Will Technology Cut Out the Real Estate Broker-middleman From Apartment Rental Processes?
As new NY regulations threaten to change rental commission practices, PropTech seeks to streamline the apartment rental process from A to Z
New York City apartment living has long been known as difficult to come by and prohibitively expensive, and largely a landlord’s market. But in reality, the NY apartment market is actually in the hands of the city’s brokers, charge as much as 15 percent of tenants’ annual rent in exchange for their services closing deals, even if the renter did not hire the broker to operate on their behalf. However, recent changes to the city’s housing regulations may overturn this power dynamic once and for all, opening the doors for technological innovations to streamline apartment rental processes, middleman-free.
In 2020, it’s all about ‘Renter’s Choice’
In an unexpected move, New York politicians recently made a move that effectively bans New York brokers from requiring tenants to pay the hefty service fee prior to signing new rental contracts unless THEY contract their services themselves. Praised by tenant advocates, the change could cause a veritable shakeup within the New York real estate market, with many a broker out of a job, or at least out of regular commissions.
Why? It’s simple: without getting paid the commissions they are accustomed to, real estate brokers will not be eager to show apartments or help sign contracts. That being said, the process of searching for, bidding and closing on an apartment remains highly tedious, with much paperwork and bureaucracy eating at potential tenants’ time and money. Unlike many other aspects of daily life, this field has yet to become fully digitized and streamlined. But that doesn’t mean that “Renter’s Choice” is anti-landlord. Far from it. In the wake of these new rent law reforms, digitization seems like the likely next best step that will simplify, streamline and enhance the apartment rental process for renters AND landlords.
Why not let the tech do the talking?
With the abolishment of renter-paid broker fees and the subsequent decrease in broker jobs, landlords will likely turn to technological innovations to help them rent out their apartments. Renters have already jumped on the tech-to-rent bandwagon, using more and more tools and apps to help them find and secure housing in the Big Apple (and around the world).
Companies such as Apartments.com, Zillow, Trulia, and Zumper make it easier than ever to list and locate New York apartments. Co-living and roommate matching apps, such as RoomZoom and Joinery help renters find empty rooms in shared living spaces. Apps like Jetty
And The Guarantors enable would-be renters to close deals, regardless of one’s credit score or background. And with NestApple, renters can earn cashback when signing a contract, instead of pouring more funds into broker fees.
Bottom line
Like in most areas of the majority of industries within the commercial market, technology is streamlining the way we engage in real estate transactions, providing greater transparency and control to all relevant stakeholders. And while real estate brokers may one day find themselves out of a job, homeowners, renters and landlords will find themselves enjoying a more user-friendly, and affordable real estate market at their front door.
