Public hearing on NYC real estate broker fee reform gets heated. What people on both sides of the issue are saying.
NEW YORK -- A public hearing over a proposal that could dramatically change the city's broker fee system took place at City Hall on Wednesday.
Hundreds of members of the public signed up to speak, both in support and against the proposal.
The proposal, called the FARE (Fairness in Apartment Rental Expenses) Act, simply states whoever hires the broker pays for the broker. If the FARE Act becomes law, landlords wouldn't be able to shift the broker fee cost to the tenant.
A typical broker fee is approximately 12-15% of the annual rent, although in New York, fees are not capped.
Heads of NYC brokerages defend fees
Hundreds of brokers say this change would destroy their livelihood. There are nearly 60,000 brokers and agents citywide.
"Almost 50 percent of the units are no-fee apartments. You don't-- nobody's forced to. This is all negotiable," said Bess Freedman, CEO of Brown Harris Stevens.
Gary Malin, COO of The Corcoran Group, one of the largest brokerage companies, said landlords will just spike the rent and the council should focus elsewhere.
"Politicians don't understand. Developers take risks to build apartments and you don't want to incentivize them producing," Malin said.
The Real Estate Board of New York, which represents brokers, told CBS New York that, in many cases, if the landlord has to pay for the fee, they'll just raise the rent.
"They're going to end up paying no matter what," licensed broker Janna Raskopf said. "The landlord is going to have to pay us in some way. It's just going to be baked into the rent."
NYC councilmember wants to end broker fees for renters
City Councilmember Chi Ossé, who co-sponsored the bill, says renters put down on average $10,000 for a new place. The forced broker fee is a huge cost he wants to end.
"There are a whole bunch of things that are wrong, and every time we try to fix one part of it, that part of it says, don't fix that part of it," Public Advocate Jumaane Williams said.
The Department of Consumer and Worker Protection was supposed to testify Wednesday. If this bill becomes law, they'd be in charge of enforcement. But instead, the Council claims Mayor Eric Adams' administration put up a different agency head.
"You all showed up with no data, no input, nothing conclusive, no analysis to offer on this bill," Councilmember Sandy Nurse said.
Despite what brokers say, at a rally outside Wednesday's meeting, tenant Suzy Englot told CBS New York during her move in May, she couldn't avoid the fee.
"Apartments were moving fast and I felt that I had no choice, even though I didn't hire the broker," she said.
Ossé's bill has the support of the majority of the council with 33 co-sponsors. If it gets voted out of this committee, it will be up for a full vote next.
The mayor has expressed some concerns about the bill, but if the council gets one more person to sign on, it will become veto-proof.
Seven out of 10 New Yorkers rent. If the FARE Act becomes law, they would no longer have to pay at least three months rent to move: The first month's rent, security deposit and the broker fee for the landlord.
