Exorbitant $20K Broker’s Fee for One Bedroom Manhattan Apt Being Probed by State Authorities

 

 

Edited by: TJVNews.com

 

The scarcity of finding a cheap apartment in New York City, is translating into big bucks in brokers fees.

As reported by the NY Post, a real estate agent recently was paid an astounding $20,000 fee for brokering a rent stabilized apartment in the Upper West Side.

According to a follow up report, a spokeswoman for the state Department of State, which provides license to real estate agent, is investigating the shady business transaction.

The real estate agent, Ari Wilford with City Wide Apartments in Manhattan, who advertised the deal, attached a broker’s fee of $20,000 for finding the steal. “He said, ‘Looking at the rent-stabilized price and looking at the broker fee, it will make sense in the long term,’ which, at the end of the day, it does. But at the same time, it’s like, wow, that’s a lot of money for a broker fee,” the tenant, who wished to remain anonymous, told the Post.  The renter got a $500 discount from the broker and sealed the deal dipping deep into his savings to pay the $15,500 fee.

The apartment is a “rustic 6 story prewar elevator building” near Central Park and Frederick Douglass Playground, as described by owner Solil Management.  The renter was hyped for the July 1st move in date, but despite the hefty fee, the apartment wouldn’t be painted on time, and the renter had to hold his wares in storage for a week, until the landlord was able to finish the paint job.

The one-bedroom pad was listed on Street Easy for $3,750 a month, but the realtor told prospective tenants that it was actually rent stabilized and would come out to just $1,725 per month.  The rental is well below Manhattan’s median rent, which reached a record $4,150 per month in July. This apartment’s price would be limited by the city’s Rent Guidelines Board, and could only increase 3.25 percent next year, as part of the approved guideline for one-year leases.

The state does not set limits on broker’s fees but says agents cannot charge “exorbitant commissions that have no reasonable relationship to the work involved in earning the commission,” according to the Post report. The report also indicated that the fee that was taken by Wilford was far above the typical fee that a broker would earn for one month’s rent or 15% of a year’s rent.

Representing parts of midtown Manhattan and the Upper East Side, Councilman Keith Powers harshly critiqued the “egregiously high” fees saying they “hurt our city’s affordable housing goals and perpetually lock New Yorkers out of the market,” according to the Post report. He added that, “As we rebuild, I will be working with my colleagues in the council to address this issue by making it easier for tenants to get an apartment.”

Other tenants piped up in the aftermath of the previous report in the Post, telling the paper that Wilford and City Wide also demanded exaggerated fees.

The Post reported that one Manhattan woman said Wilford wanted $8,000 in 2020 to lease a rent-stabilized one-bedroom for $1,985, doing little work to get the fee.

 

“Ari, to be clear, wasn’t even in New York. Because of COVID, he relocated,” the woman said, according to the Post report. She added that he merely handled the paperwork. She ended up paying him $7,000.

For a regulated one bedroom in Gramercy Park priced at $2,400 a month, another person seeking an apartment in the city in 2019 said that Wilford asked for $10,000, the Post reported. The perspective tenant did not follow up on the deal and told the Post of Wilford, “He kept calling the apartment a unicorn.”

Defending the exorbitant broker’s fees was Michael Jacobs, the head of City Wide. In a statement sent to the Post, Jacobs said: “Brokers provide great value to their clients and have been working harder than ever at a time where demand is surging, supply is low, and finding a home in New York City has become more challenging than ever.  These factors together with the hyper-competitive process for getting a rent-stabilized apartment and the current system surrounding these units are what lead to these high fees that we’re seeing”