How To Share A Broker’s Fee

Today we answer our first question emailed to Dear Splitwise.

Dear Splitwise,

How does one split the broker’s fee fairly in a NYC apartment? If someone has their own bathroom, should they pay more, or is it split evenly by all roommmates?

Thanks,
Broke and Broker

Dear Broke and Broker,

It’s true that in New York, Boston, and other major metro areas you often have to pay a broker’s fee to the real estate agent to get an apartment, even one you would share with roommates. Which stinks.

So, Broke and Broker, your question is: if the bedrooms are different enough in quality that one bedroom should have a higher rent, the question is, should that person also pay a bigger share of the broker’s fee? Great question!

There are basically three possibilities:

1. Split the broker’s fee equally no matter what
2. Split it proportionally to the way the rent is split
3. Do something weird (we will ignore this option)

In principle though, what would be fair? There are certainly arguments on both sides. The search process is something stressful that all roommates need to be in on together, and is different from the value obtained in renting a specific room, which would argue for the first option. On the flip side, if everyone were on his or her own, a less expensive bedroom would come with a less expensive broker fee. And how should it be handled if roommates have significantly different incomes?

To answer Broke and Broker’s question, we created three scenarios as part of a survey of Splitwise.com users and followers. In the first scenario, you are sharing an apartment and end up getting a nicer room than your roommate, which you both agree is worth a $900/$700 split. The broker asks for a half-fee (half of total rent) of $800. Therefore, if you split the fee equally, you’re paying less than your proportional rent – lucky you! Here’s what we found:

Perhaps unsurprisingly, our survey respondents wanted the broker fee to be split equally in this case. But what about if the respondent is the ones with the cheaper room? Are our survey respondents cynical and unencumbered by morals? In scenario 2, they have the cheaper bedroom by $100. Will they agree to pony up and pay an equal fee?

Yes! Our respondents genuinely believe that sharing a broker’s fee equally is the right thing to do under most circumstances. These questions both had a rock-solid, 80% majority.  I would conclude that if you are splitting rent unequally with your friends, the broker’s fee should be split equally under most circumstances.

To quote one respondent, “I think the important thing to remember is that the broker’s fee is not about each of you finding a room, but about the two of you finding an apartment that fits the conditions each of you had specified. If you are both equally satisfied with the apartment, then you each owe an equal share of the broker’s fee.”

However, there seems to be an exception. What if you and your friend make very different amounts of money, and have different budgetary constraints? One way of sharing fairly in this case is to go into the process looking for an apartment with one small bedroom and one fancy bedroom. This way, no one feels bad about sharing rent unequally. In that case, our respondents swing completely towards the approach of broker’s fee proportional-to-rent.

In fact, one respondent even claimed that they experienced a psychological shift when they got to this scenario, and went back and changed their answers to the other questions. However, I stand by the majority in the first two cases. My view is closest to the respondent who wrote: “In the last scenario, the fact that the roommate is objectively less able (and not just less willing) to pay influenced my decision to split the broker’s fee unevenly.”

So in short, you should usually split a broker fee evenly, especially if the rooms chosen were a matter of taste. If you go into the process looking for bedrooms of different quality because of different budgetary constraints, you should split the broker’s fee in the same ratios as you split rent. This exception helps people with different earning power live together in harmony.

– Splitwise (ask@splitwise.com)