Property Grunt

Sunday, August 27, 2006

Don't be a deposit douchebag

It seems to be a yearly ritual where the New York Times real estate section has an article discuss the trials and tribulations of renting an apartment in New York City. The Hunt is filled with these stories. I find it redundant to throw in my 2 cents since I have done countless entries on rentals, however there were two aspects of the Penelope Green article on Housing Virgins that caught my eye.

“Then it was a race to see who could get their application in first,” said Mr. Snydacker, who drew $500 from an A.T.M. as a kind of place holder, for which the agent wrote out a receipt. Apartments are not taken off the market until an application has been approved and the certified checks duly cashed, but a $500 deposit shows a landlord a would-be renter’s good faith during the application process. It’s typically returned, or applied to the broker’s fee or the rent itself.

The deposit is the biggest piece of bulls**t in rentals, because a deposit means absolutely nothing to a landlord and will not act as a placeholder for the apartment because the landlord can pick and choose whoever they want to rent to. Even an accepted application can be turned down. The only assurance a client has to secure an apartment is a lease signed by both parties. That’s it. Any lawyer can back me up on that.

A landlord would be highly unlikely to take the deposit and apply to the rent because doing that would require a time and effort on their part with the paper work, which doesn’t justify the amount. They would rather prefer getting the first, last and a safety deposit. A good landlord must be efficient as possible particularly with their books, therefore and any deviation from the system they set up is going to mess with their infrastructure.

Never ever, ever and I mean never give money to a broker, especially cash to a broker. You only pay the broker after the leases are signed and in certified checks and after they have done their job.

If you are in a situation that requires you give some sort of deposit, you must write a check and have an agreement signed by the agent and the manager that the deposit will be returned to you whether you have rented an apartment or not. The worst case scenario is you haul their asses into small claims court and get your money back there.

“Except when I arrived with all our checks to sign the lease,” said Mr. Snydacker, “the guy refused to give me the money back. He said we needed two receipts. He was pretty aggressive, and there was a moment when I thought, ‘I’m already spending $5,000, what’s another $500?’ But my dad called a lawyer, and then called the broker, who then got really aggressive with me. I called customer service at the agency, and they were pretty decent. They said, ‘Don’t worry. Come in and get your money.’ ”
Mr. Snydacker took his roommate to the agency’s office, where he said the agent scowled beetle-browed and silently counted out a stack of $20 bills onto his desk. Just as silently, Mr. Snydacker said, he counted them, and left.
“I don’t know why this guy felt like he had a right to be angry with me,” said Mr. Snydacker. “But he was furious. He’s a big guy, and it was pretty scary.”

Of course this jerk off was pissed at you. He was counting on you to forget about the $500 in cash you gave to him which he probably blew on strippers and coke. He felt entitled to this money because all of the hard work he did for you.
Mr. Snydacker should be thankful he even got his money back because there was no documentation that he actually gave the money to the broker.

I remember one rental I found for a client where the exclusive agent demanded $500 as a deposit in order to hold onto to it which my client agreed. Then she got into an accident and was unable to rent anything. Guess what happened to the $500? And no. I never got a cut. In fact the exclusive agent never returned it ot my client.

Last summer, Ann Marie Yoo, a 23-year-old Columbia graduate now working as a health care consultant, and two of her college roommates applied for an apartment in Morningside Heights. They lined up their financial ducks in three days, she said, but when Ms. Yoo arrived in the agent’s office with her sheaf of certified checks, her agent announced that the landlord had given the apartment to someone else.
“I never felt like the broker was looking out for us,” she said, “and he was really impatient through the whole process. He tried to get us to stay, to keep our deposit for another apartment, but I’d had it.”
This is when she made her move from a large agency to “a completely random agent on Craigslist,” said Ms. Yoo.
“He was the sketchiest man,” she said, “and the apartment was — eh. But the location was just so prime and he said ‘We don’t do credit checks and we only charge 12 percent.’ ” And so Ms. Yoo and her friends once again assembled the sheaf of certified checks. On the morning of the lease signing, the agent called Ms. Yoo three or four times to say he was stuck on a train, he was on his way, he would meet her on a corner near her Midtown office.
“I’m waiting, and 10 minutes goes by, and then 20, and he pulls up in huge, grimy white minivan, and says, ‘Why don’t you step inside?’ ” Ms. Yoo remembered. “And I’m wondering what all the stuff about the subway was, as I say, ‘No way am I going to step inside your van!’ He starts giving me grief, saying stuff like, ‘I don’t feel like working with people who don’t trust me.’ And I’m freaking out because I think we’re going to lose the apartment, even though there’s no way I’m getting in the van. So I’m begging him to take the checks, to guarantee me the apartment.”
But the agent drove away, leaving Ms. Yoo gape-mouthed on Madison Avenue, after making another appointment to meet that evening at a Starbucks near the apartment.
“I take my roommates with me,” Ms. Yoo went on to say, “because there’s no way I’m going to meet him alone, and as we’re walking to the apartment with the keys he calls me on the whole thing again. He literally said something to the effect of, ‘You’re not comfortable with me because you’re Asian,’ and I’m like, ‘No, I’m a young woman alone in the city.’ ”
“Brokers always provide you with an experience you never forget,” she concluded wryly.

What Ms. Yoo did was smart. She trusted her instincts and stayed safe. Unfortunately the barrier to entry to become a real estate agent is nonexistent, all you have to do is take some classes and pass two tests and I MEAN PASS! That means you just need to get the bare minimum and you are officially licensed.

The door swings both way when it comes to weird people whether it is brokers or customers. I have been in many situation with crazy clients and at one incident I was checking in every ten minutes and wrote the license plate of a car I was in and left at an office in case they did an Amber alert on me.

It seems the current rental market is taking its toll on brokers.

“I felt like it was time to go to a big agency so there’d be accountability,” he said. “I didn’t want to be making deals on street corners with these agents who were saying, ‘Please don’t go in my office.’ They were trying to undercut their own companies.”

With less inventory to go around, agents are going to more apt to engage in acts of desperation to put food on the table. I do not recommend undercutting your office, it can land you in a heap of trouble. The office will most likely eviscerate you and make an example of you in order to discourage the rest of the pack from even thinking of ripping them off.