“If I Can’t Get My Price . . . I’ll Rent It!”
Lots of Buyers’ agents — myself included — have heard that line lately from Listing agents (representing Sellers).
How credible is that threat?
My take is that it depends on the following variables:
–Condition. The nicer the home, the less believable.
A Seller who’s just spent big money updating and re-furbishing their home for sale is less likely to entertain renting.
Not only will all those nice improvements go for naught, but the Seller is likely to have to re-do them after a year (or three) of rental wear-and-tear.
–Seller’s life stage (and location).
Renting takes hands-on management. If the owner is retired and living elsewhere part (or all) of the year, they’ll need to hire professional management locally, which can be expensive.
For many older Sellers, the related hassle and details — insurance, potential liability, security deposits, screening renters (or hiring someone to) — makes renting even less palatable.
–Type of property. There are lots of prospective renters who can can afford $1,000 to $2,000 a month (an average 2 Bedroom Minneapolis apartment rents for about $900 now).
So, if the home in question has a fair market value around $150k – $200k in a decent neighborhood, renting may very well be an option.
However, finding someone who can afford $4,000 – $5,000 (or more) per month is more of a stretch (at least in the Twin Cities, if not Manhattan).
Plus, upper bracket rental homes often compete with executive rentals that typically come fully furnished.
–Seller’s financial circumstances. If the Seller needs to be cashed out, receiving small, monthly payments isn’t an option.
–Is renting even allowed?
If the property is a townhouse or condo, the owner’s rights and duties are subject to an Owner’s Association — some of whose Bylaws limit or even forbade rentals or sublets.
How much of the foregoing is knowable?
While the listing agent can’t divulge confidential information (especially price, terms, or motivation), quite a bit is a matter of public record — for example, how long the owner has been in the home.
Ultimately, the best gauge of how serious a would-be Seller’s “rental threat” is is (double “is,” I know) how aggressively they’ve priced their home, and how they respond to a legitimate offer to purchase.