For this week's buyer education post, we consulted Dan Perez
, a Buyer Showing Agent with The Keri Shull Team. Dan's career in real estate goes all the way back to his high school days, when he helped his family manage their real estate investment portfolio! From there, Dan pursued a career in financial management for over ten years, learning about mortgages, lending, and investment before joining our team.
Read on to hear Dan's advice on how renters can respectfully and strategically break their leases when they're buying a home and need a change fast.
1. Find A Replacement
Dan Perez: "The best option is to talk to your landlord for permission to have someone take over your lease. That way you would just pay rent until the new tenant signs the lease and moves in. There are a lot of great free websites for renters like Zillow, Trulia, Craigslist, etc. where you can post an ad for the property to find new tenants. The landlord would have to approve the new tenants, including credit check and income verification."
2. Work With The Seller
Dan Perez: "If you're buying a home and can't find someone to take over your lease or are on a tight timeframe, ask the seller for a credit at closing. This can potentially cover all or part of the cost of breaking your lease, and leave you with more money for a downpayment or in your pocket. Make sure to read your lease carefully because there will be a clause or clauses outlining what happens when you decide to break your lease early. In a buyer's market this can equate to a good deal of savings, but in a seller's market the seller may or may not go for it if you're competing with other offers."
3. Buy Your Way Out
"If these options don't work, another option is to talk to your landlord and pay the penalty to break your lease outright. Read your lease since many can be very different, but this usually equates to a 2 month penalty. This excludes the security deposit which should be returned as long as there is no property damage.
Your best bet is to hire a Realtor, especially in a busy market. They know the market, if a property is priced correctly (so you don't overpay) and will have access to listings that are updated in real time via the MLS. Looking at rental sites such as Zillow, Trulia, Craigslist, etc. are good places to start but I've worked with dozens of clients who respond to ads but ultimately miss out on a property they're interested in. A lot of times the landlords will rent their properties out but not take their ads down. This can result in hours of lost time responding to property ads that may or may not be available.
Also, don't forget you can negotiate! If a property is on the market for more than 30 days, the landlord usually wants to get their property rented as soon as possible to cover their carrying costs like a mortgage, utilities, condo fees, etc. This can leave room for negotiation to save money on the monthly rent price which could be hundreds or thousands of dollars over the course of a lease."
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