Our piece last week about the peeing great dane stirred up some conversations about what a homeowner can do when she wants to sell her home but she decides to rent in the meantime. A journalist called me and posed the question, and I thought that it would be a good idea to put my suggestions here. For those who missed the first piece, Sell-Lord is the name I have given to those who are trying to sell their home and decide to attempt renting at the same time to cover costs or wait for a market improvement.
A messy tenant (or his messy dog) can kill a Sell-Lord’s prospects of selling. Here are a few ideas to consider:
Screen tenant as closely as possible. I am not suggesting that you violate fair housing laws. But do your due diligence. Check their credit report, call references, make sure they are employed. Check with prior landlords and find out what kind of tenants they have been.
Pets are not protected by fair housing. You do not have to accept a tenant with pets. I am not suggesting that pets are the only thing that can make a sale more difficult, but they are a consideration. Of course, my 3 year old does more damage than many dogs, but one cannot refuse to rent to someone because they have children.
Cut a deal with the tenant. If the house sells during the tenancy then cut the tenant some cash. Depending on the price of the home, $1,000 might be a great deal compared to a month of the home sitting empty. Tell them about the money when you are negotiating the lease. This will incentivize the tenant to keep the house clean and keep Fido under control. The tenant will also be more cooperative about accommodating showings.
Make a deal with a local dog-walker or pet day care. As a requirement of the lease, have the pets out of sight for showings.
Include very specific verbiage about showings in the lease agreement. Include things about how much notice will be given to the tenant, the hours of day that the home will be shown and such.
Consider the term of the lease. Most buyers will not want to purchase a home for investment purposes, so they will want the tenant out at close. The tenant has the right to stay in the home for the duration of the lease. If you are attempting to sell, you might want a short term lease with month-to-month renewals so that you can accommodate a buyer’s desired occupancy date.
A cooperative tenant can help get a home sold more quickly. Nice furniture and a homey look are much more appealing than a vacant home. If you move forward carefully, you can cover your monthly expenses and get the home sold.
Renting is definitely an option that many owners are considering these days. Under the right circumstances it can provide many advantages for the seller. Just be sure you have looked at all of the issues and proceed with caution.
[tags]sell-lord, renting and selling a home, birmingham mi real estate[/tags]
Oola Checking out the Hood is by Laertes
Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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{ 4 comments… read them below or add one }
Lenn Harley 04.16.07 at 8:59 pm
The photo of the dog made me laugh. I got a call today from a hopeless young Marine. His request was impossible.
He wanted to rent. (Don’t handle rentals).
He wanted Old Town Alexandria for under $2,400 a month.
He wanted 2 BR and 2 BF.
The final straw. He has a 100 lb. Great Dane.
Poor thing. Hopeless.
Lenn
Mariana Wagner 04.18.07 at 12:40 pm
As a Real Estate Agent, I do my best to make sure that I befriend the tenant immediately, because as much as the home is the landlord’s PROPERTY, it is as much the tenant’s HOME. Allowing plenty of notice to show – and sticking to that, has made our tenant occupied listings quite easy.
Oh, and another thing that has been great, is giving the tenant a gift card to the movies/restaurant … and offer that they could use it on a day where there are a lot of showings.
Perspective of a soon renter/buyer 04.29.07 at 8:21 pm
This concept of sell-lording really seems like a bad deal for the tenant.
While the set of rules that you formed seem like a sound advice for a sell-lord-owner, what would make a tenant put up with them? Especially, considering the current renter’s market?
Right now I’m trying to figure out whether we should buy or rent – we’re getting ready to move to Metro Detroit area from Illinois, and will probably have to move again in 2-3 years (which could become 4-6, depending on work). This write-up does nothing to make renting seem attractive.
A one-time $1000 gift (made to sweeten a sudden lease termination) doesn’t seem anywhere near enough. Remember, the tenant is already putting up with frequent showings, the need to move out at a moment’s notice, and the high rent (substantially more than the mortgage payment, were they to buy the same property). The unplanned move is going to cost more than $1000 all by itself.
Maureen Francis 04.29.07 at 8:44 pm
Soon renter/buyer,
If you know you are going to be in a lease for 2 to 3 years then the owner probably would not leave the home on the market unless you agree to that in advance. There are some landlords that do not want to sell. Many, as a matter of fact. There are others who are being forced into renting because they cannot sell. Either way, you’ll negotiate something with the owner. I own rental property and my lease agreement allows me to show the home in the last two months of the lease. Other than that, the tenant is not inconvenienced.
And a tenant would never be asked to move out early because a home is sold. The lease actually has to be honored in Michigan, so if a home is sold and there is a 3 year lease in place, the tenant stays for 3 years.