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Rent vs. sale: the lesser of two evils

By Svetlana Stolyarova

Real Estate Agent with Local-n-Global Realty, Cleveland and International Real Estate Solution BRK 2007000844

December 11, 2008 06:02 AM

The most successful of my advertising copies for 2008 was the one which said, "The houses in Pepper Pike, Solon, Mayfield, Twinsburg needed for rent with option to buy".

I used to say that I did not do rentals, neither many of my colleagues who specialize in residential Real Estate sales in Greater Cleveland did. I do rentals now.

I do rentals because there are many potential buyers who can not go through new tough underwriting requirements.

I do rentals because it's a big demand in a rent-to-own scenario and it will be even bigger for few more years.

I do rentals because my selling clients who own two houses need the immediate solution - and sometimes it's better rent than nothing. Indeed, it's the lesser of two evils. What is an alternative for rent for many of the sellers?

* Selling short, which means at least losing credit

* Not-selling, which means - struggling financially or losing opportunity to move to the other level of your life.

* The worst case scenario - losing the house to foreclosure.

Struggling homeowner

Sure, our goal is to sell. And Local-n-Global Realtors successfully sell our clients' properties. However sometimes sale is not happening as quickly as needed.

You may say that rent is a temporary solution, that it's better to price the houses more aggressively in order to sell them now. Reality is that aggressive pricing and short sales are not working for many of my clients. They are still able to make two mortgage payments. Tough but possible. They do not want to ruin their credit. They do not want to act irresponsibly.

It may sound old fashion but many people still remember by heart and by soul the old meaning of the word Mortgage - Dead Pledge, "apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken through foreclosure", according to Wikipedia.

I am proud to represent a lot of responsible people in finding the right solutions for their Real estate needs.

Need to sell your house or condo in Greater Cleveland? Please call 24/7 Local-n-Global Real Estate Hotline 877-770-5551 or call directly to Svetlana's cell number 216-548-4663.

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Roland Woodworth

Blue Cord Realty - Clarksville, TN

Blue Cord Realty

If you take the time to help someone today who may want to buy and is unable, when they are ready to buy, the will likely remember you and also send you referrals

Dec 11, 2008 02:00 PM

Aaron Bosshardt

Bosshardt Realty Services, Inc. - Gainesville, FL

Property Managment is a completely different business then sales. A lot of agents make the mistake of assuming the business should be the same. I'd definitely recommend that agents do a good bit of education and training before they jump into to property management.

Dec 11, 2008 02:22 PM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Roland - That's all about better services for our clients. And that's great reason to stay in contact with our sellers, too. Thank you for your comment!

Aaron - Great comment. I am with you that property management requires serious preliminary education and training. This is the reason why my company is not offering a full service property management yet. So far we find the good tenants for our sellers as a temporary solution. I know that we will need to change in 2009. We help a lot of out of state investors to buy the properties in Greater Cleveland, and there is a big demand for property management. One of my agents has a background in property management and is taking classes to get up-to-date information and skills. Thank you very much for stopping by!

Dec 11, 2008 02:38 PM

Marcia Kramarz

Re/Max Executive Realty - Medway, MA

CDPE,LMC,CBR

I too do rentals for the same reason - I love your graphic though - Says it all...

Dec 11, 2008 09:08 PM

Diane Bell, Hilton Head Real Estate, Bluffton

Charter 1 Real Estate, Hilton Head, Bluffton, SC - Hilton Head Island, SC

I think you're right on with this----I don't do rentals but refer to a rental agent in our area who I respect for her honesty and integrity.

Dec 11, 2008 09:43 PM

Lisa Schlitz

Home Run Real Estate, Inc. - Wellington, FL

Realtor - Wellington, Florida Homes 561-214-3216

I am doing a rental now (a referral) and it is as much work as a sale (if not more), with a lot less pay. Although I am more concerned with always finding my clients the right fit and don't worry much about commission, you still have to call a spade a spade. I'm still on the fence if its even worth my time and, definitely, my efforts!

Dec 11, 2008 10:39 PM

Barb Szabo, CRS

RE/MAX Above & Beyond - Cleveland, OH

E-pro Realtor, Cleveland Ohio Homes

Svetland, Good for you that you have not buried your head in the sand and done what is necessary for your clients.

Dec 11, 2008 11:31 PM

Barb Szabo, CRS

RE/MAX Above & Beyond - Cleveland, OH

E-pro Realtor, Cleveland Ohio Homes

Svetland, Good for you that you have not buried your head in the sand and done what is necessary for your clients.

Dec 11, 2008 11:31 PM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Marcia - Thanks fo your comment. May be homeowners will be able to walk straight rather than crawl under the pressure of mortgage and falling prices.

Diane - I also started recieving referrals from other agents in the area. My advice is still - try doing it on your own. These future sellers are your clients. Who know them better than you do, who may help them better than you do.

Dec 12, 2008 03:42 AM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Lisa - that's a dark side of today's situation. We work more and earn less only because fewer people can get financing and buy today. However things change. We are blessed to help people to find a good house for their family, to move froward with their lives, to move to more children-oriented neighborhoods when necessary, etc. This happens no matter how bad or good Real Estate market is. Thank you for visiting my blog!

Barb - nice to see you in my blog! You know Greater Cleveland market very well. Isn't it sad when we have very nice solid homes, motivated but not desperate sellers, very reasonable prices, many showings and - no sales because buyers have troubles financing the house now. Rent-to-own may become a win-win for them. Thank you for your comment!

Dec 12, 2008 03:54 AM

Gene Tecce

Keller Williams Real Estate - Washington Crossing, PA

I have had a few friends try the renting avenue, some were successful whileothers were not as successful as the house was badly damaged by renters.

Dec 12, 2008 04:49 AM

Dan Magstadt

Paramount Residential Mortgage Group, Inc - Lake City, FL

Thanks for the info. This is an informative post & I'll definitely keep it around for future reference.

Best, Dan

Dec 12, 2008 08:28 AM

Charles Stallions

Charles Stallions Real Estate Services - Pensacola, FL

850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

You're so right, we are all having to learn to get creative. My buyers are going rent to own with a five year balloon. They we can do a refi instead of straight financing.

Dec 12, 2008 12:48 PM

Neal Bloom

Brokered by eXp Realty LLC - Weston, FL

Realtor CRS-Weston FL Real Estate

All I can tell you is I've always done rentals even in a good market....it works and you can live off of them if you get a lot of them and also I've converted them into future sales then they end up renting them through me too so go for it.

Dec 12, 2008 12:51 PM

Yvette Gardner

Keller Williams Realty, Spartanburg, SC - Spartanburg, SC

Great post and thanks for sharing. Looking forward to reading more of your posts!

Dec 12, 2008 01:24 PM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Gene - Things happen. I feel sorry for those of your friends who got to the bad renters. We have the good examples, too, don't we? Thank you for visiting my blog .

Charles - good for your buyers thaty they found the right deal with assistance of right Realtors! Thanks for stopping by!

Dec 12, 2008 01:44 PM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Neal - that's interesting that you do rentals all the time. That's a number game, you are right. Have a great Holiday season and more successful profitable sales!

Dan - That's a pleasure seeing you in my blog. Thanks for your comment!

Yvette & Dennis - You are very welcome! Thank you for reading my blog and commenting.

Dec 12, 2008 01:49 PM

Jason Ellis

Coastal REO Solutions - Myrtle Beach Short Sales & REO's - Myrtle Beach, SC

rent w/ option or less purchase has helped me clean up some of my listings - did not like them before -- but I think it is an evil we have to live with -- great post -- JE

Dec 13, 2008 01:17 AM

Christopher Johnston

The Johnston Team - Metairie, LA

I think you are adapting to a changing market and that is what you must do to remain competitive. I think the lesser of two evils is do you do rentals or do quit the real estate business?

Dec 16, 2008 08:12 AM

Svetlana Stolyarova

Local-n-Global Realty, Cleveland and International Real Estate Solution - Mayfield Heights, OH

Local-n-Global Realty, Broker 216-548-4663

Jason - I just closed another listing by rent with option to buy. Frustrating in terms of commission - you can figure the difference between selling $300k house and renting it for less than $2,000/mo. Is it beneficial for my clients" Yes.

Will this purchase work I will receive the remainder of my commission any way. Will it not - we'll figure out what to do later. What is good for my loyal clients is good for me.

Christopher - I think you are absolutely right. When you do rentals for your listings, at least you don't forget to follow up with your clients. What a great way to build a big data base of loyal long term clients!

Dec 16, 2008 08:46 AM