The market for rental homes, while relatively stable in terms of supply and demand, is still subject to many of the same forces affecting homes for sale. Time of year, availability of qualified tenants, and external factors such as military transfers can all impact how “hot” the rental market is at any given time. As mentioned in a previous blog article, well qualified tenants understand they are a valuable asset for rental property owners. As a result it’s not unusual to receive offers to lease from them that differ from the advertised terms.
There are two schools of thought regarding negotiation with rental applicants. The first is that tenants should be subject to screening before negotiation of their offer to ensure they are fully qualified and desirable to the landlord. This assures the landlord he is negotiating with a bona fide applicant. However the potential tenant risks the time and expense of a screening process and the resultant impact on their credit file without absolute assurance their offer will be acceptable to the landlord.
The second involves negotiating the contingent items before screening. This method is most frequently used in cases where there is a property manager, since the manager must work within the relatively narrow confines of a contract with the landlord. Consequently he or she would be reluctant to approve significant changes in price or authorize a list of non-essential repairs without certainty the landlord would agree. This method offers the advantage of knowing the deal will be acceptable to the landlord before the applicant’s money and the manager’s time are invested in screening.
Applicants who offer a different price, length of term, or request alterations or repairs may encounter either of these two practices. Both are valid and a matter of preference for the landlord and/or management company. An important consideration for applicants who wish to negotiate terms, particularly in an active market, is that they may disadvantage themselves by doing so. Other applicants who offer the asking price and accept the property as advertised, provided they are similarly qualified, will be the path of least resistance for the landlord and/or manager. Negotiating terms is a double edged sword. You may get yourself a better deal if the landlord is receptive and activity is slow – or you may spend several days trying to work out the details only to be deflated when another applicant makes a non-contingent offer to lease.
In a future article we’ll discuss agency as it relates to licensed agents showing property and whether tenants are customers or clients for purposes of the agent’s involvement in negotiating leases. Rental property management and leasing is a specialty that demands a great deal of skill and knowledge. If you own investment property and need a pro on your team to ensure good return and peace of mind, call one of the property management professionals at The Real Estate Group. (757) 512-7225