How Much Do Broker Fees Cost in NYC?

New York City’s real estate market is dynamic and competitive, often requiring the assistance of real estate brokers. These brokers act as intermediaries between property owners and prospective renters or buyers. Broker fees are a significant financial consideration in both rental and sales transactions within the city, and understanding these costs is important for market participants.

Rental Broker Fees in NYC

Broker fees for rental properties in New York City have traditionally been a substantial upfront cost for tenants. Historically, these fees ranged from 10% to 15% of the annual rent. For example, an apartment with a monthly rent of $3,000 would incur an annual rent of $36,000, making a 15% broker fee $5,400. Tenants often paid these fees, even when the broker was engaged by the landlord.

The Fairness in Apartment Rental Expenses (FARE) Act, effective June 11, 2025, shifts responsibility for broker fees to the party who hires the broker. If a landlord hires a broker to market their property, the landlord is now responsible for paying that fee. Tenants are no longer required to pay a broker fee if the broker works on behalf of the property manager.

Despite this legislative change, a tenant may still incur a broker fee if they independently choose to hire a broker to represent their interests in the apartment search. The typical fee for a tenant-hired broker is 7.5% of the first year’s annual rent. For instance, if a tenant hires a broker to find an apartment with a monthly rent of $3,000, the 7.5% fee would be $2,700.

Landlords may still offer “no-fee” apartments, where they cover the broker’s commission to attract tenants, especially in situations with higher inventory. This practice aligns New York City with common practices in other parts of the country, where the party engaging the broker typically bears the cost.

Sales Broker Fees in NYC

Sales broker fees in New York City, commonly referred to as commissions, are typically paid by the seller. The total real estate commission generally ranges from 5% to 6% of the property’s sale price. For example, on a home sold for $750,000, a 5.36% commission would be approximately $40,200. This commission rate is usually negotiated between the seller and their listing agent.

The total commission is typically split between the seller’s agent, also known as the listing agent, and the buyer’s agent. While the seller traditionally covered both agents’ commissions, recent changes mean sellers now negotiate their commission with their listing agent and then decide whether to offer a commission to the buyer’s agent. Historically, a common split meant both brokers received around 3% each of the total commission.

If a 6% commission is agreed upon, the listing agent and the buyer’s agent would each receive 3% of the sale price. Buyers are generally not responsible for paying their agent’s commission directly, as it is typically covered by the seller’s proceeds at closing. However, buyers may now need to sign agreements with their agents outlining how the agent will be compensated, especially if the seller does not offer to cover the buyer’s agent commission.

Sellers often offer to pay the buyer’s agent commission to make the home more appealing to a broader range of buyers. While not mandatory, this practice can facilitate a smoother and quicker sale. The real estate commission is usually the largest single cost a seller faces when selling a home.

Understanding Broker Fee Calculation and Payment

Broker fees are calculated as a percentage of either the annual rent for rentals or the sale price for sales. For rental properties, the fee is typically based on the gross annual rent, not any advertised net effective rent. For example, if an apartment’s gross monthly rent is $3,000, the annual rent of $36,000 would be the basis for calculating a 7.5% broker fee, resulting in $2,700.

Payment methods for broker fees usually involve secure transactions such as certified checks or wire transfers. For rental properties, the broker fee is typically due at the time of lease signing. This payment is made concurrently with other upfront costs, such as the first month’s rent and security deposit.

In sales transactions, real estate commissions are paid at the closing of the property sale. The commission is deducted from the seller’s proceeds from the sale, rather than being paid upfront. While percentage-based fees are the most common structure, some specialized transactions may involve flat fees. However, such arrangements are less prevalent in the broader New York City market.