With higher levels of inventory on the market, it’s inevitable that some homeowners simply won’t be able to find buyers for their homes. A viable and increasingly popular alternative is renting your home, or offering a lease-to-purchase option. This will allow you to cover your current mortgage payment and purchase your next home if you must move (due to job relocation, etc.).
Being a landlord isn’t for everyone. Here’s an excellent article from CNN Money which explains when you would want to rent rather than sell your home, if you’re a good candidate for being a landlord, and how to build a team to handle the transaction effectively.
Personally, I’ve been getting a few calls a week from people looking to rent homes in West Hartford, rather than buy. They’re hesitant because of the current mortgage market and wonder if housing prices will continue to drop. Local sellers are also becoming more aware of the situation and are increasingly offering a lease option when listing their property for sale in the MLS.
As a seller, the more options you offer for someone to cover your mortgage, the quicker you can move on to your next home. Just something to consider as we deal with a changing housing market.
Recently I’ve had a few people contact me and ask if I can help them find a rental property. Some agents will help clients find rentals, while others won’t. I’m happy to help people find rentals, as there are often good reasons why the person shouldn’t be buying a home at the current time. Maybe you’re new to an area and want to determine what areas you enjoy. Renting for a year might be a good idea. Maybe you’re trying to save for a down payment on your first home. Maybe you just don’t want to be responsible for any maintenance. Whatever the reason, using an agent to find your rental may be the right choice.
If you’re planning on eventually buying a home, using an Realtor for a rental is a good way to “test drive” an agent. The agent should work diligently on your behalf, as they would with any buyer or seller. They’ll understand your needs and then search to identify a rental that works for you. If you find that you were happy with the Realtor’s service when finding the rental, you’ll probably want to use that Realtor again when you buy. You’ve built a relationship with the agent, they understand your needs, and will most likely be effective in a purchase transaction.
You may wonder how the agent gets compensated when finding a rental. If your Realtor finds a rental for you using the Multiple Listing Service, you typically pay nothing because our fee is covered by the landlord listing the rental. If they find you a rental using Craigslist or some other service, the landlord may be willing to pay the Realtor’s fee. It’s important that the agent talk with the landlord prior to showing so that you understand how their fee will be paid. If the landlord is unwilling to pay the agent’s fee, you may need to compensate the agent. Commission on rentals varies, but a good rule of thumb is half a month’s rent. So if you’re looking for a $1000/month rental, the agent would receive $500. Make sure you clarify how the agent will be compensated before you start working with them. If you don’t want to pay out of pocket, specify that they use the MLS to find you a rental.