Struggling to Sell? Consider These Alternatives
There is no question that today's market is a buyer's field day. For sellers, this means you have your work cut out for you. Say that your home has been on the market for months and you've already worked with two or three agents. You've already lowered your selling price substantially, but are still struggling to sell your home. What should you do?
There are other options sellers can choose from before hitting the panic button. Some may not want to become landlords, but renting your home at an affordable price may attract a few bites and reel in some income. According to Bankrate, houses worth up to $125,000 should receive 1% monthly ($1,250). Homes valued between $150,000-175,000 would rent for 0.9%, while you would probably only get 0.75% ($3,000) for a home valued around $400,000. (A sliding scale is imposed in effort to avoid scaring away potential renters who might not want to pay 1% of a $400,000 or higher valued home.)
Of course, there are other factors to consider. The rent you can charge depends heavily on things like local demand, the economy, the health of the housing market, and the location and condition of your house. Do some research. Check listings in your area for homes similar to yours and see what the asking prices are. Try a few follow-up calls weeks down the line and see if those houses have been rented yet. The more affordable you make it for renters, the quicker you will fill the space, but don't sell yourself short either.
Though renting is a solid option, you may even find success with renters who may want to buy your house down the line. To do this, you and the potential tenants would enter a contract for a lease option or lease purchase. In both cases, you'll ask for a sum that is a little higher than the going rental rate, however, the renter will get the first chance at buying the house at a predetermined price (lease option) or can commit to buying it later (lease purchase). If the tenant decides to buy, you'll credit the extra money towards the purchase price (money which will be saved in an escrow account.) If the potential buyers back out or fail to qualify for a loan, the money in escrow is yours to keep.
Offering a lease option or lease purchase could be a win-win situation for both renter and owner according to June Fletcher, House Talk writer for The Wall Street Journal. With tenants who are renting to buy, they will most likely take great care of your property since they are, in fact, considering buying it. You will hopefully attract the right kind of people-renters who are responsible and committed to buy, but for various reasons cannot do so at the time of the signing.
If months are passing and your property still remains on the market, renting or renting to sell are both excellent ways for you to bring in some money. Hopefully, these tactics lure in tenants who will eventually fall in love with your home and buy it.