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October 31, 2008
Weirdest rental situation
Hello there,
I've run into the weirdest rental situation ever, and could use a reality check. I found a great place in Ft. Greene (my target neighborhood) super close to the park, brand new condo treatment in a floor-through brownstone, with a deck off the bedroom and a shared roof deck. In short, amazing amenities, and I'd love to rent it.
The problem is, it is in a condo renovation building and is the only unit of 4 that hasn't sold. It is a 4th floor walk up, 1 bedroom, and has been on the market for $700,000 since February. I saw it as a rental but now am told that the owners really do want to sell, so the deal proposed is this: I still pay a 12% broker fee, and my moving expenses of course, and $2300/mo rent. After 6 months if it sells the seller would like to option to give me 2 months notice and pay my new broker fee. That's it.
This seems crazy to me. To consider paying that kind of fee and all the expenses that come with moving knowing that i may only live there 8 months sounds ridiculous. By the same token, the thought that this will actually sell in these times and with that profile seems equally ludicrous. I'm having a hard time walking away as I really do love it as a rental & it's the best thing I've seen and I've been looking for over a month, but it is super strange. Thus, I bring it to the awesome Brownstoner community. Thoughts?
Comments
Shantigirl...sit tight. I say stay. The ball is truly in your court. Make sure you consider all of the associated expenses you will have with moving (and packing) and negotiate these into your rental agreement. The truth is, you would have to move if you rented in a brownstone and the owner sold the building. This scenario is quite similar. A $700K brownstone condo will not likely fly off the shelf in this economy. Overall, you 'got it good'.
Posted by: cmontgom at October 31, 2008 4:46 PM
Hey cmontgom, thanks for your comments. It's a relief to bounce this off someone! Just to clarify though, do you mean stay as in move forward with the Ft Greene place? Or stay where I am and let this one pass. Thanks SO MUCH!
Posted by: Shantigirl at October 31, 2008 4:58 PM
Personally, I think moving is a drag and would not want to make a habit out of it. They'll have you in for the winter and then hope that the Spring will bring in new buyers and the deck will be a selling point. I would rather find a place that I can settle into. If you must do it, make sure they pay for all moving-related expenses.
Posted by: Susan Elkins at October 31, 2008 5:07 PM
Generally, I concur with Susan. I would be sure to get all moving / broker expenses and steel yourself for what may be an anxiety-producing spring. Also, having just moved, I will remind you that it's expensive and annoying.
Is the thought that they could sell at any point after the six months? or at that point would you have a lease?
In this situation, you'll either be living out of boxes for eight months, wondering, or you'll unpack and settle in quickly only to be jarred about.
A big concern for me would be the wondering if tomorrow you were going to get the "time to move" call. You may settle in with your things but mentally will you settle? And will they say that if by date X they haven't contacted you, then you're in until at least next year?
Posted by: youandwhatarmy at October 31, 2008 5:13 PM
What would be the compensation for allowing prospective buyers into the apartment while you're renting?
If this is a really great apartment, I think you should take it. If you don't want to move when they're trying to sell you could be strategic about your level of tidiness. I once had a three family house that was almost impossible to sell until one tenant, an incredible packrat, moved out.
Posted by: Bessie at October 31, 2008 5:27 PM
Another thought: would they allow you to have a month-to-month option after six months? (But they would not be able to end it for a year, or until some fixed point?)
What I'm getting at is that you're doing them a favor by renting in a bad selling season, with the possiblity of getting booted out come spring. So, in addition to moving expenses, ask them for the ability to break your lease without penalty after May 1, or something, in case you find the /real/ place of your dreams.
Posted by: youandwhatarmy at October 31, 2008 5:29 PM
The proposal is a 1 year lease, but with the option that after 6 months if they sell it they will give me 2 months rent and I will then have to move. If that happens they have offered to pay my new broker fee. I just talked to my current broker and counter-offered that for one month free rent, and moving expenses, in addition to broker's fee.
I do want to move in and make it a home, so my thought is that with the 1 month free ($2300, they went down by $100) I could pay for those things that I will likely loose if it sells and wouldn't have to feel bad about it...aka paint, room divider (21' bedroom I want to make into bedroom/office), patio furniture that I many not be able to use somewhere else, curtains, etc...
So really there is the issue of wanting not to loose any money in the deal, which I think may be achievable, and then as so astutely mentioned, trying to figure out how emotionally it will feel--and if I can just be carpe diem about it. :) The broker thinks this will never sell and will ultimately be a rental (a $700K, 1 BR, 4th floor in FG!) but of course we don't really know that.
And yes, it is a really great apartment. I love the neighborhood (I've lived on the upper upper west side of Manhattan for 3.5 years which is more of an "area" than a neighborhood to me) and I've never dreamed of having outdoor space, so that is totally seductive too. Add to that the huge kitchen with all new stainless steel & I am super smitten. Thus the quandry.
I really appreciate all of the feedback. It helps!
Posted by: Shantigirl at October 31, 2008 5:38 PM
Well... since you're in the market for a $2300 apt, you're obviously asking these questions based on principle and not the actual money concerned (am I reading this right?)
I would say this seems like a ridiculous situation.
Other than the under-one-year craziness, you're pretty much signing up for a year and then looking at moving again. Wouldn't you want to try to find a place where you would live for more than a year? (Not signing a longer lease... but simply having the option to stick around longer.)
There are lots of apts in that price range... and you don't have to use a broker. Brokers are worthless for both parties, still don't get why people use them. Try craigslist and so on.
Posted by: tybur6 at October 31, 2008 7:20 PM
I totally appreciate that. I have been looking via Craigslist and 2 brokers since mid-September and have had horrible luck. Since moving from Seattle to Manhattan 3.5 years ago for grad school I've lived in a tiny apartment in a neighborhood that I don't love and I'm ready for a great place again. I'm a hard sell, the neighborhood to which I'm most drawn (Fort Greene) doesn't have much stock, and it's a weird time of year. That's my best assessment anyway. Thanks for all the input. And yea...any way you shake it it's weird. The hope would be that the owner would realize that this unit needs to just stay a rental, but that's a pretty big gamble. And, no, I don't love moving. Ugh! I so wanted to be done...that's really the bottom line. I'm worn out by the search, found a good-for-me place, and now it comes with a bunch of strange-ness. Annoying...and confirmed here that it's probably something I should pass on, which I needed as I'm a bit weary now. Thank you!
Posted by: Shantigirl at October 31, 2008 7:38 PM
I would take the apartment but rather than pay your future broker fee, have them reimburse you for the broker fee you would pay to take the apartment. That gives you more leverage -- they would reimburse you as soon as they notify you of the two months notice, rather than you having to try and collect as you're on your way out.....You are doing them a favor by renting the place -- don't forget that. Otherwise sounds like it would just sit empty and they are just waiting till prime selling season to try again. And there's a good chance you won't have to move at all....sounds overpriced.
Posted by: bricktop at October 31, 2008 7:38 PM
Sounds like you're really set on this place. You should go in as a total hardass on the $ negotiations. It's not making them any $ empty, esp. with those wack rental conditions. They need you, go get 'em!
Posted by: pattunia at November 1, 2008 4:13 AM
Find another place. There are plenty of other apartments out there that won't give you the kind of hassle that this place will.
Posted by: Boerum Hill at November 1, 2008 10:04 AM
I would definitely be a hard ass about what you demand, but as long as you're getting all your extra expenses paid, go for it. Moving isn't that much of a hassle -- if you don't have a lot of stuff. I moved twice in one three-month period. Just pare down and throw out the junk. It's like going on a diet. Feels good. Don't forget the cost of buying boxes twice. But I wouldn't count on the apt not selling. Maybe. Depends on how unreasonable the price is. Can you rent to buy? Ha. Now there's a demand. Have you seen anything else this good in Fort Greene? Check the by-owner listings on Craigslist. You will find large floor-throughs as low as $1800.
Posted by: mopar at November 1, 2008 10:25 AM
Then again, maybe they need to face reality and just rent the apt with a normal lease and not try to sell it.
Posted by: mopar at November 1, 2008 10:26 AM
One more consideration is if Ft Greene is really a neighborhood you love, moving into this place for 1 year could give you a chance to make contacts in the neighborhood in anticipation of finding future places.
Posted by: Schultz at November 1, 2008 1:41 PM
Maybe my math is way off, but if not, your rent is $2300/mo., and with 20% down the monthly mortgage would be just over/under $4,000. From that point of view, it's hard to picture a sale in the near future (at least, at the current price). I think bricktop's got it right: try negotiating two month's notice as well as full refund of 12% broker's fee at time of notice (not at/after vacancy), six month minimum rental. Maybe even incentive payment if vacancy in less than two months after notice, or penalty if failure to vacate in 60 days.
Posted by: vinca at November 1, 2008 3:01 PM
So these sellers want to offer you no lease really, AND you have to pay a broker's fee up front, AND you have to have to let them in to show to buyers the entire time you live there? This is the seller trying to have their cake and eat it too.
Nobody here has said much about having to give access to the seller's broker and to strangers the whole time you live there. Ridiculous. That's a huge inconvenience. I'd never do it. It wouldn't feel like your own personal private space at all.
These sellers need to commit to it being a rental and just a rental for a year.
Posted by: traditionalmod at November 1, 2008 3:18 PM
This doesn't sound like a good deal or price to me. At all. It is not the same as moving into a brownstone that might be sold. You would be signing a lease with a 2 month cancellation clause, having paid plenty of money up front. In the case of 1 year lease, the owner must honor your lease for that time period whether or not the building is sold. You have rights. If you sign a lease with a 2 month cancellation clause for that kind of money and a high brokerage fee, you are getting ripped off. That is not a good deal. Forget the price they are asking and the sales status. They can lower the price and sell it and then you are out and starting all over again. Will you pay a broker all over again and pay to move again. By the way, the broker doesn't deserve 12% for that deal.
Posted by: donatella at November 1, 2008 7:24 PM
Hey all,
I've taken all of the recommendations into consideration and it's helped me come up with an offer that could be fair for all. Thank you!
Posted by: Shantigirl at November 1, 2008 10:27 PM
I say take this rental (or others), and save the fee altogether:
http://newyork.craigslist.org/brk/abo/905464123.html
Posted by: diego at November 4, 2008 12:26 PM
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