All you need to know about the broker fee for your next rental (2024)

Real Estate

You should pay for services rendered, but what if the landlord hired the agent?

All you need to know about the broker fee for your next rental (1)

By Sury Chakraborty

Amid the sky-high rents in Boston, and half of all renters being cost-burdened, paying a broker you did not hire is probably the last thing that you want to do.

While there are ways to avoid paying the broker fee on your next rental, knowing the laws that govern what your landlord can charge you is always wise.

Let’s dive in.

“In Boston, there are lots of brokers who are operating at the landlord’s direction and are telling renters that there’s a broker fee for it, and they basically make the renters hire them,” said Douglas Quattrochi, executive director of MassLandlords, a not-for-profit trade association.


According to state regulation 254 CMR 7.00, he said, brokers have to disclose upfront whether they are going to charge a fee.If the agent is going to charge a broker’s fee, the law states: “This written notice must be given by the real estate broker or salesperson at the first personal meeting between the broker or salesperson and a prospective tenant. It must be signed by the real estate broker or salesperson, contain the license number of such broker or salesperson, be signed by the prospective tenant and contain the date such notice was given by the broker or salesperson to the prospective tenant. Where a prospective tenant declines to sign such written notice the real estate broker or salesperson must note on such written notice the tenant’s name and the refusal to sign such notice.”

The same regulation also states that brokers cannot charge the prospective tenants a fee unless they find them a home.

Quattrochi also cited Chapter 186 Section 15B, which states that no landlord can take anything but the first month’s rent, last month’s rent, the cost of a new lock and key, and security deposit from the tenants at the beginning of the tenancy. “That basically means you can’t include a broker fee as part of the move-in money paid to the lessor.”

Quattrochi said it is well within the rights of the renter to to refuse to pay the broker’s fee if they did not hire the broker. If tenants want to hire a broker to help them in their home search, they can and should discuss the terms separately.

But refusing to pay the fee for a landlord-hired broker can be an obstacle in negotiations.

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“My best advice would be to do anything you need to do to get the apartment, because Boston is such a difficult rental market,” Quattorchi said.

He added that the renter can negotiate with the landlord about the broker fee — after securing the apartment.

“I think as a practical matter, a lot of people are squeamish and won’t raise that kind of claim, so it definitely is an area that seems to be having some problems,” Quattrochi said.

Dedham-based attorney Alan J. Pransky, an expert in real estate law, said Massachusetts requires a broker to have a written contract with the customer in order to get a brokerage fee.

“It’s illegal for the landlord to require the tenant to pay that broker’s commission at the time they sign the lease,” Pransky said, but “I don’t think they can avoid the broker fee.”


Brokers should be paid for their services rendered. No one is arguing that they shouldn’t be.

To get around this law, brokers can ask prospective tenants who hire them to pay them upfront and refund the money if they fail to find a place for them, Pransky said. “Very few brokers appear to be doing that, as far as I can tell.”

He also said the landlord can pay the broker and get the money from the tenant, by raising the rent by a certain amount to compensate for the fee. “So, if the fee is $1,200, it’s an extra $100,” he said.

Theresa Hatton, CEO of the Massachusetts Association of Realtors, said that when it comes to broker fees, “the law is open to whatever contractual relationship clients want to get into with a brokerage.”

She said there is no standard amount for the fees; it depends on the negotiation of the terms.

As a tenant, having thorough knowledge of the laws and understanding your rights, can go a long way.

Hatton emphasized the need for tenants to understand that they have rights. “I know it’s a competitive market right now, but you still have legal protection, to protect your interest in your search to find housing,” she said.

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All you need to know about the broker fee for your next rental (2024)


What is a good broker fee? ›

On average, agents take a 6% commission on the listing price when a property is sold. This is usually split between the seller's agent, the buyer's agent, and the respective brokers.

Are broker fees legal in MA? ›

It's illegal for the landlord to require the tenant to pay that broker's commission at the time they sign the lease,” Pransky said, but “I don't think they can avoid the broker fee.” Advertisem*nt: Brokers should be paid for their services rendered.

What is a broker's fee in New York? ›

New York is one of the only U.S. cities where tenants have to pay for a broker they did not hire. Those fees can range from one month's rent up to 20% of the annual rent depending on the market. And in a rental market with a 1.4% vacancy rate, many people see broker fees as a barrier preventing people from moving.

When to pay broker fee? ›

On offer – This is when the hard part of the broker's job is complete. They have applied for your mortgage, it has been checked and you have been accepted. It is understandable that a broker may want to charge you at this point, as this is when their hard work has paid off and you have been approved.

How to avoid brokerage fees? ›

Reduction of Brokerage Fees to Zero

Investors can reduce account maintenance fees by comparing brokers, their provided services, and their fees. Buying no-load mutual funds or fee-free investments can help avoid per-trade fees.

What is the normal brokerage fee? ›

Percentage-based brokerage fees can range between 0.01% to 0.05% of the total value involved in a transaction, the lowest brokerage charges being 0.01%. On the other hand, flat fees range from ₹10 to ₹20 for every trade.

Can I avoid broker fees in NYC? ›

No, there is no law that states that you have to pay a broker fee in New York. You can choose to look exclusively for no-fee apartments or contact the landlord directly. But if you have strict requirements and you're looking in a hot neighborhood, chances are you'll be compelled to pay the fee to find the perfect unit.

Why do brokers charge a fee? ›

Brokerage fees are any commissions or fees that your broker charges you. Also called broker fees, they are generally charged if you buy or sell shares and other investments, or complete any negotiations or delivery orders. Some brokerages also charge fees for consultations.

Are broker fees tax deductible? ›

Any fees you pay to buy, sell, or hold an asset or to collect interest or dividends are not eligible for income tax deduction. This would include brokerage or transaction fees, management and advisor fees, custodial fees, accounting costs, and fund operating expenses.

How is brokerage calculated? ›

The brokerage is computed based on the total cost of the shares at the chosen percentage. Consequently, the brokerage formula is as follows. Intraday brokerage = market price of one share * the number of shares * 0.05%. Delivery brokerage = market price of one share * the number of shares * 0.50%.

What is the proper way for a broker to handle an advance fee? ›

Advance fees will be deposited in the broker's trust account. The funds belong to the client of the broker, not the broker, and cannot be withdrawn by the broker before they are earned and a statement is sent to the client.

Do you pay more going through a broker? ›

You May Owe a Broker Fee

Mortgage brokers are paid either by the lender or by you. If the fee is covered by the lender, you need to be concerned about whether you'll be steered to a more expensive loan because the commission to the broker is more lucrative.

What percentage do most brokers take? ›

A common commission split gives 60% to the agent and 40% to the broker, but the split could be 50/50, 60/40, 70/30, or whatever ratio is agreed by the agent and the broker. It is common for more experienced and top-producing agents to receive a larger percentage of the commission.

Is it worth paying for a broker? ›

Working with a mortgage broker can potentially save you time, effort, and money. A mortgage broker may have better and more access to lenders than you have. However, a broker's interests may not be aligned with your own. You may get a better deal on a loan by dealing directly with lenders.

What is a good trading fee? ›

These fees can be associated with stocks, mutual funds or ETFs. The typical industry standard fee for options trading is $0.65 to $1 per contract. If you're trading through a traditional brokerage, the fee may be much higher. A full-service broker may charge $100 or more to execute trades on your behalf.

What is the average brokerage rate? ›

What is a normal brokerage fee? A normal brokerage fee usually varies depending on the type of transaction, the services provided by the broker, and the market norms. For real estate transactions, this fee can typically range from 4% to 6% of the sale price, paid by the seller.

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