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Apartment Hunt Without the Broker's Fee? There's a New App For That

By Irene Plagianos | November 26, 2014 7:34am | Updated on November 28, 2014 3:26pm
 Padspin is aiming to add a broker-free twist to your dreaded apartment search.
A New Spin on the Apartment Search
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MANHATTAN — It took about three months for Jeffrey Segal to realize he’d made a pretty expensive mistake.

Last year, after embarking on a dreaded apartment search, the 34-year-old ended up moving in with a friend of a friend in the East Village — and shelling out $3,500 for his half of a broker’s fee.

“I realized pretty quickly that we just weren’t compatible as roommates,” Segal said. “After three months, I decided to leave — but the only thing that left me angry was the broker’s fee. It was such a waste of money.”

After griping to friends, the tech industry vet decided to turn his ire into something more productive: a new app that cuts the broker out of an apartment search, but not the search fee entirely.

Last month, Segal launched Padspin, a platform that connects apartment seekers to tenants leaving their rentals. For now, it's accessible only through the website but plans are in the works for the app to launch in 2015. The Padspin twist on the elusive no-fee apartment hunt is that renters leaving their apartments get paid to post photos and details of their soon-to-be vacant digs, and would-be tenants pay nearly the same amount to Padspin if they find an apartment through the site.

It’s an approach, Segal said, that incentivizes and streamlines what a growing number of sites and apps are trying to offer: a means of skirting what’s usually thousands of dollars paid to a broker.

Padspin's fee and payout are based on how much the apartment costs.

For a $3,500-a-month apartment — about the average city rent — you’d get $305 for posting (if the apartment is rented by a fellow community member on PadSpin), or pay $400 for renting it.

That’s in comparison to a possible $6,300 broker’s fee, based on the average 15 percent of a year’s rent that brokers usually charge. For apartments below $2,250, there's a flat rate: $250 to rent, $200 to post.

The goal, Segal said, is cutting out the middleman by making it easier for apartment-seekers and apartment-leavers to find each other. He even became a certified broker himself, in order to learn the in-and-outs of what he says is the "outrageously overpriced" competition. For now, Padspin has been offering to take high-resolution images for those looking to post apartments.

"There are sites that list no-fee apartments, and we all know what it's like to use Craigslist, or go through Facebook in the apartment search," Segal said. “But many of those places are also overrun by brokers posting listings, whether they are no-fee or not.”

Once you submit an apartment, with information about the building, neighborhood and other details, the Padspin team will reach out to your landlord or management company.

All apartment postings are anonymous, and apartment hunters don’t directly contact the person leaving the apartment.

It’s up to the landlord to show the apartment — but Padspin won’t bombard them with applicants. Only two people at a time who’ve expressed interest can check out the place. Then they have 48 hours to decide whether they want it.

Padspin can also do a credit check that will cost $5 dollars, Segal said, something that often costs about $100 when going through a broker.

But brokers DNAinfo spoke with said they aren’t too concerned about Padspin, or other platforms like Urban Edge and NY Bits that list no-fee apartments.

With a less-than 2 percent vacancy rate in the city, most renters know how tough it is to quickly find a good apartment. Brokers say they are still the most efficient means to lock down a rental.

“We have a tremendous inventory of apartments, and have longtime relationships with landlords and management companies,” said Rory Bolger, a longtime Citi Habitats broker. “We know the market and are there to serve the renter and the landlord.”

For now, Padspin has about 400 people signed up for the site, and about 85 apartments to choose from. It's a small number, but one they hope to grow.

The service is free for landlords and management companies, and, so far, he’s only had one landlord that’s had an issue working with Padspin, because they had an exclusive relationship with a broker.

“Our goal, ultimately, is to empower renters,” said Segal. “If we keep growing, all the inside information that brokers claim they have will really be at everyone’s fingertips.”