Renting an apartment is a stressful and fast-paced process. In an exceptionally active market, some renters notice that listings they inquire about may get rented that day, and finding an apartment is a race that often leaves your head spinning. Finding a potential home takes a decent amount of time, as you must research potential spots, connect with agents, and view the property. Therefore, going into the process with more information will help you decide what kind of units you are looking for, decreasing the amount of time and energy you spend on the search.
Many prospective renters may know the differences between neighborhoods in their area, the types of apartment layouts, or what it means to have specific amenities in their building. However, some renters may know that there are also various styles of listings.
When a renter knows about different listings, they are more equipped to go through the renting process. While a renter may not immediately notice the difference between types of listings, having the insight ahead of time will help them develop a more robust understanding of the general renting process.
Knowledge is power, and renters looking for a specific listing will have an easier time searching through the constant and never-ending supply. Continue reading to learn more about the differences between open and exclusive listings and gather more information for your rental search process.
What are open and exclusive listings?
Different kinds of apartments for rent differ by size, location, price point, and style. Apartment listings also vary by their listing type, whether an open listing or an exclusive listing. Landlords and management companies decide how to advertise and rent their units, enlisting the help of either a specific agent or a pool of many agents.
Open listings
A landlord, management company, etc., allows any agent to rent out the unit on their behalf. Therefore, many agents have access to the listing and compete to rent it before someone else.
Landlords may opt for the open listing strategy, as it becomes an all-hands-on-deck situation and ensures their listing rents quickly. Therefore, renters may face higher levels of competition when trying to secure this kind of unit, as they are working against a high volume of renters.
Various kinds of landlords may decide to list their units openly. Smaller landlords with limited resources and connections could need as many agents helping as possible. From a different angle, larger management companies with many listings may also wand their units to rent quickly to ensure overall vacancy remains low.
Open listings exist for the benefit of landlords and management companies who do not want to spend their resources advertising and showing their apartments. While an individual agent can complete these necessary tasks, opening the listing up for all agents ensures that many agents will show the unit to potential tenants. Since it costs money to put up a listing on a rental website, landlords put the task in the hands of agents. An open listing agent typically has access to even more units. They may only pay to list one apartment in a whole building or complex but then show a renter several listings while on an appointment.
Exclusive listings
In an exclusive listing, a landlord or management company explicitly enlists the help of a particular agent, real estate team, or brokerage to rent out the apartment. A landlord may choose to exclusively list their unit because they trust that the agent will efficiently complete the rental application process and provide them with a strong prospective tenant. When the landlord does not have to spend copious amounts of time reviewing applications, they can direct their energy to other aspects of the job, incentivizing them to choose this style of renting. However, renters may have difficulty contacting exclusive agents, as they must wait for a single person’s response.
In this situation, the landlord usually pays the agent for their work, meaning that the agent does not need to collect a broker’s fee from the renter. However, there are situations where the landlord may not pay the broker’s fee, and renters will have to cover that expense. Learn more about broker’s fees and no-fee listings below.
How to spot the difference between an open and exclusive listing
At this point, most apartment rental listing websites in New York City strictly list exclusive listings. Many sites also use a tag or feature to highlight if a listing is exclusive. Agents may also specify the exclusivity of their listing in the description.
Best websites to find open listings
There are several websites available for renters to search for open listings, including the following:
- RentHop: The largest open listing site, featuring over 18,000 open listings in NYC and even more across the country. Many agents on the platform specifically work with open listings and can effectively guide renters through the application process.
- Facebook Through Marketplace, renters can browse between thousands of available listings in their area. They can search in the “Houses for Sale” category and filter by price to return applicable apartment listings.
- Craigslist Renters can search across many listings in their area under the “Apartments/Housing for rent” section to find a home that best aligns with their search criteria.
What is a Broker’s Fee?
To rent in New York City, you may need to pay a broker’s fee on top of the first month’s rent and security deposit. A broker’s fee is a sum of money that a renter pays for their services, including showing the apartment and then handling and guiding renters through the application process. Many brokers work solely off commission; their broker fee is their source of income. Most New York City agents charge between one month’s rent and 15% of the annual rent.
Should you decide to rent an apartment for $4,000 from a broker who charges a 15% fee, you will then pay $15,200 to secure the apartment ($7,200 broker fee + one month’s rent + a security deposit typically equal to one month’s rent).
Due to the high cost, many renters look for apartments where they do not have to pay a broker fee. Open and exclusive listings can each have broker’s fees.
What is a “No-Fee” listing?
A “No-Fee” listing is one in which the renter does not have to pay a broker fee to rent the apartment successfully. A no-fee listing means that at the lease signing, they will only submit payment for their first month of rent and a security deposit if required.
When a listing does not have a broker’s fee, the landlord or management company directly pays the broker’s fee to the agent, taking that financial responsibility away from the potential tenant. Since broker fees can get expensive, many potential renters search for no-fee listings.
What does it mean if the listing does not say “No-Fee”?
If a listing does not say “No-Fee,” there is most likely a broker’s fee that the renter must pay. Some agents directly put their broker’s fee amount in the listing description, but some may wait until they show you the unit to disclose the amount of their fee. If the listing does not specify, ask the agent before the scheduled showing, so you have all the payment information ahead of time.
You may be able to negotiate a broker’s fee with an agent down to 8% of the yearly rent or the equivalent of one month’s rent. Negotiation tips include proving that you’re a reliable client by explaining that you’re ready to apply when you see something you like and that you have your application paperwork organized. Additionally, if you find an agent listing the same unit or comparable units which offer a lower fee or have no fee, you can try to work this angle with the agent you want to work with.
Pros of Open Listings
Renting an open listing means you may benefit from the following.
The landlord is motivated to rent quickly
A landlord who decides to openly list their unit typically wants to rent that unit as quickly as possible. This motivating factor may trickle into the application process, where a landlord may have fewer requirements for renting that apartment. With fewer requirements, you as the renter can quickly assemble an application and hopefully get approved.
The landlord frequently wants to rent the unit as quickly as possible, making it easier for you, and they may have fewer requirements for your rental application.
You may view units that are not listed online
When you work with an agent who focuses on open listings, they’ll be able to show you a variety of apartments from different buildings/management companies. An open listing agent typically pays to put up the listing for one unit type in an area, even though there may be three comparable units in the building or neighborhood. Many times, these listings do not get advertised, so you will not have to compete with a large number of renters as they are not even aware that the unit exists.
Renter is confident that they’re working with an industry expert
Agents who work with open listings typically know that the market is fast-paced and will move the renter along quickly to ensure they can get the apartment. The agent knows that other potential renters are simultaneously renting the apartment and possibly submitting an application so that they will keep their prospective renter on track. Therefore, renters can take solace in knowing they are working with someone who will help them receive approval.
An experienced open listing agent will further grasp the sense of urgency and effectively communicate that with a renter. They will keep the renter calm while swiftly moving them through the process to give them the best chance at success.
Cons of Open Listings
Renters may experience the following cons when searching for an open listing.
The agent may not have a strong relationship with the landlord
A landlord who chooses to openly list their available unit does not create a specific agreement with individual agents and may have never met or communicated with the agent leading you through the deal. If you have specific questions about the unit, the agent may not immediately know that information and will have to contact the landlord or property manager for clarification.
While a good agent should know every tiny detail about the unit they’re listing, agents who work primarily with open listings may show several drastically different units daily to various clients. With a large array of listings to know about, they, therefore, spend less time and energy gathering information unless their prospective client specifically asks for it.
Waiting to hear back on an answer to your question could eat away at the precious time in a busy market, as landlords and management companies may respond to what they consider higher priority tasks. If you’re renting in a slower season, waiting a few hours for an important question may not be a big deal. However, those renting in a busy season do not have the luxury of waiting for answers.
Stiff competition
Due to many potential agents attempting to close a deal on the apartment, there may be a higher level of competition for a renter. There may even be times when you go to view an open listing apartment and notice that there are other agents with their prospective clients also viewing the unit. In a competitive rental market, you must move quickly on an application should you decide you want to rent the unit. Nothing is guaranteed, and your unit could rent to someone who applied just a few moments prior.
How do you ensure you’re ready to rent? Organize your paperwork before you view an apartment. This way, you can submit your application at the apartment or within the day. According to RentHop, most applications ask for the following information:
- Photo ID (passport or driver’s license)
- Letter of employment (usually on company letterhead that states your job title, length of employment, and salary)
- Copies of your last two pay-stubs
- Copies of your last two tax returns
- Asset documents (such as brokerage accounts or property deeds)
- Contact information for past landlords/employers/guarantors*
- Letters of reference from past landlords*
- Personal letters of reference*
* These last three are recommended but not always necessary.
Increased probability of broker’s fees
Since the agent likely does not have a personal relationship with the landlord, there is a possibility that the landlord will not compensate the agent, therefore putting the broker’s fee on the prospective tenant.
However, it is also important to note that the landlord may be so motivated to quickly rent the apartment that they may pay the broker’s fee or offer other concessions like a free month of rent. Furthermore, an agent may offer an agent rebate, giving the renter an amount of money a specified number of days after a lease signing. Successful agents may provide a rebate when they are confident about their closing process or if showing the unit is especially convenient for them.
Pros of Exclusive Listings
There are several benefits to renting an exclusive listing, including the following:
The landlord has a relationship with the agent
With an exclusive listing, the landlord specifically enlisted the agent’s help to rent the apartment. That specific desire likely means that they have a preexisting relationship from a past deal, and you can benefit from this relationship as the renter.
This agent will likely have all information about the apartment and will therefore quickly answer your questions in the moment, making your decision about whether or not to apply easier. If the agent previously worked with the landlord, it means they should also know how to get your application approved, providing valuable insight that will hopefully end successfully.
Additionally, the relationship between landlord and agent may mean they have access to other comparable units. The agent may also have inside knowledge about units coming to the market and will be able to provide you a first glance look if they have exclusive agreements for those units as well.
The agent has knowledge
Similar to the above point, an agent who works with exclusives will likely only work with a few units simultaneously, meaning they are the expert in the unit you’re viewing. If you are moving to a new city or even a neighborhood you’re unfamiliar with, you may desire this heightened level of expertise to ensure you have all the necessary information about the area.
Higher possibility of no-fee apartments
The relationship between landlord and agent suggests that the landlord may pay the agent’s broker’s fee, taking that responsibility off of the renter. Therefore, renters who search for no-fee apartments may notice that the units are exclusive listings. A landlord is typically more inclined to pay the fee to someone they know does good work.
According to RentHop’s current data, 41% of exclusive listings on their site do not charge a broker’s fee, compared to 31% of open listings that do not charge a broker’s fee.
It is important to note that sometimes landlords do not pay the broker’s fee. Additionally, an agent who collects a broker’s fee from a landlord is still allowed to collect a broker’s fee from the renter, increasing their take-home pay. An agent who receives a broker’s fee from the landlord must legally inform the renter about this when signing an Agency Disclosure form, where they will check off “Dual Agency.” If you notice that your agent is collecting a fee from both parties, you can engage in a negotiation to try and lower or remove that fee.
Potential for less competition
An agent who works on an exclusive listing can logistically only show it to so many potential renters at a time, meaning you could experience a lower level of competition than you would when viewing an open listing. While the agent may host an open house or work with other agents to rent the unit, you will likely view the unit privately and compete against fewer potential renters if you apply.
Cons of Exclusive Listings
You may notice the following potential drawbacks if you search for exclusive listings.
More expensive rent
If the landlord pays the agent the broker’s fee, they may try to recoup that financial loss by increasing the monthly rent. Therefore, while you may escape the fee, you will end up paying it in the long run through your rent payments. You will never know if your landlord calculated the broker’s fee into your rent payments.
However, many renters prefer this scenario as it is easier to pay that money through a rent payment over the lease term than in one lump sum at the time of the lease signing.
Must work with agent’s schedule
Since only one person, or a small collection of people, can access the apartment, it may be harder to coordinate a time to view the apartment. This detail may significantly affect your ability to rent the unit in a busy market.
If you plan to move into a new apartment with roommates, having one person view the apartment may be best and report back to the group. An agent who works on an exclusive listing may also invest their money into providing visual tours, which they typically attach to the online listing. As a last resort, that agent may be able to schedule a virtual tour, where they video chat with you as they walk through the apartment.
Should there be a tremendous discrepancy between your and the agent’s schedules, it may be in your best interest to move on from the apartment, as you will also need to communicate with them quickly when applying.
Conclusion
With all the available apartments in New York City, it can grow overwhelming to determine where to start your search. Understanding the differences between exclusive and open listings is a stepping stone to acquiring more knowledge about the rental market. While open listings have higher competition and sometimes mean you must pay a broker fee, agents also have access to a wide variety of listings, and you may pay cheaper monthly rent. Agents who show you an exclusive listing have more information about the unit and surrounding area, but you may have a higher rent payment.
You’re now more prepared to move through the process of renting whichever type of listing you target in your apartment search. Best of luck with your move!
Want to provide your feedback on the open vs. exclusives on the market? Email us at [email protected]