Have you ever lost a great seller lead because they decided to rent their home instead?
Ugh! That can be so frustrating.
When a house stays on the market for an extensive period of time, sellers may become frustrated and decide they need to do something different with their home to make sure it's not just sitting empty.
Because the sellers may have already purchased another home while still owing on the other mortgage, they could be feeling the monetary stress their unsold home is bringing. As a result, some of them decide to take their home off the market and rent it out.
The thinking here is that there's always a ready market for home rentals, and it would be better to have, at the very least, the mortgage payment covered by the rent, along with any associated utilities. For the discouraged homeowner, this short-term solution may seem like a great idea because it gives them a measure of financial breathing room.
However, this can end up costing them more than they expected, which can lead to very real long-term regrets.
Here are four reasons why taking a home off the market just to rent it out is a crazy idea:
OK, in a literal sense, you can technically sell your house at any time. All this means is that once it's off the MLS, the listing disappears and your house is missed by thousands of homebuyers who are searching every single day. You've already paid your agent a pretty penny, or you'll have to pay a contract termination fee, so if you do this, you're just throwing money away.
Consider this: The listing agreement is a legal contract which may, or may not, allow for termination before the end of the term. During the start of the listing agreement with your agent, he or she spends significant amounts of time creating a marketing plan for your home and has probably arranged to have your home staged and professionally photographed.
You may need to reimburse the agent for the costs they put forward as part of the service with the expectation that it was included in their commission.
Ask anyone who's been a landlord, and you'll hear stories of holes in drywall, water damage from overflowing bathtubs, strange stains, missing appliances, etc. The normal “wear and tear” skyrockets because the renters don’t care about your house.
After all, who cares as much about something that isn’t theirs? Renters simply don’t have a vested interest in maintenance. Then there's damage caused by parties and behavior caused by plain negligence (dragging heavy furniture across wooden floors, dropping items on delicate tile work), and even worse: alcohol or drug use.
While the homeowner may be willing to take the risk because they think they’ll just have to repaint the house, it’s usually worse than that.
A true nightmare tenant is the one who doesn't pay their rent, refuses to leave, or decides to file a lawsuit because they tripped walking through a doorway or slipped on a wet driveway. These are all things that have happened, and in some cases, have cost the homeowner tens of thousands of dollars to settle.
The worst is when a tenant who's been served an eviction notice retaliates by methodically doing as much damage as possible to the interior of the house before leaving. It can turn into your worst nightmare.
When someone is house hunting, it really doesn't matter what season it is. Sure, looking at the numbers, it would seem that spring and summer are the 'hot times' to list a home because more people have time to go to open houses, the Holidays are over, and tax time has passed.
While this may be a great time for many, don't forget: buying a house is a long process. A lot of people may have spent years saving up their down payment. And once they’re approved, they’re ready and anxious to buy.
If you've already taken your house off the MLS, they won't know it's been for sale, or that you're still interested in selling, so you won't know how many chances you may have missed.
Let's say you decided to leave it listed, but rent it out in the meantime. This can be done, but you're asking for another set of headaches. Hopefully, you don't have an aforementioned “nightmare renter,” but it can still be an issue.
Though you own the house, the renter has the legal right to live there undisturbed as long as they're current with the rent, and you have to give them at least a 24-hour notice before you show it.
When you do show it, you cannot touch, move, or tidy up any of their belongings, so you more than likely won't be showing the potential buyer anything close to the beautifully staged interior they've seen in the listing images.
A serious buyer may overlook this, but if someone is getting prepared to buy a higher-end house, they may not appreciate being shown one that has dirty laundry on the bed or dishes in the sink.
You may be thinking that you'll simply rent your home out for a year or two to recoup your costs, then list it again when you're ready. It sounds simple, but just like anything else, this move comes with its own set of issues.
Potential buyers can view the history of a home's listings, tax records, and how many times it's been bought or sold. If a buyer sees that a home was listed, and then removed without an offer placed or being sold, and then subsequently re-listed, it can raise red flags.
They may wonder if the seller is difficult to work with or if the house has suffered significant damage (fire, structure damage, water damage) and had to be rebuilt in places.
While you know the truth — it was a simple act of wanting to rent the house out for a bit — the potential buyers have no idea if you're being truthful or not, and that's not a good way to start negotiations. You’ll have to do a lot of explaining.
Damage control is exhausting. Trying to recover your losses, and your reputation, after pulling and then re-listing a home is, frankly, exhausting.
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