Fare Act to eliminate mandatory broker fees expected to pass council, as REBNY voices opposition
Anna Klenkar, of Sotheby's Realty, tells News 12 she supports the bill, as new language has now removed the price cap for realtor fees for those who do choose to hire them.
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The Fare Act is set to head to a vote before City Council Wednesday, with the bill requiring real estate brokers fees be paid by those who hire the broker.
Currently landlords who hire brokers are able to pass the cost to the tenants, according to bill sponsor Chi Osse, who believes his bill will offer New Yorkers cost savings when it comes to rentals.
"Eliminating that upfront costs of 15% to 30% of the annual rent that comes in the form of a broker fee allows people to be more mobile when it comes to looking for new homes," he said adding that it would make existing housing supply more affordable for New Yorkers.
However, the REBNY, the board that represents the interests of brokers and landlords have come out against the bill arguing the language is vague around which party can be determined to have hired the broker.
"Right now, the bill has a clause known as a rebuttable presumption, which means that if I'm a broker, I take you around to 15 different apartments. You pick one of those, even though the landlord may not have ever met me and based on that language of rebuttable presumption, the broker now has to go get that fee from that landlord that they may not have ever met. It forces a contract between two parties that have never met versus allowing for a broker and attendant to just have a contract of their own" said REBNY director of Legislative Affairs Dev Awasthi.
Awasthi also believes the bill will not drop prices as landlords will take the fee they now pay and build it into the base price.
"Landlords spreading themselves then with increased construction costs, the maintenance costs. So to say they can just absorb this, that that doesn't make a lot of sense to me," he said.
But Council member Osse tells News 12 he believes the rental market is already pricing units to the max, and that the bill will create new downward pressure, by making more units available around a certain price point.
"If your landlord could increase your rent tomorrow, they would have done so yesterday. They're not holding back, rents are set by market forces, what tenants can pay. This bill would give tenants more bargaining power when it comes to the resigning of their lease," he said.
And not all brokers agree with REBNY.
Anna Klenkar, of Sotheby's Realty, tells News 12 she supports the bill, as new language has now removed the price cap for realtor fees for those who do choose to hire them.
She tells News 12 during 2020 and 2021, under COVID- era guidelines, all leases moved to no fee for tenants, and her businesses went up.
She says she has seen pent up demand for moving that is waiting on the passage of the bill adding "If REBNY says people housing supply will drop, that means landlords are taking available housing units off market which seems unlikely."
She says as a broker, she also believes the bill can help make the market safer long term, citing concerns over a recent anti-trust case filed against the National Association of Realtors over a similar requirement of homebuyers to pay a 6% fee for both buyers and sellers' brokerages.
"We do have to step away from this fight because once REBNY signed onto the NAR settlement, I don't think you can have a group of brokerages spearheaded by a trade organization forcing people to pay agents they didn't hire. It's not exactly the same, but it does feel like potentially antitrust behavior that we should probably not engage in," she said.
Council member Osse tells News 12 he believes the bill is a small piece of a larger push to help with housing.
"We need supply, we need affordable supply, and this is working towards that," he said.
The bill is set to head to a vote Wednesday afternoon.
