“Should I rent my home if it won't sell”? Well, that question has many layers. But that off the cuff declaration by an annoyed seller might be a bit dramatic and premature. For owners unsuccessful at selling, “I’ll rent it” seems to be a knee jerk response. Best to take a step back, breathe, and examine all of the mitigating circumstances that contributed to this situation. For owners, selling a home usually has a significant emotional component; it’s unavoidable. To home buyers, it is just another home. Motivations, objectives, and personal situations are different and before anything rash is done, slow down. Start with figuring out why the home didn't sell.
Why Didn’t My Home Sell?
Assuming the home is/was placed on the market, why didn’t it sell? The reasons for failure can be any one or combo of things, but as the ultimate decision maker, the seller controls many of them.
Factors keeping a home from selling can include:
- Inept/poor performing real estate agent
- Ineffective/poorly regarded brokerage
- Inaccurate price
- Poorly presented and marketed
- External obsolescence
- Functional obsolescence
- Unreasonable seller expectations
- Market conditions
- Inability to reach compromise with buyer
The list is in no way comprehensive, every situation is unique. However, sellers control the single most important aspect; selection of the listing agent and company. The importance of properly vetting EVERY agent AND their company before signing takes but a few minutes and sellers rarely do it, often with unpleasant results.
Rent My Home
Well, it might not be up to you; that decision will likely be tempered by a litany of factors. Again, control emotions. Having an experienced agent to lean on is invaluable. But here are just a few things to consider before declaring that the home will be a rental.
Deciding to rent includes things like:
- Is it feasible? Are the sale proceeds needed for the next home
- Is it legal and permitted in the community
- Is it permitted by the mortgage and insurance company
- Is there an understanding of what being a landlord entails?
- Is it practical, will it rent
- Are the legal/tax/insurance requirements understood
- Is cash on hand for repairs, management, vacancy
- Is cash on hand for updating between tenants and when it is time to sell
Many communities in the Atlanta area cap or prohibit rentals, investors tend to be less interested in upkeep than owners. Many renters are responsible for landscaping and routine maintenance, rarely a high priority for them. Atlanta is also one of the top markets for institutional investors and corporate landlords. Rentals are many but they tend to be outside largely owner occupied areas.
When Will My Home Sell?
Assuming the above factors line up, there are few final things to consider. These are basic economic questions; if the home failed to sell once, what is going to change down the road?
Renting a home that does not sell assumes:
- A required sale at some point to recognize equity
- Appreciating values over the rental period
- Stronger buyer demand than before
- Stronger seller position than before
- Money for updates will be recaptured at sale
- Factors that prohibited sale last time are no longer influences
The 2022 market was an anomaly; the Fed will see to that. The expectation that anything similar will happen should be dismissed, the buyer pool is back to balanced levels. Accurately priced and presented homes around Atlanta sell, if the agent misrepresents the home expect it to sit. Unless whatever issue caused the home to sit unsold has been corrected, the home is likely to languish again. In every case, experienced guidance and an accurate price typically solves the problem.Posted by Hank Miller on