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Let's do some simple math to show how brokers in NYC are raking in disproportionate amounts of cash, at the expense of tenants and landlords. I will explain why the economics of this market is very broken, & if there were any industry ripe for disruption, this would be it.The numbers:Avg apt rental in NYC = $4,000/mo or $48,000/yr. source: Elliman, 2014.Broker fee ranges from 1 month rent to 15% of full year = $4,000-$7,200 (paid by renter)Time to photograph: 1 hrTime to list on Zillow / Craigslist: 1 hrTime to show to 9 prospects: 3 hrs (20 mins per showing)Time to process paperwork (lease + credit check): 1 hourTotal hours invested: 6Total earned per hour @ 12% commission: $6912/6 = $1,152.00.Now you may say that any renter that chooses to use a broker is doing so as a luxury, as there are many no-fee buildings / listings on the market. Not necessarily so. If a desired unit is in a condo/coop vs. a rental building, it is often held by broker, & paying the fee is required to get in the door. Remember that in NYC, renter pays the commission. The owner is often inclined to hire a broker as it appears as if the work to rent it is done at no cost to him/her. However, renters will look at the total cost of rent + brokerage fees, when making a decision, just as shoppers look at the cost of item + s&h + tax when making a purchasing decision. If the owner were to list it themselves, or hire someone at $X/hr, it will likely yield a higher rent since the renter does not have to incur the expense of the broker. Back to the "no-fee" scenario. These landlords know that since the renter is saving the broker fee, that savings, or some portion of it can be baked into the rent. Similar to how free s&h is often not really 'free', as it inflates the total cost of the goods sold.My argument is that a better model is to compensate the agent hourly vs. commission. Even at a handsome $50-$100/hr for the labor, it would result in higher rent for landlord, lower rent for the renter, & a healthy profit for the agent.Make sense? Is there something I am missing? Let's discuss.

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neuen超过 10 年前

As a quick note, I don't know much about the industry or claim to do so but I do feel I have a better grasp on it that how you've broken it down.You've taken a job that you know very little about, that thousands of people try every year and fail and broken it down to simple 6 hours to rent an apartment and make a cool 1k an hour - seems like you've been watching alot of HGTV.Thousands and I mean thousands of people try to make it in the NYC Real Estate world every year and come out broke and jobless. Most of these people probably came in thinking along the same lines you are.Is the fee unfortunate? Yes, do people understand exactly how much their paying - maybe not. Does it take someone six hours all by themselves to rent an apartment? Nope.I'm not sure if you're a programer or not but what you've done here is basically the equivalent of me saying "Eh, that's one page of code? And he types at 60wpm? That only took him 4 minutes. Why am I paying him more than $2.44".

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dreamweapon超过 10 年前

Make sense? Is there something I am missing?Well, you're way off on your math. Just the communications and scheduling of those 9 prospects (and dealing with no-shows, late-shows -- not to mention getting there and back, because it's not like you can get them all to show up in the same time window, back-to-back) involves a very significant multiplier on the 20 minutes per actual showing (1.5 hours per actual, physically appearing prospect) would be a better estimate).And ditto with the overhead on everything else you're mentioning. Plus they have side costs, and (significant) downtime between clients, etc. I'm not saying these are wonderful people that deserve every penny they're paid. But there's no way the "average" broker is taking in around $7k a week (or $350k a year) as your math would seem to imply.My argument is that a better model is to compensate the agent hourly vs. commission.If that was in any way viable it would have happened along time ago. There are reasons the compensation is commission-based; it's because it's basically a sales job, and the same remuneration logic applies: you get paid for closing a sale -- not for posting ads on Craigslist, or for talking up the parquet floors and fireplace and how great the restaurants are.

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bbcbasic超过 10 年前

On the one hand - you are right that the hourly figure is high. It just wont be THAT high.For example 20 mins per showing assumes they teleported to the apartment, right?You didn't include all of the fixed costs, like the broker's rent, staff, insurances, cars etc. You didn't include the time spent haggling with the property owners.So lets assume the pay is lower but still high - say $200 an hour. That is still alot. Why aren't people advertising on craiglist themselves.On to my second point:I don't live in the US. Buy my wife sold her apartment herself without an agent (broker) for a good price. She tried an agent first but they were not interested in putting in that much effort. So I agree that these overpaid agents are not always needed.So why do we need brokers/agents in 2014 when most of the work is marketing, which the internet takes care of (and isn't a lot of work)?Premium properties and fixer-uppers excepted!

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uptown超过 10 年前

I don't disagree that it's ridiculous - same could be said for the 6% commission on an apartment/property sale. But they do it because there's enough supply to continue the practice. If a building were to propose paying them hourly, they'd likely balk, and choose to focus on different listings with a higher commission.There's plenty of room for disruption - many companies are tackling it, basically growing the concept of "pocket listings" for rentals - but NYC has a high volume of renters and it's a difficult market to convert to a new business model for something as entrenched as real-estate.

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old_chestnut超过 10 年前

Flaw in your plan: what if the deal doesnt work out? who compensates the agent? The 6% fee is amortized over the 9 clients that didn't work out - each has phone calls, paperwork, organizing, travelling.From the agents perspective: Its a much harder job than you imagine. You have no control over the quality of your product, or its pricing. Also you can do just a few visits per day.From the landlords perspective: When you own several properties you will have better things to do with your time than do a real estate agents job.Anyhow the issue isn't with real estate agents. Its with asset inflation vs wage stagnation. Start complaining about that instead !

Ask HN: Why do real estate brokers in NYC make $1,000+ / hr?

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Ask HN: Why do real estate brokers in NYC make $1,000+ / hr?

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