Question: Should Renters Sign An Exclusive Agreement With A Real Estate Agent?
Doesn’t it make more sense to work with as many agents as possible?
The answer is absolutely not.
For one, almost everyone in New York City – the public and brokers, agents and landlords – we all have access to the same information. In other words, no matter which agent you choose, all have access to the same apartment, and you should always choose an agent whom you feel will work for you the hardest.
Second, signing an exclusive right to represent agreement with a real estate agent actually protects you, the tenant, as much as it secures the commission for the agent who is doing all of the hard work.
You see, a majority of rental apartments in NYC are already listed with a real estate broker – about 90% of them – and most have a fee. Of course, there is a trend in Manhattan we’re seeing and one that I cannot ignore, that many apartments these days have “no fee,”; however, renters should be very aware that, most of the time, the landlords are paying the listing agent’s fee, and so a fee is being paid regardless.
So, when you approach the listing agent to rent the apartment, just know that the agent is working to do everything in his or her power to net his landlord the most money.
This is because the landlords signed their own listing agreement with the listing agent, which indicates that the listing agent will be paid. And whether paid by the landlord or the tenant, you can be sure that the listing agent is not working for free.
No matter what the listing agent says or does, that agent has a fiduciary duty to represent the landlords best financial interests.
That’s right, that listing agent works for the landlord, not the tenant.
The only real way for most tenants to level the playing field is to sign their own agreement, securing their own licensed real estate agent representing them and working on their behalf to negotiate the price and terms in their best financial interest.
Sadly, and typically, most renters talk themselves out of signing an agreement with a renter’s agent, usually after they see the paragraph where they agree to pay a commission. They are allowing their focus on paying a commission to deter them from signing an agreement to have a licensed real estate agent represent them exclusively.
If you want someone to make sure that you get the best deal, you may pay for it upfront with a fee, and you will have someone doing all the research for you to find an apartment, plus you’ll have someone negotiating on your behalf.
The fact is that listing agents are being paid a fee, whether paid by the landlord or by you, the tenant – to generate the most money and the best deal for the landlord.
You, the tenant, should definitely have someone in your corner, someone at the plate going to bat for you, because the other real estate agent may lead you to believe they are doing the best thing for you.
You should always be presented with a state disclosure form and unless you’ve signed a binding agreement – like the one that the listing agent has signed with the landlord, agreeing to represent the landlord’s best interests – there will be no one looking out for you, no matter what anyone says.
Of course, there can be pros and cons to working with a broker, and each renter should weigh out their options.
While the focus of this post is to provide renters with information about why they should or should not sign an exclusive agreement, I would never tell someone they should absolutely work with an agent.
But, if you decide to work with an agent, you should definitely sign an agreement so that you know the agent will work for you as hard as he or she can.
Renters should make sure they have enough time and resources to look on their own before deciding against working with an agent, because searching for an apartment without a broker is:
- Often exhausting
- Sometimes worrying
- Almost ALWAYS frustrating
Sometimes, but not often, searching on your own can work out in your favor – according to experts, less than 30% of the time working alone can end up in the tenant's favor. Those aren't very great odds, and you should keep the following points in mind:
- Be prepared to walk around a lot
- Searching for an apartment is a full-time job
- Familiarize yourself with no fee listings
- It will take up your free time
- You need persistence and good negotiating skills
If you need a professional real estate agent working full-time for you, please contact Marc Quadagno using the form below.
Some infographics originally appeared on Naked Apartments.