What the f@#! does "No Fee" mean?

1) The Legitimate "No Fee" - The landlord has a 2BR penthouse apartment in their building and they are asking $5,995/mo for rent. This apartment will be very difficult to rent because of its high price; there are only so many people who are looking to spend $5,995/mo to rent a 2BR. Therefore, the landlord will pay the broker $5,995 (1-month) as an incentive to bring a qualified tenant to the table and rent the apartment expeditiously.

2) The "No Fee" Roll-up - The rent for the apartment is $3,000. The 15% broker fee is $5,400 ($3,000 x 12 months = $36,000 x 15% = $5,400). The broker will advertise the net effective rent at $3,450 ($5,400/12 months = $450 + $3,000 = $3,450). In essence, the broker is rolling the fee into the monthly rent.

3) The 1-Month Free "No Fee" - Many landlords will offer tenants 1-month free when they sign a 13-month or 2-year lease. Often times, brokers will advertise a property as "No Fee" and expect that you'll apply the 1-month free toward the broker fee.

4) The Blatantly Illegitimate "No Fee" - The broker will post a "No Fee" ad to peak your interest. When you call, or even worse, once you're out on the appointment, the broker will mention that "the landlord is no longer paying the broker fee" or, "Did I post the apartment as 'No Fee' in the ad? That was a mistake."

The "No Fee" tactic has been used by numerous brokers as a lead generation tool on Craigslist, in particular. The reality is that the majority of apartments in Manhattan are not "No Fee" apartments, as most landlords will not pay the broker fee. This is especially true, given that we are in a landlord's market at the moment, with vacancy rates falling below 1% in some neighborhoods. Typically, the landlord will pay the broker fee on high-priced apartments that are difficult to rent or during a slow period (winter). There are only a handful of buildings/landlords in Manhattan that continue to pay the broker fee on a rolling basis.

"That's a fact."