Ari Wilford NYC realtor with City Wide Apartments charges $20K broker free on $1750 UWS one bedroom rent stabilized apartment, raising questions of propriety.
Define ethical? Competition for NYC apartments has become so fierce that one realtor was able to demand a potential tenant pay them an unheard of $20,000 broker fee on an Upper West side apartment renting for $1750.
The Manhattan rental, a one bedroom unit that had been initially advertised for $3.750 a month on StreeEasy, was being handled by City Wide Apartments broker, Ari Wilford, with the realtor telling prospective tenants that it was actually rent stabilized and would be a steal at just $1,725.
But the ‘steal’, came with a catch, with Wilford assuring one tenant who eventually paid, $19,500 for the privilege of moving into the rent stabilized apartment, that the hefty up front fee would be worth it in the long run.
At below $2K a month, the one bedroom is well below Manhattan’s median rent, which hit a record $4,150 a month in July. And any future rent increases on the apartment would be limited by the city’s Rent Guidelines Board — which this year approved a 3.25% increase for one-year leases.
Recalled a gob-smacked potential tenant when told that the one bedroom could be his, on condition he paid Wilford the staggering sum of $20,000.
Broker’s fee hits nearly $20K for a rent stabilized one-bedroom NYC apartment https://t.co/WshDwYVkUg pic.twitter.com/9DVshlh5Np
— New York Post (@nypost) August 21, 2022
‘He said, ‘Looking at the rent-stabilized price and looking at the broker fee, it will make sense in the long term,’ which, at the end of the day, it does. But at the same time, it’s like, wow, that’s a lot of money for a broker fee,’ the un-named tenant, who didn’t want to be identified told the nypost.
The renter said he managed to get Wilford to shave $500 off the fee before sealing the deal, taking a chunk out of his savings to pay it (raising the question, if they had access to $20K in the bank how is it that even qualify for the rent stabilized apartment normally designated low income earners?).
The apartment is in what owner Solil Management describes as a ‘rustic 6 story prewar elevator building’ near Central Park and Frederick Douglass Playground.
Despite the huge cash outlay, the apartment wasn’t even scheduled to be painted ahead of the renter’s July 1 move-in date.
The un-named tenant said he paid even more money to put his belongings in storage for a week so the landlord could add a fresh coat of paint.
The hunt for a New York City apartment has become so grueling that prospective tenants are standing on long lines to secure tiny spaces. Gone are pandemic price breaks, with bidding wars are increasingly becoming the norm on some units.
At $20,000 broker fee, the sum is unusual — even for the current rental market. The typical fee is usually one month’s rent or a maximum of 15 percent of a year’s rent.
Ludicrous proposition
‘I’ve never seen that and it’s not something I’d do. All my fees have been 15 percent,’ said Marvin Michel with Douglas Elliman according to the nypost.
Broker Dolly Lenz told the nypost the practice ‘probably isn’t kosher,’ and if the tenant complained loud enough, ‘could probably get the money back.’
One person who viewed the Upper West Side apartment said the $20,000 fee was an indisputable turnoff to him — on top of what he said was poor natural light in the unit.
‘I just thought it was the most ludicrous proposition,’ the prospective tenant, who also didn’t want to be named, told the nypost.
The seeming price gouging follows that of another agent at City Wide Apartments demanding an exorbitant fee for an Upper East Side railroad flat, which was also rent stabilized, with a monthly rent of $2,250, according to a report via Hell Gate in June.
The prospective tenant declined to pay the reported $10,000, the site said.
Ethics violations?
The state Department of State, which licenses real estate agents, said there was no law that sets a limit on broker’s fees.
‘However, a broker’s fee must represent charges for actual services. Real estate licensees are obligated to act with honesty in their dealings with the public, and cannot perpetrate a bait-and-switch, charge exorbitant commissions that have no reasonable relationship to the work involved in earning the commission, or have undisclosed conflicts of interest,’ spokeswoman Mercedes Padilla told the nypost.
Padilla added that the ‘department takes licensee conduct seriously and investigates complaints filed on a case-by-case basis.’
Renters had a brief reprieve from paying broker’s fees after the Department of State in 2020 ruled that under rent legislation passed in 2019 landlords should shoulder the cost. After a legal challenge by real estate industry groups, the DOS reversed its position in May 2021, forcing renters to cough up the broker’s fee.
NYC’s record breaking rental prices comes as individuals seek to return to NYC post COVID, along with rising interest rates now forcing ever tighter standards for home mortgage approval, forcing people turned away from home loans to join the crowded pool of apartment hunters in the city.
Wilford nor City Wide Apartments have to date declined to comment on their fee structures.
