When I first started in this industry, I was actually surprised to learn that Real Estate Agents can help put together Leasing Agreements for their clients! I mean, it wouldn't have done very many people justice if we only catered to "traditional" Buyers and Sellers. And let's face it, with the current Market conditions, sometimes Buying a home just isn't an option!!
Looking at a typical Leasing Agreement as it compares to a Purchase Agreement, the same concepts still apply! There are still two different sides to the transaction. You have a Lessor/Landlord (Seller) who hires an Agent to put a property on the Market for rent, and you have a Lessee/Tenant (Buyer) who hires their own Agent to help them find a rental property to lease. The two parties come together in a "meeting of the minds", just like regular Real Estate, and the Leasing Agreement is taken to Closing.
Some Agents will have their clients complete a Buyer Agency Contract beforehand, to outline each party's responsibilites, should the Buyer find a suitable home.
As it applies to Rental Property, credit requirements are typically less stringent, so long as you at least have a rental history in "good" standing and/or can prove your ability to keep up the utilities. But, of course, as always, it's ultimately the Landlord's decision as to whether or not a future tenant's Credit/Income History is acceptable.
After an Agent has taken the time to show a Buyer multiple properties that fit within their price range, and, mind you, these listings are found in the MLS, it's finally time to submit a Leasing Application. The Buyer Agent will contact the Listing Agent to determine exactly what documents are required by the Seller. Below is the typical outline...
Typical Documents Required for a Lease
- Leasing Application (this will vary from Seller to Seller)
- Credit Report (hook-up with your Agent's Mortgage Broker)
- Rental Agreement (again, this can vary from Seller to Seller)
- Commencement Inventory Checklist (a detailed account of the initial state of the property, filled out by the tenant)
- Lead-Based Paint Disclosure (NOBODY is exempt from this)
- Termination Inventory Checklist (to be filled out upon the Lease's termination)
The next question, I suppose, is exactly how is the commission calculated? For some Sellers, this may be a flat fee for the Buyer Broker, and in other instances, it may a fixed percentage. Typically, the first month's rent is split between the two respective Brokers, and a security deposit of up to 1.5 months of rent is to be held by the Seller, contingent on the satisfactory completion of the Termination Inventory Checklist. In the end, the Lessee/Tenant (Buyer) will bring 3 different checks (in CERTIFIED FUNDS) to the Closing table...1 for the Buyer Broker, one for the Seller Broker, and one for the Lessor/Landlord (Seller). Again, remember that this is only a typical scenario!
And, just like that, we have a Lease!! I like to think of it as Real Estate on a much smaller scale! It's a step on the road towards something BIG!!
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