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Neighborhood Home Values Brought Down By Uncaring Tenants, Says Occupying Homeowner
by Blanche Evans
Speculators aren't the only ones who were hurt when they bought at the top of the market, finding themselves unable to sell at a profit as prices softened. Occupying homeowners who bought alongside them are also feeling the pain, as they watch their neighborhoods devalue further due to because of lack of care by investors and their renters. Here's one homeowner's plight: Dear Ms. Evans, Realty Times responds: Dean, I feel for you. Market momentum is against you, but there are some positive things you can do to turn your neighborhood around. First, let's assess where you are. Your situation is more common than you might think. Non-occupying homebuyers accounted for a third of home sales in 2004 and 2005, and didn't slow down until 2006 when sales to speculators plummeted by nearly 29 percent. There are a lot of people out there who can't sell at a profit in a softening market, so what's their Plan B? Many are turning into landlords. "A recent CompleteLandlord.com study revealed nearly one out of five landlords did not intend to rent the property when they purchased it," writes Broderick Perkins for Realty Times. "The National Association of Residential Property Managers says that's reflected in an increase by more than 20 percent in its membership in the past year as more suddenly-landlords seek property management help." It stands to reason that if you didn't intend to become a landlord, and you choose to rent your home, you'll have to get up to speed with how to do it. You can use a Realtor to help you rent your place, with the proviso that he or she helps you learn the ropes. Who knows? You may like it and start gobbling up the other houses in your neighborhood or somewhere else. Your other choices are that you can stay or that you sell. One advantage to staying is that you save on moving costs until you build enough equity to sell. It will probably take several years, maybe less, for the excess inventory in your area to absorb so that prices start to rise again. If you can hang on that long, you'll want to do something about the tenants. Live by example. Keep your place in tip-top condition. That way, no matter what happens, you'll be in a better position to rent, sell or enjoy your own property. Ask your Realtor for comparables and see if he or she would be willing to do a study for you to determine if the homes that are selling for more near you are owner-occupied or former rentals. You can use this information in a letter to your neighborhood landlords, pointing out as nicely as you can that you're all in the same boat in this softer market, but that lack of care by some tenants is causing home values to soften even more. Ask for the landlords' help in keeping yards and homes in better shape, and you might be surprised. Some may see the wisdom in your logic, especially if they want to sell their investments. If you really want to sell, ask your Realtor for a change in strategy. I personally don't believe that in a market driven by fear and overbuilding that lowering the price is the best way to go. The reason is you are chasing reluctant buyers to the bottom. Instead you want to attract the ones who want to buy but need a way to stick their toe in the water. Offer your place as "Rent to Own." That way, renters can ease their way into homeownership without huge downpayments, and you collect better than lender's interest rates for making the home available. Should the renter-buyer decide not to buy, you keep the money that was escrowed for their downpayment. Should they buy and default years down the road, you can get the property back. Published: May 24, 2007 Use of this article without permission is a violation of federal copyright laws. Related Articles: |
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