renting a house for sale... good or bad idea?

Asked by David, Roseville, MI Thu Mar 12, 2009

My friend of a friend is offering to rent us his house for $800 a month. The catch is the house will still be for sale for 180K and that we will need to be able to show the house when someone want to see it. Is there any advice for me you guys might have? Its a beautiful house but i dont like the idea of people invading my privacy. Also if the house sells im gettin kicked out! The only reason im renting is i dont have money saved for a down payment. Do they still offer the 0 down loans?

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Ed & Cindy K…, Agent, Shelby Township, MI
Thu Mar 12, 2009
BEST ANSWER
Hi David right now since the market is a bit slower you may not have a ton of showings. It sounds like great rent for that price range. For showings an agent is always present with the buyers and they usually do not take that long. The biggest problem will be the time frames we as agents use. I typically set on the 1/2 hr but many set on the hour. It's best if you are not present. If the home is priced really good the home will sell quicker but you'll still have some time for mortgage approval.

As for buying you may not need as much as you think. There are some programs zero down but they are on the north end of Macomb. If you are a 1st time buyer you may qualify for the tax credit which could help with costs. There is also a program available with funding from the govt that helps with repairs and down payment.

Give us a call and we can get you the details.
0 votes
Derek Bauer, Agent, South Lyon, MI
Fri Mar 13, 2009
David,

I am putting an absolutely gorgeous Roseville Bungalow on the market on Sunday for $1,000 per month. 2+ car detached garage, basement, updated Kitchen, hardwood floors ... very neat place! The house would NOT be on the market if you opted to lease it, and the owners are dog people, so that would be allowed.

If this sounds appealing to you, please call or email me at 734.678.4745, or Derek@DoorToDreams.com. I can visit http://www.DoorToDreams.com.

Hope to hear from you ... thanks, David!

Derek Bauer, Associate Broker / Realtor
Real Estate One
Web Reference:  http://www.DoorToDreams.com
0 votes
Jared Hammond, Agent, Harbor Springs, MI
Fri Mar 13, 2009
As long as you are courteous, and everyone else is courteous there shouldn't be too much of a problem. Most buyers and agents have a mutual respect for the owner and/or tenant.

You can request a 24 hour notice prior to showings, or something else reasonable that can be agreed upon. You may want to ask a lawyer about tenant's rights if you feel this might be an issue. Remember that you are the guest (renter) in the owners home, and this does restrict you on what you can and can't do with or at the property. Owner's have rights too...including the right to sell their property. You will have to give up some of your privacy as you know, but people can't just show up unannounced and demand to be let in unless it's an emergency of course. As an offset to this inconvenience- you are getting a good rental rate, right? And a roof over your head...and a chance to hopefully catch up on some bills?

Being at the home when a showing occurs is generally frowned upon. Just imagine how awkward, difficult, and what a deal breaker it would be trying to sell a home when buyers are surprised by a dog licking them to death, finding people at the table trying to enjoy a nice meal, dirty laundry, and a recently used stinky bathroom (hey, when you gotta go you gotta go...but still embarrassing.) As a courtesy to everyone involved you should vacate the home and make it presentable for the showing if requested. It is a disruption to your life, but you are the owner's guest. If you decide you don't like the disruptions, and choose to be a disruption to the potential home buyers, the owner, or agents...the owner might kick you to the curb! Also, if you must leave the house for a showing and can't take Fido with you please put him/her in the yard on a chain, or in a cage, fenced in area, or room not significant enough for buyers to want to see...AND notify the owner and/or Realtor where the dog will be. If the dog attacks somebody...well...nobody wants that... (I'm sure your dog is a good boy or girl though)

On the other hand...if you are a fairly organized/neat/clean person there really shouldn't be too much inconvenience. If you choose to leave during a showing you won't feel rushed to get out of the house stuffing your personal items in drawers and closets, or sweeping dirt under the rugs if you keep the place nice. Sure, you might have to leave the house for an hour or two....but maybe Fido needs a walk anyways, or you take it as an opportunity to treat yourself to dinner and a movie. I've also heard a few stories of how tenants have actually helped sell the property by being at the home during a showing. If a buyer walks into a welcoming atmosphere, and a tenant who knows about the property is there to welcome and greet them it can actually go OK. Talk to the agent showing the home on that one- just to get their ok as a common courtesy. There are some legal issues involved on that one (having to deal with a non-licensed person providing information.)

Anyways, good luck. Hope this helps (I've been a renter in your shoes, and am a property manager and real estate agent representing buyers, sellers, and work to accommodate renters)
0 votes
David, Home Buyer, Roseville, MI
Thu Mar 12, 2009
Hey folks thanks again for all the helpfull replies. As far as my dog goes, caging him while people invade my privacy to look at someone else's house? I don't think so! Is there someway i can put into the rental contract that we have to be home for showings, or showings can only occur on certain days or certain times of days? The house is really beautiful and i would love to live there. I can't argue that its a GREAT deal traulia.com estimates the monthly payment for this house 1k/month w/20% down. But this 'house showing' sounds like too much hassle than what its worth. I know the economy is slow and people are not buying but it could start picking up.

I have 7+K credit card debit and I am wondering if I should use my income to pay that off or put it in a savings account? When and if I get approved, what more important to lenders, debt or available cash? For someone making 54K a year with a 500+/month car payment what value should I try to get pre-approved for? Its kinda confusing getting pre-approved, the bank wants to know how much you want but I need to know how much I can afford! I am paying 800$ a month in rent know, +- 100/month right know I think would be affordable. Thanks guys
0 votes
Ed & Cindy K…, Agent, Shelby Township, MI
Thu Mar 12, 2009
David many people cage their dogs, some have a friend or family member check on them, some sellers work around the it and allow showing while they are present and some depending on the pet allow showings while they are away. This is not preferred by many agents since it is hard to determine how the dog will react.

If the agent markets the home well it will bring in more qualified buyers so you will have less showings.

As for getting a mortgage today with all the various programs I would check with a mortgage broker. You can try Bill Sassin at Great Lakes Mortgage Funding at 586-532-060, I have worked with him for 20 years. Your numbers do not look bad at all but credit, years on the job, other debts ect will make a difference. Try Bill
0 votes
Bob Haywood, Agent, Owasso, OK
Thu Mar 12, 2009
David,

In regards to the dog, get an outdoor dog run or kennel of some sort. Of course, that costs money, but when I'm doing a showing and there is a dog, it makes the showing a bit difficult. You can keep the dog in the backyard of course, which is the easiest solution. I think I have to agree with Stacey. Avoiding this situation might be in your best interest because of the arrangements that would need to be made whenver there would be a showing...not to mention having to always keep the house clean!

On the RD (Rural Development) loans, you might get with a mortgage officer and go ahead and see if you qualify. I am hearing they are going to rezone the qualifying areas in about 120 days.
0 votes
David, Home Buyer, Roseville, MI
Thu Mar 12, 2009
Thanks folks for all the nice replies i appreciate it.
You guys are saying we should not be home when they are doing showings? We have a dog! what do you suggest we do with the dog when there is a showing? I think i would rather buy a house I make 54K a year but 6K credit card debit and a 500$ month car payment / and no cash saved. I dont think anyone is going to pre-approve me with that kinda debt
0 votes
Stacey Green, , Brighton, MI
Thu Mar 12, 2009
David,
I agree with you. Even for a homeowner, who will benefit financially, it is a difficult and invasive process. I would try to avoid this situation.

There is still a zero down loan available with Rural Development, but the home has to be in an area the government considers rural. For instance, all of Livingston county is approved for the Rural Devolopment loan. If you email me, I can check on any areas you may be interested in.
0 votes
Pat Sankey, Agent, San Antonio, TX
Thu Mar 12, 2009
David - You just named the disadvantages! It does feel invasive to have your belongings in view while the owner is showing the home, no doubt. While agents typically walk with clients as they view the home, sometimes the clients will split and look at two rooms at once. If you decide to rent, keep in mind that the home may be shown and I always recommend to my clients that they not leave cash, jewelry, small electronics (ipod) or prescriptions with "street value" (think pain meds, ADD meds, little blue pills, etc.) in the medicine chest or out on the vanity. Best to put them in a dresser drawer as folks WILL open cabinets while looking but most likely won't invade any furniture. Regarding your question about 0 down programs - the only one left that I'm aware of is VA - so if you have served in the military you may be eligible. Hope this helps,
Pat
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