Should you pay a finder’s fee when looking for an apartment? In some markets, it can be impossible to find a decent rental without using the services of a realtor. In others, realtors don’t work with tenants to find an apartment, but they will screen you and recommend you to the landlord they are working for. Generally, if the realtor is working for the landlord, the landlord pays the fee. If the realtor is working for you, the tenant, then you pay the fee.
Fees can often range from one to two month’s rent, or 10 percent of the annual rent, in addition to a security deposit, the first month’s rent, and moving expenses. It can be a real jolt to prospective tenants to have to come up with a significant amount of money prior to moving day.
The first thing you need to do when engaging the services of a realtor in renting an apartment, is to discuss the fee. Sometimes, the finder’s fee is paid by the landlord, sometimes by the tenant. Even if the realtor is representing you, some landlords will pay the fee as an incentive to attract qualified tenants.
What are the advantages of using a realtor to find you an apartment? For one, they have a good idea of what is currently available on the market, and can make appointments with multiple landlords and property managers. They also screen your qualifications, and are more likely to show you choices that they know you are well qualified for, rather than have you keep making those discoveries multiple times on your own.
Realtors also build relationships with landlords and management companies, and may have some professional knowledge of motivations and incentives for good-quality tenants. They also have knowledge of multiple properties, and tend to have a more objective point of view about what is right and wrong with the building, rather than the sales pitch you may receive from a landlord or manager.
Fees are assessed one time only. If you are looking to move each year, you may find that a fee really tips your annual budget over the edge. However, if you stay in an apartment for several years, the value of a one time fee takes less out of your annual budget for a rental. For example, if your rent is $2000 a month, your fee will likely be in the neighborhood of $2,000-$2400 a month. If you divide that fee by five years, it comes to under $500 a year, or around $40 a month – a reasonable premium if you have found the right place to live at a price you can afford in a good neighborhood.
If you are relocating for work, your employer may absorb the cost of the fee if they are offering to pay your moving expenses. You may also find that the fee is a tax-deductible moving expense, depending on your personal circumstances. You should consult your tax professional before assuming that any expense is tax-deductible.