How to Survive a Rental Bidding War

Q: I recently attended an open house for a rental in Park Slope, Brooklyn, where the broker informed applicants in advance, via email an...

Q: I recently attended an open house for a rental in Park Slope, Brooklyn, where the broker informed applicants in advance, via email and in person, that he would be accepting the best and latest offers. rent and commission. It was not a luxury apartment; the building was not new and had no amenities. I quoted the listed price: $6,000 per month, with a 15% commission. He replied that he had already received offers of $6,800 and that I would have to offer more to be considered. How should tenants react to these tactics?

A: An apartment is worth as much as a person is willing to pay for it. In this rental market, with a shortage of listings and intense demand, many potential tenants seem willing to pay a little. In May, 18% of all New York rental listings ended in bidding wars, according to a Douglas Elliman Report — a trend affecting apartments from the bottom to the top of the market. Long queues for open days are common. TikTok is full of videos posted by battle-weary apartment hunters bemoan their fate.

In New York, bidding wars are legal for apartments at market price. However, landlords cannot accept several months’ rent in advance. Brokerage fees are also unregulated and are now the responsibility of the tenant, after a respite earlier in the pandemic when landlords picked up the cost. Although a fee of 15% of the annual rent has become an industry standard, nothing prevents a broker from charging more. Keyan Sanai, a Douglas Elliman salesperson, said he had heard of brokers charging 18% or 20% commissions. “Right now brokers have too much power,” he said.

To find an apartment in this market, first decide on your maximum budget. Then look at the apartments below that number; chances are you’ll need to complete your offer to the owner, broker, or both. How much will you have to offer? Unfortunately, there is no magic number. Brokers report rented apartments for a few hundred dollars to a few thousand dollars more than the asking rent. The answer will depend on the degree of desperation of the other bidders.

Show up ready to make an offer. Have all your documents in order, including your pay stubs, bank statements, proof of employment, and letters of recommendation. If you’re using a guarantor, make sure you have that person’s financial information on hand as well. And show up early.

“It’s first come, first served,” said Nicole Hechter, a broker associated with Corcoran. “Put your best foot forward. There will be a bidding war. It will go up in price. »

Whatever rent you agree to pay, remember that your future rent increases will be based on that price, so be aware of your current and long-term budget before signing the lease.

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Newsrust - US Top News: How to Survive a Rental Bidding War
How to Survive a Rental Bidding War
Newsrust - US Top News
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