Monday, March 14, 2005

Real estate brokers, petty thieves

I am currently looking for a new apartment in the neighborhood where I live, Astoria, in Queens. Perhaps this would be a trying experience anywhere -- an old professor of mine who enlisted me to lug boxes of books for him when he moved insisted that studies have shown that moving is as stressful as a death in the family -- but it is especially difficult in Astoria, where the apartment rental market is controlled by that rarefied species of parasite known all too well to New Yorkers, the real-estate broker.

Now, one does not grow up dreaming of becoming a real-estate broker. There are no children's books glamorizing their profession. Real-estate agents don't appear as the heroes of films (if they appear they are usually caricature villains, comic relief, emblems of a habitual, institutionalized corruption or hysterical phoniness -- like Annette Bening's character in American Beauty) and the real estate profession is not one assumed as an alter-ego for superheroes. No one has epiphanous moments when they realize that real estate is their calling (unless you call the moment when they hear how much money they can make for what little they do an epiphany). And parents don't marshall up all their persuasive forces and save all their money for fancy colleges to insist to their children that they grow up and become real estate agents. No, people drift into the real estate business because they think it's easy money. It's not a business attracting the best and brightest a society has to offer. It's a profession attracting the sneakiest and greediest.

Deception is part of the real estate agent's stock-in-trade, even in places where the real estate market is not as contentious as it is in New York City. They must be deceptive because they spend they time helping customers while their financial interest and duty lies with the seller or lessor. They are duty bound to encourage the customers to take the worst deal offered them, and if these clients do the brokers maximize their profits. The ones that are successful are the ones that are best able to make their clients think they are watching out for them while stabbing them in the back. They are the slick talkers, the ones who seem so empathetic and understanding, the ones who want to take care of everything for you (so you won't know how badly you're getting fucked). Real estate agents thrive on the complexity of transactions as these discourage people from understanding what is going on. They benefit from confusion and do what they can to foment it, like their evil brethren in the advertising industry.

In most apartment-rental markets, brokers are hired by slum lords to rent out their unrentable properties. These brokers collect only from the landlords for the service of strong-arming a poor desperate sucker into one of their flea traps. The actions of these brokers are ethically dubious enough, but at least they earn their pay, even if through ignominious deeds. But in New York, inexpicably, brokers collect both from the landlords and the renters, presumably on the theory that they are matchmakers when really they are like fee-charging double-dipping ATMs that hit you up at the machine and on your end-of-month statement. Their fees are openly contigent on the amount of rent paid per month, so they have no interest in serving as an honest broker between negotiating parties. And because of the chronic shortage of apartments in the city, their work does itself. They just sit back and collect when anxious renters come to them. In longtime immigrant communitites like Astoria, the brokers are typically bilingual mediators between generally suspicious homeowners with no mastery of English and no savvy with real-estate law, people who long ago left the city but maintained their childhood homes, and renters, who are usually desperate to find a place in a tight market.

Don't expect a New York broker to call you with apartments. You end up calling them daily, begging to be shown something as if you were a temp calling every morning hoping for an assignment. Usually they will try to distort your sense of what are fair prices by showing you a few hell-holes that haven't been inhabited for years so that you'll take the first mediocre thing that comes along. Generally they prefer to deal on an all-cash basis, likely to mask some of their earnings from taxes. It is easy for them to do, because there is no product of their labor that can be readily traced. They don't produce anything; they simply leach away money by virtue of being favorably situated and totally shameless. Long practice has given these bloodsuckers a truly contemptible sense of entitlement, that their money should be easy and that you'd be crazy to resent them for it. This is the system, they seem to say, you have no other choice. Grow up and deal with it. Like all status quo systems it's very existence serves as the strongest argument in its favor, and it can always resort to using the "be realistic" case for justification. It exists because it's realistic, and one is being unrealistic if one expects something better.

Obviously, if markets were truly efficient and the consumer was truly sovereign, an honest, fair broker should make a killing, and they should force dishonest brokers out of the field. But efficient markets break down here for a number of reasons. It may be that cloistered ethnic groups ambivalent about renting tolerate poor service and have an artificially limited set of brokers with whom they feel comfortable working. And rent stabilization may play a part in discouraging honest types from entering the field and in keeping the number of openly and honestly leased apartments on the market minimal. And the graft-like nature of the business seems institutionalized, so these profit margins are preserved at the expense of greater ones theoretically available to those willing to do a more legitimate day's work. I'm sure everyone's maximizing their utility somehow (Gary Becker would be able to defend it as rational, I suppose) but having been on the cusp of taking a truly compromised apartment, I don't feel that way. I felt like utility has been minimized for me, as my time has been wasted and my willingness to spend more is meaningless. Just another petty gripe, I guess. I should grow up.

1 comment:

  1. Don't hate the playa, hate the game. And one correction/addendum: In the case of the NYC broker, you (the client) are actually the third priority, not the second. First priority is the best deal for the broker himself, second priority is for the building owner (for future business, see #1), and the third priority is you, poor sap.