Listing Not Selling This Winter? When Renting It Makes Sense
When renting it for a year makes sense, and how to set it up to sell later.
This time of year, some listings sit. The price has come down once, the showings have slowed, and the listing is close to expiring. Then the seller asks: should we just rent it?
Sometimes that's the right call. A year of rent covers the carrying costs, and the house goes back on the market in a better season. The seller keeps you as their agent for that sale.
Here's how to tell when it makes sense, and how to set it up so the sale still works later.
When renting makes sense
Renting is worth a look when:
- The seller doesn't need the money from the sale right away.
- The rent would cover most or all of the mortgage, taxes, insurance and HOA.
- The house is ready to rent as it is, or close to it.
- The seller is open to waiting a year or more to sell.
It's usually not the right call when the seller needs the cash now, the house needs real work first, or the rent won't come close to the carrying costs. In those cases, a price change or waiting until spring to relist may serve them better.
Either way, the decision is the seller's. The numbers just make it easier to see.
Price it for what the market will bear
The first question is what the house will rent for in November, not in June. Winter has fewer renters looking, so the price has to be right from the first day.
Rent is what the market will bear, not what the mortgage, taxes and insurance add up to. A seller who prices to cover their costs may wait a long time for a tenant.
The math usually favors pricing right. On an example house that would rent for $2,600, two empty months cost $5,200. Pricing it $150 lower costs $1,800 over a 12-month lease. A hundred dollars a month less almost always beats another month or two empty.
Set it up now so it sells later
A few decisions at the start make the sale easier when the seller is ready.
- Lease term. Set the first lease to end in late spring or summer, when the market is busiest. In Oregon, once a tenant is past the first year, a lease generally rolls to month-to-month. The owner can't end it just because the date arrives.
- Selling with the tenant there. When it's time, the house can sell to an investor with the tenant in place, or to a buyer who will live there with written notice after an accepted offer. I covered those rules in https://www.bendlifestylesrentals.com/selling-oregon-rental-with-tenant.
- Taxes. If the house was the seller's home, the IRS lets them exclude part of the gain on a sale when they've owned it and lived in it for at least two of the last five years. Renting it out starts that clock running. That's a question for their CPA before they sign a lease, not after.
None of this is legal or tax advice. It's the list of questions worth asking before the house is rented.
Start with a rent number
If you have a listing that's sitting, send me the address. I'll put together a rental market analysis your seller can compare against their carrying costs. Request a rental market analysis here: https://lifestyles-rental-analysis.netlify.app/
If they decide to rent, I manage the house while it's rented. I don't sell. When they're ready to list again, they come back to you. Your client stays your client.
Michelle Hardesty, Property Manager/Principal Broker Lifestyles Realty Group 541-408-3620 · michelle@lifestylesgroupre.com
