Landlords in Greater Boston may have to start paying their own broker fees
BOSTON - Rent in Boston is already sky high, but sometimes renters are asked to pay the first and last month's rent, security deposit, and broker fee. The total is all too often as much as four months' rent upfront. Newly proposed Massachusetts legislation aims to put the broker fee on the landlord's dime.
"When I first heard about [the broker fee], I thought it was a scam," said Madison Survin, a renter who moved to Boston from Dallas. She wasn't used to these upfront costs. "I personally don't have any savings, and I'm grateful that my parents do."
Broker fees a Boston area issue
Some experts call the broker fee strictly a Boston area issue where renters will pay anything to find a place in a tight market.
"If you have a broker working with a landlord outside of Boston, typically the landlord pays for that," explains Doug Quattrocchi, a landlord and the Executive Director of Mass Landlords.
He says the state's legal framework only allows a landlord to ask for first and last month's rent, along with a security deposit and locks fee. He puts broker fees in a gray area, much like pet fees.
"The law already makes it clear that landlords shouldn't be asking renters to pay for it, but there's a lack of enforcement," said Quattrochi, who says a large portion of their members do not ask their renters to pay broker fees.
This of course, doesn't mean that renters will be free of the financial burden even if the law passes.
"All they have to do if this law were to pass is to raise the rent to cover the broker fee," adds Quattrochi.
How did broker fees start in the first place?
Quattrochi says it has become increasingly difficult for landlords to evict troublesome tenants, making it crucial that they select the right one. This is where a broker comes in.
"Last time I rented a three-bedroom apartment in Worcester, I had 192 applicants for one apartment, so brokers are wading through that," said Quattrochi. "We know if there is a mistake in tenant selection that the buck stops with us. We are the ones who have to pay for that eviction. This wasn't really as necessary when it was possible to evict misbehaving tenants quickly, so you didn't have to screen carefully."
"They choose to get a broker to do this so credit can be run, references can be checked from former landlords," said Nicole Vermillion, a real estate broker with Lamacchia Realty. She is also a landlord.
Clients weighing whether to rent or buy
Vermillion now has clients weighing whether to drop that money on rent, or to find a way to buy instead.
"That's almost a small downpayment on a house for some people. I always tell people, if you can live where you are living for maybe a discounted cost, be that at home, at an in-law, or with a friend, save up because your money is only going toward your landlord's mortgage," said Vermillion. "When you are putting that much money down, it should make you wonder, should I put that toward something equity buildable rather than washing away with rent?"