a hand shake between all parties involved. The owners pay half the fee because they value your tenancy. You pay half the fee because you value the apartment. And the real estate agent earns the whole fee because he brought two willing parties together in a happy tenancy.
A Full Fee Apartment
And of course, a Full Fee Apartment is an apartment for which you must pay the full fee on your own. These apartments are considered to be top shelf properties for one reason or another. Here are the reasons, the apartment is:
Trust me, I've heard countless times from a landlord, "Oh, I'm not going to pay a fee," but after seeing their place and showing them comparable properties that are priced less or where some fee is paid, they realize that in order to compete either they update the property, lower the price, or offer to pay some fee. This all concerns a question both real estate agents and owners ask themselves all the time: What will the market bear?
Therefore, Full Fee properties are the Cadillacs and Mercedes of the rental market--the Landlord absolutely does not have to pay the fee because someone out there, very soon, is going to pay it, whether that someone is you or not. Do not make the mistake of trying to negotiate away the finder's fee on a property that you really like, thinking that you are the only Joe in town willing to rent it. You will lose this battle every time, I guarantee it.
This article is From the How To Find An Apartment In Boston series.An Explanation of No Fee, Half Fee and Full Fee Apartments
In your housing search, especially if you are looking on Craigslist for an apartment, you may see apartments listed under Full Fee, No Fee and Half Fee titles. You may wonder :what is the difference between these places? There is a difference and it is important to know what this difference is. What is a Finder's Fee?
For the service of locating an apartment and leasing it to you, a real estate agent charges a finder's fee equivalent to one month's rent. In exchange for this fee, the real estate agent should first consult with you regarding your housing choices. That is, lead you someway through a discussion about the Principle Factors: Size, Location and Price that govern your housing search and ask many questions that narrows the list of solutions to the most likeliest. And then properly secure the property for you.
Helping you discover what is actually good in the market is the trademark of a good real estate agent. In a sense he becomes your Jiminy Cricket. A voice that stands outside of your own voice but one that serves to help you make good decisions.
All real estate agents charge a finder's fee equivalent to one month's rent--the good ones give you more value of service than they charge in fee. Be advised that 99% of the property on the market for rent is rented through a real estate agent, less than 1% of the property available can you get without any agent of any kind being involved.
A No Fee Apartment
Despite the name, No Fee apartments are NOT apartments where the real estate agent works for free. These apartments are offered to you without requiring you pay a fee because the landlord or property management company has previously offered to pay the real estate agent the whole finder's fee.
When you see apartments offered as No Fee, you should be aware that the owners or managers are trying to be as competitive as they can be. Especially in Boston proper, the majority of No Fee apartments are old and have not been updated in at least 15 years. Some may sport 50 year old kitchens and bathrooms. There are some No Fee apartments that are new and updated, but the management company has built the fee into the price: meaning if the apartment is worth $1200/mo, the landlord offers the property to the market as $1300 NO FEE. You essentially pay the $1200 for the Finder's Fee over the course of the first year at a rate of $100/mo. This is a marketing tactic, and this tactic works.
Half Fee Apartments
A Full Fee Apartment
- In mint condition, brand-new everything;
- In a highly desirable/high-demand location;
- Priced below market value;
- Available exclusively through one particular agent
Trust me, I've heard countless times from a landlord, "Oh, I'm not going to pay a fee," but after seeing their place and showing them comparable properties that are priced less or where some fee is paid, they realize that in order to compete either they update the property, lower the price, or offer to pay some fee. This all concerns a question both real estate agents and owners ask themselves all the time: What will the market bear?
Therefore, Full Fee properties are the Cadillacs and Mercedes of the rental market--the Landlord absolutely does not have to pay the fee because someone out there, very soon, is going to pay it, whether that someone is you or not. Do not make the mistake of trying to negotiate away the finder's fee on a property that you really like, thinking that you are the only Joe in town willing to rent it. You will lose this battle every time, I guarantee it.
Other Articles:
Size, Location, Price - The Three Principle Factors That Will Govern Your Apartment Search
Do it Yourself or Get a Real Estate Agent? - Where to Start Looking for Apartment
Super Agent Man or Super Waste of Your Time? - How to Tell if the RE Agent is Worth the Cost of a Phone Call
Real Estate Agent Fees Explained - An Explanation of No Fee, Half Fee and Full Fee Apartment
Looking for an Apartment With Roommates? - Get Your Ducks In a Row
Cats and Dogs and Snakes - Pet Friendly Apartment Searching
What to Do with Your Car - Off Street vs. On Street Parking in Boston
Boston Rental Market Timing - Know when to Start Looking
Preparing for an Appointment - What You Need on the Day of Showing
Upfront Costs and Lease Addenda - Make Sure Your Lease is Kosher
So there you have it, Ishmael, a complete guide to navigating these trouble waters. I hope it helps you on your journey.
Regards,
Robert Daniel Ortiz
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