Update September 10, 2020: A New York judge temporarily blocked a new state rule barring brokers from charging tenants. For now, tenants will once again be paying fees to brokers!
The new state of the apartment rental real estate industry in New York City (as of Tuesday), reminds one of the Abbott and Costello routine ‘Who’s On First’…Only without any humor!
When lawmakers are ‘blindsided’ by their own legislation, the system is definitely broken!
In life there are decisions made that hopefully been have well thought out, that unfortunately result in unintended consequences hurting many, including the very people the decision was ostensibly designed to help!
On Tuesday, February 4, 2020, a ruling issued by the New York State Department of State basically turned the New York City apartment rental industry on its head, as it mandated that landlords must now pay broker’s fees — not tenants.
Immediately real estate agents whose livelihoods are based on apartment rental fees were left under a cloud of uncertainty. Will there be a way to entice the landlords to pay what had formerly been paid by prospective tenants, or is it time to look for a different job in real estate or a new industry?
An even bigger question? Will the decision ultimately be seen as having been positive for the bottom-lines of prospective tenants, or at-the-end-of-the-day will the process of renting an apartment become more costly?
In other words, will the decision being used as a vehicle to pander for votes by the political class end-up being a flop.
On a certain level this apartment rental agent scenario is somewhat reminiscent of the regulations that have come down on the title insurance industry in New York State the past few years.
Initially these new rules seemed dire and would have likely doomed some companies, had the title insurance industry not spent the money to utilize the court system. On some aspects we emerged victorious (i.e. closer compensation), while other rules were not reversed, such as the inability to engage in the most rudimentary forms of business development (i.e. breakfast at a diner).
The Sad Conclusion: In industries that are subject to oversight by rule-making/licensing bodies in conjunction with politicians, it is wise to always have a Plan B!
Have you ever thought about title insurance sales?
(Article originally appeared at LinkedIn here https://www.linkedin.com/pulse/apartment-rental-agents-new-york-city-what-happens-when-haltman/?published=t)Google+