When submitting an application for an apartment that you want to rent in NYC, the Broker or Landlord may require that you submit a Good Faith Deposit along with the application for the apartment. Many people reach out to me and ask if this is a scam, or how it works. Please see below for the most FAQ:
Q: My broker told me that I had to submit a $1,000 good faith deposit when submitting an application for an apartment that I love. Is this a scam?!
A: Good Faith Deposits aren’t always a scam. Some landlords require brokers to collect a deposit when interested parties are submitting an application so that they know the person applying is serious about the apartment. However, be very careful because sometimes it can be a scam. If a broker says that they require a good faith deposit, make sure the broker firm they work for is real. Also ask the agent to see his “Pocket License.” A pocket license will verify that they are a licensed real estate agent. If they get fussy about showing you their pocket license, or you can’t find the real estate company they work for on the web, then DO NOT GIVE THEM ANY MONEY-It’s probably a scam!
Q: I submitted a good faith deposit but I’m afraid I might not qualify for the apartment. If I don’t qualify, do I get my money back?
A: Yes, if you submit a good faith deposit with an application for an apartment and don’t qualify, you will get it back. However, you will not get the money back from the application fee (which is usually around $100).
Q: If I submit a good faith deposit and get approved for the apartment, does the deposit go towards first months rent or security, or do I not get that money back?
A: If you are approved for an apartment the good faith deposit will go towards first months rent or security (depending on how the landlord wants to allocate it). A good faith deposit isn’t a fee, so if you are approved, the money gets applied to something.
Q: Can the apartment be rented out to anyone else if I apply with a good faith deposit?
A: No, this is actually the biggest benefit of submitting a good faith deposit. Once you apply and give them the deposit, the apartment goes off the market.
Q: If I submit an application with a good faith deposit and I find another apartment that I like better and am approved, can I get the good faith deposit back?
A: Probably not. This is essentially why they asked for a good faith deposit, to eliminate this scenario. Landlords who require a deposit only want serious applicants to apply for the apartment. If a situation occurs where you can’t move to NYC anymore and not that you found a better apartment, then it might be possible for you to get your deposit back.
Submitting a good faith deposit with an application to an apartment in NYC has it’s pro’s and con’s. If you love the apartment and want only this apartment, then you should submit the good faith deposit. If you are iffy about the apartment and are applying to a bunch of different apartments, that I would recommend that you hold off on applying to this particular one. Losing a good faith deposit can put a serious hole in your pocket!
For any additional questions, or if you need assistance finding an apartment, feel free to reach out to Sarah@psofnyc.com. We will never steal your money!
