Would you hold an "A" property off market for a month?

Question

This is the situation: Business person relocating from Chicago to Portland Oregon. Wants to view property (if still available) on January 7, pay the application fee and a Holding Deposit at that time with the intention of moving in February 5 if her application is approved. Rent to begin in February, prorated.

Dilemma: Never held a property for that long of time with only a Holding Deposit (refundable). Has anyone had experience charging a Holding Fee (non-refundable) at a per day rate for each day off market? If so, what would be a reasonable rate? This is a 2BR/3BA Townhouse that rents for $1850. Went on market on Nov 20. Only one serious inquiry as of today. Portland rental market is hot and vacancy rates are at a historical low, but we are in the holiday doldrums.

What do you think? What would you do?

Account Closed · Answer

Marcia....

This is December 12th.  This person wants to VIEW the property on January 7th.  (If not rented already).  Let's say it is not rented by then.  You show him the home on January 7th, he likes it and gives you a holding deposit and pays for the application fee and plans to move in on February 5th.

Well, gee, if the guy or gal likes it, let them put their money where their mouth is.  Sign a lease agreement dated for February 5, 2016.   Why rely on a holding fee?  They can easily let you have it and move on,  if they find something else, and they will still look. (Just a normal thing). Why take  a chance and lose $1800.00( less the holding fee)  when you can have a signed lease agreement.

So make them sign a contract. Make them give you an application fee.  And, have them give you half the Security Deposit as a "Holding Deposit",  and if they don't take the place, then you have only lost half the amount of rent by holding it for them, instead of a full months rent.  Plus they signed a contract, that means they have to give you a 30 day notice (or your state laws notice) to break it.  You are protected all the way around.

Nancy Neville

Kevin Borland · Answer

That seems like too much of a risk for this market. The person relocating needs to get here and locate and lockup their place to live since it is such a hot market. I would rent it to the first qualified person. If they come and look at it before it is rented, I would negotiate a shorter delay in lease start date. They can't expect you to add another 8% revenue loss (1 mo delay) for the year because that is what is the best for them. If they can qualify to rent it, they can certainly afford to pay for some unoccupied time. Seen too many people say they are very interested in a property (for rent or sale) and you go out of your way to accommodate them and then they say thank you, but no thanks.

Lawrence Belland · Answer

If it is an "A" property it would have rented by now regardless of the holidays.

If it's a long term hold drop the price and get it rented.

Receiving $100/month less for a year is better than not receiving $1,800 for a month (maybe 2).

Neal Collins · Answer

@Marcia Maynard

Just one serious inquiry thus far? Is it in Portland? If so send me the listing and I'll pass it on to some very qualified people that we met during a rental showing for a 3BR house yesterday.

Account Closed · Answer

I take holding deposits and make it only refundable with a signed lease by a certain date.

Account Closed · Answer

I see a HUGE problem.  You said the market is hot, but your unit is going to be vacant for how long?

In a really hot market the property should be available to rent for hours or days.  Not weeks and certainly not months.

The rent on the unit is set about $60 a day.  If the property is going to be vacant for 75 days, that will cost as much as reducing the rent $375 a month for a year.

I would suggest forgetting February and reducing the rent to get the property rented immediately.

Michell P. · Answer

A holding fee seems like a reasonable deal.  Not at full price, maybe at half the going rate.  Considering you're taking it off the market and reserving it for them, seems like you're meeting them half way.  Anything less, and you'll probably do better just waiting and lowering the rent?

Colleen F. · Answer

I would not promise anything.   She can say she is happy to have them look at it on the 7th and discuss the hold period at that time if they like it. Tell them there would likely be a higher holding deposit associated with a longer then usual holding period.   I don't hold a unit without a lease signed and a deposit given so your sister would not be holding from the 7th, she would be holding from whenever the credit check was done and the tenant accepted. A couple more days maybe depending on the application getting completed so theoretically maybe the 10th. You can judge the deposit based on that accepted date. I would try to get them to take it from Feb 1 too.    If you leave terms open and have slow traffic then you can be more flexible.

I have had people like this just not show so I am a bit cynical.   They are negotiating points on something they have not committed to.  It means nothing until they commit but if they do they will hold you to whatever you have said so whatever it is I would not say it now. They are flying out to see a couple places and discussing these points with everyone but for most people the house will be deciding factor.  It is a slow time of year. When you have someone interested in front of you then negotiate the holding fee, per extra day of holding sounds reasonable.

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Would you hold an "A" property off market for a month?

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