Is this normal? Agent asking for $3,455 brokers fee before signing lease

Submitted by psyrag t3_11ebj1p in boston

I reached out to a listing online, toured the place, loved it. But the agent/broker is asking for $3,455 just for the application. It's the first month's rent + an application fee (50/person) + a fee for co-signers (30/person). The agent stated in an email that "If you are not accepted, the first month's rent will be refunded."

Should I trust this? Is this normal? Or am I getting myself into a scam?

Please be kind, I'm applying for an apartment for the first time in my life and have no idea what I'm doing.

Edit: Extra info, I am an undergrad student. I've heard from a few other undergrad friends off campus that they also were asked to pay part or all of brokers fee before signing lease...

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purplepineapple21 t1_jad1v40 wrote

It's normal to pay that much AFTER your application is approved, even after approval but before signing the lease. But it's not normal to be asked to pay that much before your application has even been approved. A non-refundable application fee (the $50/person here) is also illegal in MA. There are several red flags here.

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psyrag OP t1_jad42ua wrote

most of the ones ive seen online/in person have an application fee though. is it legal in MA to have an application fee but it just has to be refundable?

i'm also a current undergrad student- could that factor into them wanting such a high amount upfront since there are probably 20 other students fighting for the same place?

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purplepineapple21 t1_jad52uz wrote

It's perfectly normal to require such a high amount upfront regardless of being a student or not. But "up front" means at the time of signing the lease or just before. It is not normal at all to be asked for rent & brokers fees before they even look at your application.

I'm not sure about the exact laws on application fees, but reputable landlords tend not to use them. It is definitely illegal for them to charge you a fee that they would keep even if you don't get the apartment. I'm not sure if it's okay for them to charge a fee if they would refund it if you don't get the place. Regardless, if every place you're looking at has an application fee (NOT a brokers fee--those are different, much more common and legal), you're probably not looking in the best places. A lot of online listings with application fees are scams.

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psyrag OP t1_jad6gxn wrote

Ok, that makes sense. I thought it was strange to have to pay the brokers fee before signing the lease...

As for the listings and application fees, I feel like it's normal for housing available to students to ask for application fees... Maybe this isn't the case for apartments that do not allow students, but all my friends who have already moved off campus have paid application fees of ~$50.

Thanks for the info!

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Mountain_Resolve1407 t1_jad93ee wrote

My understanding is brokers can charge app fees but landlords can’t. Could be wrong though

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Master_Dogs t1_jae264a wrote

> Ok, that makes sense. I thought it was strange to have to pay the brokers fee before signing the lease...

It's uncommon, but allowed. I would:

  • verify the agent is who they say they are
  • verify they actually work for the given agency
  • verify they want the check written out to the agency and not themselves
  • decide if you're willing to risk $80/person, or if you want to push back on those fees. you can negotiate, but if you do so, you may lose out on the apartment. flexibility is unfortunately required in this market. discuss with your roommate(s) on what you folks feel comfortable with.

> As for the listings and application fees, I feel like it's normal for housing available to students to ask for application fees... Maybe this isn't the case for apartments that do not allow students, but all my friends who have already moved off campus have paid application fees of ~$50.

Within MA you should be aware that application fees charged by a landlord are illegal.

Brokers can however charge them. I'd still say it's fairly uncommon in my experience to see them actually charge you for that. Typically they just lump it into the broker fee, since it's already $2000+ anyway and additional charges for $50/person or whatever just adds more paperwork for the broker to deal with.

It may be more common for students working with a real estate agent to pay these fees though. You guys have less credit, less or no income, and are typically higher risk due to being young and all. It may make sense for brokers to charge these fees in order to cover their asses or because landlords in college areas have higher standards and want to know the person renting from them has jumped through enough hoops to make it less "risky" for them.

Ultimately it's up to you whether you pay the fee or not. You can negotiate or find another broker who isn't charging these fees. You could also negotiate that the upfront payment only be required if your application is accepted first. Really depends on what you're comfortable with. As long as you've verified they're a legit broker, it's unlikely they run off with your money. It may be tied up for a bit though, so you should be fairly serious about this apartment and leave plenty of time to find other options if this one falls through.

Good luck! 🤞

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purplepineapple21 t1_jad94bg wrote

It's not normal. I'm sorry but you guys must be looking at predatory management companies that take advantage of students who don't know about the rental market. I rented as a student in the area and never paid an "application fee," and I know many people who were students after me and also didn't have these fees. But we were looking at crappy apartments in triple deckers and stuff, not corporate-managed buildings that advertise to students.

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Master_Dogs t1_jae0gmp wrote

> most of the ones ive seen online/in person have an application fee though. is it legal in MA to have an application fee but it just has to be refundable? > >

Illegal for landlords to charge this. See:

Not illegal for brokers - see the State regulations on this: 254 CMR 7.00: Apartment Rentals

> i'm also a current undergrad student- could that factor into them wanting such a high amount upfront since there are probably 20 other students fighting for the same place?

Yes. They want to weed out any student who might trash the place. That is likely why they want both an app fee and a "cosigner fee". I'm also assuming you're renting a large unit for $3,455/month in a desirable neighborhood near a major college. Broker fees are typically 1 month's rent, but they can vary since the legal regulations on them are light thanks to real estate lobbying. I'm assuming you're renting at least a 2 bedroom unit, perhaps 3 or 4 even with at least a few other people. In which case it's pretty typical for the landlord to want as much money upfront as possible plus to use a broker to deal with the logistics of showing the place and vetting applicants.

Note that under MA Law the landlord themself can further ask for these upfront payments:

  • The first month’s rent
  • A security deposit (which can not be more than one month's rent) to cover the cost of any damage to the apartment beyond normal wear and tear
  • The last month's rent (the month that will turn out to be the tenant’s last one in the apartment, not necessarily the last month on the lease)
  • The cost of a new lock and key for the apartment

You should be prepared to fork over upwards of 4 months rent upfront to the landlord/broker combined. Usually 1 month to the agent/broker and upwards of 3 months to the landlord to cover security deposit, first month's rent and last month's rent. Yes, this will be a shit ton of money. Make sure you have checks and the money ready to go if you're serious about this apartment. Get your roommates on the same page too, or have 1 person pay and everyone else Venmo/PayPal/whatever that person. YMMV based on the given agent and landlord and how many different checks they're willing to deal with. If you want to secure the place, you should be fairly flexible. That or keep looking until you find a landlord willing to do whatever you want.

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Master_Dogs t1_jadz4x2 wrote

> A non-refundable application fee (the $50/person here) is also illegal in MA.

This is true only for landlords renting directly to tenants. The OP however mentioned a brokers fee and an agent/broker. Under 254 CMR 7.00: Apartment Rentals the broker is allowed to charge pretty much any fee they want to, so long as proper notice is given. Since the OP mentioned this was provided via email, we can assume they were notified. They don't have to agree to this, but that doesn't make it illegal.

As for this bit:

> It's normal to pay that much AFTER your application is approved, even after approval but before signing the lease. But it's not normal to be asked to pay that much before your application has even been approved.

Pre-pandemic, sure. It was certainly not the norm to be asked to pay a lot of upfront fees like this.

Nowadays it's not uncommon. This is not the first thread I've seen on this, nor will it be the last. A quick Reddit search of this sub plus /r/bostonhousing will turn up results. Hard to say just how common it is, but it's not unheard of.

The only real red flag I see is a "fee for cosigners", which I haven't heard of before. But since I'm not a college student, nor do I have low credit, it's possible I've just never seen a broker ask that since I would never need a cosigner. It may be more common for new grads or college students. The OP could clarify with the broker what exactly the two fees cover, and if it would be possible to make them totally refundable since the application isn't yet approved. Whether that's worth it or not depends on how much the OP values $80 for themselves, and whether their roommates are willing to risk $80 each.

The other thing the OP should do is:

  • confirm the broker is legit.
  • confirm the apartment is actually for rent.
  • confirm who the landlord is via GIS
  • verify that all the amententies they want are actually available (parking, laundry, etc)

It's not clear how the OP found this place, so it's totally possible they're being scammed. But if they did their homework, then nothing too crazy about this. Just (now) typical housing crisis stuff.

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NoTry732 t1_jad0k9q wrote

It’s bullshit, but it’s standard bullshit

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throwawaysscc t1_jad9b7u wrote

Application fees are illegal. A judge has ruled that owners may not charge applicants a fee that covers the owner’s costs in processing an application. Read about it here

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Master_Dogs t1_jae0rso wrote

Yes, landlords cannot. The AG's page here is pretty clear on this.

The OP is dealing with a real estate agent though, who must follow the State regulations on broker fees found here. The rules for brokers are extremely lax thanks to decades of lobbying to protect their prized broker fees.

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NoTry732 t1_jadaubu wrote

If $50 is the hill you’re going to die on I hope your car is comfortable

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Smooth_Possible5629 t1_jad1ugu wrote

Usually realtor charge one months rent. It is up to the landlord if he or the tenant is to pay the fee. In your case the tenant is to pay. You can always ask to split it. I’m a realtor in Boston but don’t really do rentals but sounds standard. Now if the agents name was tom smith from All star real estate and they asked you to write the check out to tom smith not all star real estate then that would be weird. It’s always written out to the brokerage ( ex. Coldwell banker). Quick google search should help verify the agent.

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Chippopotanuse t1_jad288y wrote

Regardless of how prevalent this practice is…please move on from that type of clown show.

It’s just an apartment application.

The application fees are already highway robbery and probably just a scam to get a few grand of fees from 20 different applications.

But hard pass to any broker fees being asked for prior to them being earned. You should only ask for those fees when the lease is signed. Not a day sooner.

Any landlord that has the approach you are describing (or who works with brokers who do) deserves the heartiest “getthefuckouttahere” from any sensible tenant.

Source: 25-year Boston landlord who hasn’t had a deadbeat in over a decade. I find that treating tenants with respect is a much better way of everyone being copacetic.

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Key-Neat5457 t1_jad3dof wrote

Easy to be a landlord on 25 year old margins

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Chippopotanuse t1_jad5w0u wrote

Cool. Except my most profitable building in terms of margins is one that I bought two years ago.

It’s always a huge red flag (and a sad commentary on society) when a tenant is so desperate for housing that they are willing to pay excessive fees up-front.

So I don’t charge them. It would result in only having red flag tenants applying and scare away the best tenants.

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Key-Neat5457 t1_jad9hct wrote

Easy to buy your most profitable building when your portfolio is 25 years old. Just tired of hearing about the realtor fee drama. Finding tenants is time consuming it’s why realtors are paid to do it. I’ll happily pay the realtor fee for you but guess what you’ll just pay more in rent.

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Budget-Celebration-1 t1_jadhl32 wrote

Hah! Name me one realtor that gives a fuck about the tenants or the landlords! As a landlord myself I’ve dealt with them and I’ve yet to find a good one. Every single one of them tried to get me to drop the deposit etc because I assume the tenant they found could not afford their fee. I told them to drop their fee or have them contact me directly. I never use agents because I don’t trust they are out there looking for a good tenant.

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Key-Neat5457 t1_jadjtc2 wrote

You’re working with the wrong realtors. In the end there’s good/bad landlords, realtors and tenants.

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Chippopotanuse t1_jadlg5m wrote

Finding good tenants is the CORE of your business as a landlord.

Tenant screenings gets far less “time consuming” if you take care you your tenants, have near-zero turnover, and have a waitlist of folks who want to live in your properties.

You sound like you are 0 for 3 on those things, so yes, please keep using a realtor to help you place new tenants every year as you burn though the ones you have.

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Key-Neat5457 t1_jadmpbk wrote

Wrong again. Most of my tenants are long term but there are areas of Boston where there is yearly turnover that’s where a good realtor comes in.

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Chippopotanuse t1_jadqjhc wrote

Everyone is always wrong except you.

So it’s kinda weird how you the one who is so bitchy and grumpy…I’d think all of your success would leave you less irritable.

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Key-Neat5457 t1_jadr4tp wrote

You’re making it seem like being a landlord is the easiest thing to do. It’s not easy when you’re just starting. It’s okay to use a realtor to help with the process.

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tobiasrfunke t1_jad4njt wrote

Apartment listing scams are common. I wouldn't send that much money out just to apply.

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geographresh t1_jad5wiv wrote

Broker fee before signing the lease? Yikes. What fresh hell is this...

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Sullanfield t1_jad59jz wrote

It's becoming more normal as brokers try to secure tenants by discouraging multiple simultaneous applications, but it's trash and I've always refused to do it.

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Smooth_Possible5629 t1_jad7f8s wrote

Application fees usually cover the cost to run a credit check. It’s called a application fee but it’s just the cost of the company’s fee realtors and landlords use to run credit score checks. I forget the name of it.

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AnyRound5042 t1_jaf2vxt wrote

I will never give anybody one red cent before I have signed a lease. If they even ask I'm probably going to drop it. I try to view as many apartments as possible once the hunt begins and string them all along to keep my options open until I've actually signed

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engineeritdude t1_jadpwrk wrote

Prepayment of first month's rent to be refunded if the application is denied is not uncommon.

Its to prevent people from applying to multiple places and make sure they are serious.

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Middle-Example6618 t1_jaen9yo wrote

So.. you just stop applying to places while that guy makes up his mind? Of course you don't.

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ivb97 t1_jaef8oa wrote

I’m sorry, broker’s fees equal to a month’s rent are absolute lunacy.

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sdzk t1_jad8h02 wrote

You generally pay a fee equal to the rent when applying. It is refundable until you sign the lease. After lease signing you generally pay 2-3 other fees equal to one months rent. I’m an agent and I normally consider the first payment as the first months rent but some say it’s the broker fee. While the paperwork at my company says it’s the broker fee. Normally the broker has to present one months rent with apps to the owner/property manager to get it off market and reserved.

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Middle-Example6618 t1_jaen6gw wrote

>You generally pay a fee equal to the rent when applying.

So.. you just stop applying to places while that guy makes up his mind? Of course you don't.

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dxbaileyy t1_jadjzv1 wrote

It doesn’t sound like they’re asking you to pay a brokers fee yet. Most apartments will ask you to put down a deposit with your application to make sure you’re serious. It sounds perfectly normal.

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