By clearly setting expectations and having a clear agreement on what the terms are, misunderstandings and subsequent issues are greatly reduced.
As we explored in our last post Submitting a Great Rental Application, negotiating a lease should take place during the application process. First, you want to be sure you are positioned to negotiate. Are you a qualified applicant? Is the house available for you to move into in two weeks or less? Is the home overpriced? Is the home outdated or does it have unique design choices? If you answered yes to any of these questions, you may be in a position to negotiate.
However, is it a great house? Is it in a good school district? A great location? Is it a hot market where there is little else you’ve seen that interests you? Does it appear that there are other competing applications coming in? Then your plan needs to be to make your terms better than what the asking price is. It doesn’t always make sense to negotiate downwards.
This is the time to be very clear what work you expect or want to be done in the property. Painting? Gutters cleaned? Yard mowed? Carpet cleaned? List work even if it has been promised to you by your agent or is in the listing. Put something simple in like “Agent has said the interior will be painted and the carpeting will be cleaned.” If it has been promised to you, it doesn’t need to be in the form of a demand, just confirmation of the information that was relayed to you.
You also need to be clear on the financial terms of the lease and what you are offering. How long a lease? Move-in date? Rent amount? It is really important that this information is properly conveyed with the application so that the landlord knows the full scope of your offer.
Negotiating Price is the first place many people start when negotiating. Typically, real estate agents have priced the property based on the recent comparables, and frankly, about 85% of the houses in our area are rented at their asking price. The remainder can be rented either at a higher or lower price, depending on the competition between applicants or the terms of the offer. Consider all the facts and how much you want that particular house before you risk attempting to negotiate a lower price and losing the property altogether.
If several applications are received around the same time, there is absolutely no obligation for the listing agent to give applicants making a lower offer the opportunity to match or exceed the offer of another applicant. Your offer will likely just be turned down, and the higher offer accepted.
When is it appropriate to offer a lower price? If the property is close to its availability date, with no price drop, that is a good sign that the landlord may consider a lower offer for an applicant who will move in right away. You will also find that the fall/winter months present a slower rental market and landlords are more willing to consider a price drop during those months.
When negotiating a long-term lease of more than 12 months, you should expect to pay an increase of about 3% per year in today’s market. However, in some cases, a landlord may be willing to offer you a fixed rent for the duration of your long-term lease in exchange for the security it offers them, so don’t be afraid to ask for this.
If a home is in disrepair, you should bring it to the landlord’s attention. Generally, if a landlord is unwilling to address items that clearly need repair such as a closet door that is off track or a leaking faucet, it is a red flag that you do not want to work with this landlord anyway. However, most landlords will happily take care of items like this when they are made aware of them. Don’t wait until you are in the home to bring something like this to the table. It’s so much easier to have this handled before you are in the home and responsible for coordination of the contractors.
Cosmetic Updates can be a tough sticking point for both sides of the negotiations. Consider what you would be willing to walk away from the property for. Is the pink carpet a deal breaker for you? Chances are, you’re not alone. On the flip side, if you just can’t stand the beige walls and prefer a bolder statement, you will likely have to keep moving. Landlords are far more likely to change from personalized to neutral decor than the other way around. Make sure you are not asking them to change the home to suit your specific taste but rather to meet a broader expectation of a rental home’s appeal.
When negotiating a lease, you want to think outside the box and always prioritize what matters to you. Don’t push everything you ask for, you must be willing to let some things go.
Signing the Lease is an exciting time! You have negotiated with the landlord and both parties have come to an agreement – time to sign, right? Not so fast…ALWAYS read your lease so you are completely aware of your obligations. In addition, make sure your negotiated terms have made their way into the lease. Do not count on verbal agreements. It’s not that a landlord will intentionally mislead you, but things can get lost in the shuffle. Verbal agreements are not binding in Virginia in any real estate transaction.
In a standard Virginia Lease, you can usually expect to find these negotiated terms laid out in the final clause of your lease under “additional terms’. Some terms such as price and length of lease will be located on the first and/or second page of the lease. Read your lease thoroughly, ask questions and only sign when you understand all terms.
Most companies use boilerplate leases. Don’t expect that you can have the standard clauses changed. It’s just like signing a mortgage – there are clauses none of us like, but it’s part of the standard contract. You can ask for clarification at any point, but major changes to lease terms would require a review by an attorney, and few landlords are willing to go to the additional expense to change a standard lease.
In summary, the most important thing is to be clear on the lease terms you are offering and what your offer is contingent on.
Read through the whole lease before signing to make sure you understand what you are committing to. Make sure all terms of the final agreement are listed in the lease.
We hope your next lease signing goes a little smoother for you after reading these tips. We’re always happy to get your feedback! Let our professional Virginia property management know what you think about today’s post. Geoff@peakeinc.com.