Sunday, March 7, 2010
Reality of the Rental Roadblock
The real estate section of the Sunday times today discusses a trend of potential sellers renting out homes after not receiving their original asking price for the property. The article states that times are changing and these sellers/new landlords are finally receiving the asking prices, while having a tenant in the home - further preventing the purchaser from completing a sale. The article implies that these sellers/new landlords are being blindsided by tenants who are uncooperative with showing the home for purchasers and getting out of the home upon a sale. Yet, the article is misinforming the reader of what is actually happening. We should not feel bad for these sellers / landlords because of their current plight. Instead, we should recognize that when you agree to a contract (a lease), you are bound by its terms. If the sellers / landlords want to continue listing their property while renting it out - they should have strong terms in the leases that permits such action. If they do not have these terms in the agreement - they should have proper expectations that they are now landlords abiding by the terms of the lease signed with the tenants. This seems to be a recurring theme I see over and over - most of the time the seller's dont even understand the contract/lease they had their tenants sign. It's also problematic in real estate that everyone wants to sell for the absolute most that they can possibly get all of the time as if its some sort of competition. Yes, its good to make a lot of money in a sale, but seeking the absolute best often creates subsequent risks, preventing the optimal profit the seller was originally looking for. Stop second guessing, it's simply not predictable to know exactly what the sales price will be. Instead, you should make a decision and stick with it without looking back. Have realistic expectations. Consult with a professional to understand your responsibilities and liabilities. If you decided to rent because you needed to cover the short-term carrying costs of the home as a condition of not selling in hopes of a better market a year or two later, now you must wait that year or two. Its not 'woe is me' because 6 months later the markets good and now you are stuck. The key is to get good advise, not sign contracts that you don't understand, and realize that you can't control the market. Good luck.