8 Tips to Negotiate a Residential Lease Agreement
Finding a home to rent does not have to be difficult. You can follow the steps outlined below to find a home to rent and negotiate a lease agreement.
Tip Number 1: Look for a rental from an individual property owner. It is easier to rent from an individual owner, rather than a property management company. A property management company will get a copy of your credit report, perform a criminal background check, and verify your employment. In most cases, the individual property owner does not have the knowledge to get a copy of your credit report and will not take the time to verify your employment. However, should you find a home for lease through a property management company, do not despair. Most property management companies have relaxed some of their guidelines due to the decline in the housing market, high unemployment rates, and foreclosures.
Tip Number 2: Negotiating the lease. Most landlords would like to have a 12 month lease. In doing so, it secures their income for the next 12 months and gives them peace of mind, knowing that they will not have to get the property ready for the next tenant for one year. If you prefer a six month lease, be prepared to offer a higher security deposit or an increased monthly rental amount. Most leases have a provision that will entitle you to stay in the home as a month to month tenant. When the lease expires, you are considered to be a month-to-month tenant, but the provisions of the lease remain intact. Should you desire to enter into a new six or twelve month lease, you can request that the landlord prepare one.
Tip Number 3: Negotiating the security deposit. If the security deposit is $1,500, tell the owner or property manager to ask the owner if they will consider a $1,000 security deposit in exchange for a longer term lease, a higher monthly rental amount, or an automatic deposit of the monthly rent directly into the owner’s account. If your property manager is a licensed Realtor, he or she must present any offer you make to the owner.
Tip Number 4: Negotiating monthly rent. If the monthly rent for the property you are interested in is $1,200 a month, offer the owner or property manager $1,000 a month. Once again, if you are working with a Realtor, the Realtor must present the owner with every offer they receive. Remember, everything is negotiable. If you are negotiating any term, be sure to offer something in exchange for your request. For example, if the yard care is included in the monthly rent, offer to take care of the yard in exchange for a lower monthly payment.
Tip Number 5: Negotiating terms with a low FICO score. When you find a suitable property, offer the owner or property manager three months advance rent. Due to the uncertainty of the economy, offering six months’ up front rent is not ideal, due to the fact the owner could be facing foreclosure or suffering an undisclosed financial hardship.
Tip Number 6: Documenting property condition. Take photographs of the property, making sure the date is stamped on your photos. Download the photos to a disc and send it to the property manager or owner using a delivery method that requires a signature from the owner or property manager. If you are not provided with an inventory and condition form, find one of the internet, complete it, and send it with your disc.
Tip Number 7: Getting your security deposit back. Most leases provide that the tenant give a 30 day written notice to vacate the property. If your lease expires on June 30, be sure to give your written notice on May 30. This too should be sent using a signature confirmation method. Should the owner or property manager fail to return your security deposit, you can threaten a complaint with the State Real Estate Commission (for licensed Realtors), or if you leased through an individual owner, threaten to take them to small claims court. To understand your state landlord/tenant rights, do some research and know the laws, including allowable deductions. Normal wear and tear is not considered an allowable deduction.
Tip Number 8: What to do if the home you are leasing has been foreclosed. If you get a notice to vacate because the home you are leasing has been sold at a foreclosure auction, contact your landlord or property manager and find out what type of loan is on the property.
If the loan is a federally-related mortgage loan (guaranteed by the government), you have rights under a law called S.896 “Helping Families Save Their Homes Act of 2009.” Section 702 of this bill states that in the event of foreclosure on a federally-related loan, you, as the tenant, have the right to remain in the property for at least 90 days. If you are a month-to-month tenant (your lease has expired), you have 90 days to vacate. If you have a current lease, you have the right to stay in the property until the end of your lease term.
Stay positive. You will find the perfect home to rent. Good luck!