Should I Rent My House While I Try to Sell It?

October 22nd, 2018 by Heather Neill

Home sellers sometimes ask me whether renting their house while we're trying to sell it is a good idea. Particularly if they have moved on to a new job and home, and are now carrying two mortgages, they can be in very real financial trouble. Sometimes divorce is the culprit, as spouses and homes are torn apart, incomes separated, with two sets of living expenses where once there was one. For Sale or Rent I have seen sellers have their homes repossessed in circumstances such as these, when a renter may very well have prevented foreclosure.

Renting your house while you try to sell it can be a great option financially, assuming the renters pay the rent on time and don't tear the place up, leaving the homeowner to have to facilitate repairs in order to sell the home. Some renters are wonderful, caring for a home like it were their own. They mow the yard, paint the kitchen and pay the rent on time. Sadly, though, many do not take care of others' belongings in the way the owner would. Homeowners with more expensive homes (and therefore more costly mortgages) assume people with the financial ability to make large rental payments will be more reliable. However, I have been in million-dollar homes where the owners live like swine.

In terms of how renting impacts sale, this, too, can go either way. If the renters are clean and cooperative (they must, by law, be given 24 hours' notice for showings), then it shouldn't really impact it much. If they are messy and uncooperative, renters can be an enormous detriment. Difficult renters leave the place a mess, and are troublesome when scheduling showings. Relatives, friends of the seller, or others allowed to stay rent-free, can be very deleterious to the sale.

Finally, whatever lease agreement a seller has with a renter – duration, rules, rental amount, etc. – conveys with the sale of the property. For some buyers, a renter in place can be a plus. Maybe they're not quite ready to move due to job requirements or some such thing. Having a good renter in place, making the payments until they're ready for moving day, is a life-saver. For others, they expect to close in 45 days and move in the following weekend. Being unable to do so could push them to look for a different home. A month-to-month rental agreement could circumvent this problem, but then you might have trouble finding a renter, since most people want the assurance they can be in a home for at least 6-12 months.

There are no hard, fast answers to the "should I rent my home while I try to sell it" question. There are simply too many unknown variables. Ultimately, only the homeowner can make this decision, and it will be based on his or her own financial circumstances. Be aware, your Realtor's brokerage may charge you a percentage of the rent if you are under a listing contract with them. Some do, regardless of whether or not they locate a renter for you. If you decide to rent your home while you're selling it, make sure the rent and deposit are sufficient to cover the mortgage, taxes, insurance, Realtor fees (if any), and any possible repairs. There are many services, such as Landlord 411, which potential landlords can use to vet renters, by running credit and background checks. Insist upon such a check, as well as references, hopefully from known, trusted sources.

Categories: The Savvy Realtor

Tags: for sale by owner, real estate, realtor duties, sellers agent