Posts tagged: Brokers

When Keyan Sanai moved to Manhattan and started working as a real estate broker in 2014, he was eating 12 to 15 cans of tuna a week to keep costs low. “I said to my friend, ‘My mouth tastes like a fistful of old pennies all the time,’” he says. After a doctor’s visit, he found out he had mercury poisoning.

His first few years as a broker were rough. Working at a “boiler room” brokerage, he got acquainted with what he calls the “dark underbelly” of the industry. “The script is basically to lie to people: ‘Put up [an ad] that says ‘no fee’, and once you get ’em in, say, ‘Oh, that’s rented, but I have something else,’” he recalls managers telling him. He says they insisted their employees “just get [the client] out to the appointment, then pump the fear and pressure them into making a decision.”

“I was like, ‘Ahh, I can’t do that,’” Sanai says. After three years of scraping by as a broker, he personalized a more ethical approach to renting, switched agencies, and became Douglas Elliman’s top-ranked New York rental agent in 2019.

But less than a year later, he watched the pandemic drive a mass exodus from the city. Brokers like Sanai, who are typically unsalaried and work on a 100{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} commission basis, saw their incomes evaporate. In August of 2020, he left a showing when his client wasn’t showing up. “She emailed me, ‘You should come back,’” he recalls. “I don’t need you at this time, you need me.’” It took him four weeks to rent the one-bedroom on West 37th Street, even with a “great deal”.

Today, a one-bedroom in the same building rents sight unseen in days, and the power dynamic between brokers and renters has flipped. In contrast to 2020’s renter’s market, this is an owner’s market, which, in New York City, means it’s a landlord’s market, and, by extension, a broker’s market. Last month, the average rent for an apartment in Manhattan hit a record high of $5,000, up 29{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} over last year with demand and prices expected to keep surging into the fall. Meanwhile, the supply of available apartments is nearing record lows, with a vacancy rate in Manhattan of 1.9{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, down 46{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} from 2021.

For renters who make less than $160,000 a year – the minimum required to secure a $4,000 rental – the housing crisis can mean spending months searching for an affordable apartment, or being priced out of a neighborhood long called home. But for many rental agents, it’s been a boon for business. Bidding wars have become routine. Certain apartments rent sight unseen. In July, 45{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of apartments citywide required broker fees, compared with just 25{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} in 2021.

A hotter market often means some brokers and landlords can get away with more unethical behavior, from posting bait-and-switch BS apartment listings to starting “broker fee bidding wars”. even for rent-stabilized apartments. (There are no legal limits on how much a broker can charge in fees, but it is typically 15{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of annual rent, or one month’s rent.)

“People are more desperate. There’s very little regulation,” Sanai says. “I’ve heard stories of people saying, ‘We really wanted this place, but we’re pretty sure the broker took cash on the side from someone’” – a practice that’s illegal, but difficult to regulate.

Aside from struggling with guilt, possibly, this may seem entirely like a win for brokers, but Sanai now finds himself fielding hundreds of inquiries a day, presiding over packed open houses, and listening to “sob stories” from desperate apartment-hunters. “It was difficult to navigate when you were praying that someone would show up to your open house during Covid,” he says. “But it’s just as difficult to navigate when you have multiple people who want the same product.”

Other brokers are indeed taking it all in stride. “The rental market is crazy right now in New York City, and so I have a treat for you guys,” Anthony Park announced to his 179,000 TikTok followers in a video last month. “We have a one-bedroom in the West Village that’s going to be coming on to the market very soon. But I wanted to give you a first look and see if any of you wanted to take this place before it goes live.”

Park enters a fourth-floor walkup near the Waverly Inn, a sceney bistro that serves $29 cheeseburgers. The bedroom can’t fit much more than a full bed, and the kitchen has an “eating counter” but no room for a table.

“If you’re willing to take it sight unseen, [and] to put in more than $4,250 a month, which is what it’s going to be listed for, then shoot me an email,” says Park, 29, who started working at Brown Harris Stevens in March 2021 and now runs a popular “Real Estate TikTok” account, posting housing porn of $135m penthouses and river views from “Billionaire’s Row”.

Although his videos – and those of other NYC brokers who have taken to posting listings on TikTok – are sometimes met with hostile comments (“Looks like a torture chamber,” said one user of the West Village apartment; “Scammy af,” said another), Park is unfazed, knowing this place will fly off the market.

When Park started his TikTok in 2020, he says, “I wanted someone to look at my channel and think, ‘This guy does not look like a broker.’ I intentionally don’t wear suits.” What a broker looks like, according to Park: “Someone who is not cool, someone who comes off way too aggressive, too much oil in their hair, talking about themselves all the time.”

Whether he looks like one or not, he’s living a broker’s dream when $4,250 is considered low for a one-bedroom in Manhattan. While TikTok ultimately yielded no takers on Park’s proposal, the “torture chamber” did rent for $200 per month above asking price, to a tenant who beat out several other above-ask applications at an appointment-only open house.

“People were like, ‘How are you demanding so much? That’s ridiculous,’” says Park. His response: “New York is expensive. You can easily go to some other city and find very affordable housing. If you struggle, then it’s like, well, you chose to be here.”

Between January 2021 and 2022, jobseekers flocked to the real estate industry. The top job-related Google search was “how to become a real estate agent”, and a record number of real estate licenses were issued nationwide.

Many new brokers find the work more stressful and less lucrative than expected. The rental market “can be brutal, depending on if you have a soul”, says Anna Klenkar, a broker with Compass whose TikTok bio reads: “Housing is a human right”. “I’m on a call at 8am every Monday with agents who are like, ‘I feel fucking horrible, I feel so guilty. We got 12 applications, people are offering way more than the rent. What are these people going to do?’”

About 80{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} percent of brokers don’t renew their licenses after one year. “It’s really hard to be a rental agent long term,” says Klenkar, who worked in rentals for years before switching to sales full-time. “You can work 80 hours a week and make zero dollars. I worked so much my first two years and barely made ends meet. We’re 1099 [tax forms], we don’t have salaries. I have to pay like $800 a month out of pocket for health insurance. We expect that half the industry will leave in the next 18 months, because whenever there’s a recession, people want to go back to W-2 jobs.”

Estimates of the average income – made entirely by broker’s fees either paid by the landlord, or, in an owner’s market, by the potential renter – of a broker in New York City range between $36,000 and $47,000 a year, meaning the average agent can’t afford the average monthly rent of $5,000 themselves.

Kai Dailey, 27, an agent with Compass since 2020, says that in the past month he reduced the number of rental clients he represents and shifted his focus to sales. He describes an atmosphere of stiff competition, burnout, and strained relationships with clients in the rental market.

“I’m working from 7AM until 9pm every day. The emails, texts, phone calls, they don’t stop. And to some people, you’re an incredible agent. [But] to a majority, you might not be able to get back in contact. The rental market moves faster than you can keep up.”

Some agents describe feeling guilty watching renters pay staggering rates for tiny spaces. “When you see people paying such large fees up front for these units, it does make you gulp. Deep,” says Dailey.

On a recent Sunday afternoon, 25 people stood sweating in a narrow stairwell on West 11th Street, waiting to see a one-bedroom apartment Sanai was showing for $4,195 a month. He ushered them quickly through the small rooms, fielding questions like “Why is the lamp in the bathroom super hot?” (“It’s a heat lamp”) and “What happens if someone lies in their application?” (“Then we’ll get the documentation that shows they’re lying and move on to the next applicant”). He had been showing apartments since 10am.

“In general, people hate brokers. And if you thought people hated us before, now it’s just another level of dislike,” says Sanai. “I wish my calling was being a surgeon or something that helped society, but this is it.”

Visitors to the open house included a 32-year-old construction manager who said being a broker was a “cheap job” – “like, ‘Wham, bam, thank you ma’am.’”

“It feels like we’re doing all the legwork and just giving them a fee,” said Lucy Malone, a 26-year-old fashion designer. “It feels like they don’t add that much value.”

At one point during the showing, Sanai reminded the crowd that he would have zero say in whose application the landlord greenlit: “It’s not up to me,” he said. While he wields more leverage today than in 2020, he notes that many overestimate brokers’ power, conflating their position in the housing market with that of landlords and developers.

“We’re middlemen. We’re basically puppets. If the owner says, ‘We want $4,000 for this apartment,’ I don’t have a say in pricing. I’ll say, ‘That number is a little high,’ and they’ll say, ‘If anyone can get this number, it’s you. Good luck.’ And then someone won’t get chosen and they’ll send a nasty email, like, ‘This is bullshit,’ but we really have no say. It’s tough, because I don’t want to disappoint someone.”

He adds: “I really do sympathize with how difficult it is to get an apartment.”

The perks of being a broker in New York City today are not lost on him, but he doesn’t forget where he started, or how quickly the market can reverse course. He says: “Every now and then I’ll have a can of tuna just to remember how it tastes.”