> it *must" be adding some value but I can attest that it doesn't
And yet, landlords keep using it. A $2500/month apt in NYC will cost $34,500 the first year -- but only $30,000 goes to the landlord. Can you help explain why a landlord would freely give up $4500 (standard 15% fee) in potential revenue?
As I understand it, the difference between the broker system in NYC and the one I'm familiar with is that the tenant is obliged to pay the broker some amount directly. I've seen rental condos shown by realtors and property managers - presumably landlords pay these people although I'm not familiar with the standard rate.
Yes you are right about NYC, and the same is true in Boston - it's been explained repeatedly in this thread why the broker fee is not at all equivalent to a landlord giving up that money, but for some reason there are commenters that just keep repeating the same line about a perfectly rational market instead of engaging with the actual arguments presented.
For someone new to the market it is essentially a hidden fee you find out about at buy time. Since 90% of places do this it would be a huge hassle for a tenant to try to avoid the fee, especially with the pressures surrounding shopping for housing. It's not the same at all as changing a list price.
And yet, landlords keep using it. A $2500/month apt in NYC will cost $34,500 the first year -- but only $30,000 goes to the landlord. Can you help explain why a landlord would freely give up $4500 (standard 15% fee) in potential revenue?