Broker Fee Laws in NYC: What's Legal in 2025?

Broker Fee Laws in NYC: What's Legal in 2025?

New York City’s real estate market is notoriously competitive and can be confusing, especially when it comes to the fees associated with renting, buying, or selling a home. For years, one of the most significant and debated upfront costs for renters has been the broker fee. As of 2025, a landmark change has shifted the landscape, creating new rules that every New Yorker should understand.

This guide, brought to you by Yeo Real Estate, breaks down the key changes in NYC broker fee laws, focusing on what’s legal and what’s not for renters, buyers, and sellers in the current market.

The FARE Act: A Game-Changer for Renters

The most significant change in the NYC rental market this year is the Fairness in Apartment Rental Expenses (FARE) Act, which went into effect on June 11, 2025.

Before this law, it was common practice for a landlord to hire a broker to find a tenant and then pass the cost of that broker's fee—often 15% of the annual rent—directly on to the tenant. This meant renters were paying for a service they did not hire, adding thousands of dollars to their move-in costs on top of the first month's rent and security deposit.

The FARE Act aims to correct this by ensuring the party who hires the broker is the party who pays the fee.

Q&A: What the FARE Act Means for You

• What is the FARE Act?

  The FARE Act (Local Law 119 of 2024) is a New York City law that prohibits landlords from forcing tenants to pay the fee for a broker the landlord has hired. The law creates a clear distinction: if a landlord or their agent is advertising a rental apartment, they are responsible for paying their own broker.

• Who pays the broker fee under the new law?

  • If the landlord hires the broker (a "landlord's agent"): The landlord is legally responsible for paying their broker's fee.

  • If the tenant hires the broker (a "tenant's agent"): The tenant is responsible for paying their own broker's fee. This law does not prevent a tenant from seeking out and paying for their own representation to find an apartment.

• Can a landlord require a tenant to use a specific broker?

  No. The law explicitly prohibits landlords or their agents from conditioning the rental of an apartment on a tenant hiring a particular broker or paying an unlawful broker fee. Landlords cannot require you to use a dual agent (a broker who represents both the landlord and the tenant).

• How do I know if a listing has a broker fee?

  The FARE Act requires landlords and their agents to clearly and conspicuously disclose all fees a prospective tenant must pay before a lease is signed. Unlawful broker fees cannot be included in any apartment listing or advertisement.

• What if I'm charged a fee illegally?

  You can file a complaint with the NYC Department of Consumer and Worker Protection (DCWP). It's important to keep any evidence, such as text messages, email screenshots, or receipts, to support your claim.

Broker Fees for Buyers & Sellers in NYC

While the FARE Act focuses on rentals, it's also crucial to understand how broker fees work when buying or selling a property in New York City. The long-standing practices here have also faced legal challenges and evolving market norms.

The Role of Brokers: A Quick Primer

• Listing Agent (Seller's Agent): A broker hired by the seller to list and market their property.

• Buyer's Agent: A broker hired by the buyer to help them find a property and navigate the purchasing process.

• Dual Agent: A single broker who represents both the buyer and the seller in the same transaction. This is a complex arrangement that requires full disclosure and consent from both parties.

For Sellers

Historically, sellers have been responsible for paying the full commission for both the listing agent and the buyer's agent. This total commission typically ranged from 5% to 6% of the sale price. For example, on a $1.2 million sale, a 6% commission would be $72,000, which the seller's agent would then split with the buyer's agent.

While this remains a common practice, the real estate industry is seeing a rise in alternative business models that offer lower commission rates.

• Traditional Brokerage: The full-service approach, where an agent handles everything from pricing and marketing to negotiations. Commission is typically 5% to 6%.

• Modern/Discount Brokerage: Companies that use technology and salaried agents to offer the same services for a lower fee, often 1% to 2% for the listing side. The seller still pays the buyer's agent's commission separately.

For Buyers

In most cases, a buyer does not directly pay their agent's fee. The buyer's agent is compensated through a portion of the commission paid by the seller. However, recent changes and lawsuits have put this practice under scrutiny, and some buyers may encounter scenarios where they are asked to pay a portion of their agent’s commission if the seller's offer is low.

Table: Who Pays Which Broker Fee?

FAQs & Practical Tips for All New Yorkers

Tips for Renters

• Know your rights: Understand that if you did not hire a broker, you should not be paying a broker fee for a rental apartment after June 11, 2025.

• Read the lease carefully: Review all documents before signing to ensure no illegal broker fees are included.

• Ask for clarification: Don't be afraid to ask a listing agent, "Who hired you? Will there be a broker fee?" Their response will quickly clarify your position.

Tips for Sellers

• Factor in commission: When pricing your home, remember to account for the total commission you will be paying (your listing agent's fee + the buyer's agent's fee).

• Explore options: While the traditional 5-6% commission is still common, consider working with a brokerage that offers a lower listing fee. These services often provide the same full-service support with significant savings.

Tips for Buyers

• Understand your agent's role: Your agent's primary role is to represent your best interests, from finding the right property to negotiating the best price.

• Ask about commission: Confirm with your agent how they are being compensated and if you will be required to pay any part of their fee.

Tips & Takeaways

The New York City real estate market is always changing. The FARE Act is a monumental win for renters, making the upfront costs of moving more manageable. For buyers and sellers, while the system is largely the same, an increasing number of brokerage options are empowering consumers to save on commissions. Staying informed about these laws and market trends is the best way to ensure you're making smart, financially sound decisions.

Ready to navigate the market with an expert on your side? At Yeo Real Estate, we believe in full transparency and putting our clients' interests first. Whether you're looking for your next rental, buying your dream home, or ready to sell, we'll provide the data-driven insights and personalized service you need to succeed.

Contact Yeo Real Estate today for a free consultation and let us guide you through the complexities of the NYC market.