[plondon514]

Broker fees are the biggest scam. I’m surprised that StreetEasy or another player like compass hasn’t been able to disrupt on this more. As a renter you basically do all the work to find an apartment and then shell out thousands to a broker who… lets you into the apartment for 5 minutes to see it

[mushufasa]

I think the Chesterton fence here is:

- there's more demand for good apartments than supply in NYC

- multifamily building owners outsource the process to brokers

- building owners can pay brokers less if brokers pass on overhead costs to renters

- brokers don't have leverage with building owners because the apartments sell themselves

- renters put up with this because there's more demand than supply

If you were here during the pandemic, when there was less demand than supply, you would have experienced a time when all those brokers' fees magically disappeared... and brokers were working harder than ever!

[reaperman]

The term "Chesterton's fence" implies there's a good chance that something will break in an unwanted way if you remove the brokers fees. I'm curious what would break for the other parties in the transaction.

"building owners can pay brokers less if brokers pass on overhead costs to renters" could just as easily be "owners could charge $10,000/year more in rent if brokers didn't capture it".

[tacticalturtle]

But why doesn’t this happen in a city like San Francisco that also has a constrained supply?

Many cities have this same fence - but only Boston and NYC have a culture of broker fees.

[SteveNuts]

I don't see how this broker system isn't literally rent-seeking. It seems like a totally useless middle-man scraping some cheddar off the transaction for no real value added.

[deegles]

I paid a broker fee and the day I was moving in the landlord told me it was a fee-free building.

[shoo]

Lucky you only had to pay the broker and not the building too.

Obligatory:

  “The door refused to open. It said, “Five cents, please.”
  He searched his pockets. No more coins; nothing. “I’ll pay you tomorrow,” he told the door. Again he tried the knob. Again it remained locked tight. “What I pay you,” he informed it, “is in the nature of a gratuity; I don’t have to pay you.”
  “I think otherwise,” the door said. “Look in the purchase contract you signed when you bought this conapt.”
  In his desk drawer he found the contract; since signing it he had found it necessary to refer to the document many times. Sure enough; payment to his door for opening and shutting constituted a mandatory fee. Not a tip.
  “You discover I’m right,” the door said. It sounded smug.
  From the drawer beside the sink Joe Chip got a stainless steel knife; with it he began systematically to unscrew the bolt assembly of his apt’s money-gulping door.
  “I’ll sue you,” the door said as the first screw fell out.
  Joe Chip said, “I’ve never been sued by a door. But I guess I can live through it.”

-- Philip K. Dick, Ubik

[yieldcrv]

Compass was disrupting it 10 years ago and then hired a bunch of brokers and seemingly realized how much they could make with the market inefficiency

[m-ee]

I think this was what compass originally intended to disrupt but then realized it was way more profitable to just make tools for real estate agents.

[iancmceachern]

The biggest scam