The wild, wild west of New York City real estate
Everyone knows New York City marches to the beat of its own drum, and because of the fabric of how the real estate industry works in the city, it is very much the wild west of real estate, an anomaly to how the rest of the real estate sector functions in America.
Anthony Lolli is the CEO of Rapid Realty, a decade old real estate firm which became a franchise nearly three years go. Since franchising, they’ve grown from one location to 50, with 800 agents.
How NYC real estate is different
There has not been widespread adoption of a single MLS for all boroughs in the city, so the very fabric of real estate is different than in other American cities. Add to that the vacancy rates are extremely low and finding a quality home to rent or buy is a challenge, and you’ve got the wild west where real estate is almost a sport amongst consumers and brokers.
In an effort to enlighten the rest of us that live in traditional real estate cities, Lolli has shared seven ways in which NYC real estate is different, particularly with rentals, as the city has seen a rapid rise in demand for rentals.
1. How broker fees are paid
Lolli told AGBeat that in NYC, “clients (tenants) are expected to pay the broker fee when they rent an apartment or commercial space. There is such a high demand for apartments, and there are so many people renting, that landlords often feel they don’t ‘need’ to pay the fee in order to rent their space. In almost all other states the owner pays the fee to the broker to get their space rented.”
2. Brokers pay to list
“Not only is NYC the only city where the tenant pays a fee, it’s also the only place in America where the brokers have to pay for housing posts on craigslist, the most popular go-to website for anyone looking to rent an apartment or commercial space,” said Lolli.
3. A different pace
Another factor that separates NYC from other cities is the pace. Lolli said, “Renting in NYC is extremely fast paced compared to most other places. If you see an apartment you like, you have to snap it up immediately. Oftentimes when clients decide they need more time to decide if an apartment they just saw is right for them, by the time they come back on, two, or three days later, the apartment is usually not still available.”
Lolli added that “In NYC, it is almost impossible to look for a place more than four weeks before your move-in date. If you need a place for May 1st, you start looking in the beginning of April. There is such a high volume of renters, the landlord knows that he will always find someone looking to move into his apartment immediately and as a result will not voluntarily keep it off the market. In most other states renters are able to start their search two or even three months before they plan to move.”
4. What consumers get for the money
Lolli said, “Apartments and commercial spaces are much more expensive in NYC. For the amount of money you spend on rent, the square footage is much, much less than what you can expect to find elsewhere.”
5. How consumers search
Lolli says that NYC is “unique” in how renters search for their next apartment. “Clients may come to us asking to live in Brooklyn, and end up in an apartment in Queens. Websites like walkscore.com come in to play because people pick where to live based on ease of transport – the proximity to subways stations, laundromats, grocery stores and other amenities.
Generally, the most popular NY neighborhoods are ones that have grown as a result of their being near to a major transport hub. Most New Yorker’s don’t drive. In most other states neighbourhoods vary so dramatically, and are farther apart, so it is unusual for renters to be willing to focus their search on more than one area.”
6. Landlords are unusual
“New York landlords are unusual in that they are accustomed to, and even expect, a very high turnover rate,” said Lolli. “Many apartments are rented out for one year at a time, people move very frequently. This constant turnover allows landlords to raise rents often in-between occupancies. Landlords are also used to a hugely varied tenant-base. One year they rent their 2bedroom apartment to a couple, the next year to room-mates, the next to a single person with a dog, etc.”
7. Tougher to rent without a broker
Lolli said, “It is noticeably harder in NYC to rent an apartment without the help of a broker. The city is vast, and landlords have many requirements that renters aren’t always accustomed to – paperwork typically includes a professionally run credit and background checks, bank statements, letters of employment, paycheck stubs, tax information, previous rent receipts etc. Landlords are used to expecting this type of paperwork and it becomes a task that can be quite intimidating for the renter to do alone!”