Can I rent my house while it is on the market until it sells and how would I go about the rental contract?

28 May 2009

28 May, 2009 Open House

My husband and I are buying a new house that is more suitable for our needs and our growing family. We want to put our current house on the market but would like to move into the new home before the new baby comes in June. Well were afraid that the current house won't sell before then due to the market and the town that the house is in right now isn't the most desireable due to flooding, but our home is on high ground and doesn't flood. We know that at this time we would not be able to afford 2 mortgages until this home is sold. So we would like to rent out the current home to cover the 1st mortgage and only have to worry about the mortgage on the new home. What do you think about this idea and also is there anything that I would need to specifically state in the contract with the renters if it was a month to month lease about the sale of this home? Also if this home is on the market and we need to hold open houses and the realtor needs to show the home would we need to include that?
NO we are not going to buy the other house until we get this figured out. We do have the funds for 2 mortgages but it would be tight and we do have the money for the down on the new house. More than likely we are going to make the offer on the new home contingent on the sale and closing of the current home, for all of you bashing me thinking I have no clue what I'm doing, I just wanted your advise on if we had issues in selling the current home. Also where we live we own 10 acres with the current home and where we live that is very attractive to buyers.

You can rent it out while its on the market, just keep in mind that to show the house you have to give notice (at least 24 hours in my state). There also may be some stipulations you have to put in the rental agreement, i.e. house has to be relatively clean, must move out within 30 days of sale, some things like that. Now if they dont move after the sale has been completed that can be a violation of the sale contract, and the buyer may be able to walk away (I've heard of this happening a few times); Id talk to a lawyer just to be safe.

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7 Responses

satarnag
2009 May 28 1

Your best bet is to sell your home first and purchase your new home when your home goes into escrow making it contingent on your home selling. The reason why I state this is sometimes the home doesn't rent or there will be times when it will be vacant and if you can't afford to carry two mortgages then you shouldn't be renting.

Anyway to answer your question:
1. You make it a month to month
2. You make the tenants sign something that states that they know that the home is for sale and that they agree to a sign and lockbox being on the property and agree to the showing times.
3.You canot do open houses unless the tenants agree to it.

Good luck

Regards
References :
Nicholas H
2009 May 28 2

You can rent it out while its on the market, just keep in mind that to show the house you have to give notice (at least 24 hours in my state). There also may be some stipulations you have to put in the rental agreement, i.e. house has to be relatively clean, must move out within 30 days of sale, some things like that. Now if they dont move after the sale has been completed that can be a violation of the sale contract, and the buyer may be able to walk away (I've heard of this happening a few times); Id talk to a lawyer just to be safe.
References :
Years of Property Management
vlvtnrbt
2009 May 28 3

My 2 centavos is , 1) a lot mortgage agreements have specific language that forbids this practice
2) Most tenants will not put up with the "disturbance to their quiet enjoyment of the property" which is considered to be one of their primary rights in renting of the property ; that will be created in asking them to make the house available for showings (Basicly what I'm saying is : Legally they don't have to and most won't!)
The same holds when rerenting an apartment , some courts have held it to be a form of harassment.
References :
Landlord
Mary B
2009 May 28 4

I personally think you are making a huge financial mistake.

First, you are buying a home, when you still own the first home, and you have already stated that you can't afford two mortgages.

Second, you are NOT going to find a renter that would be willing to rent, knowing that they will have to leave on any given month because you are selling the house.

Third, if you don't get your rent, you can't make your mortgage payment….THAT should tell you that you can't afford to buy the new house.

Fourth, even IF you could find a renter under those conditions, you will be severely limited in showing the home because you have to give the renter 24 hours notice for a potential buyer to come in with a Realtor AND hope that the Renter keeps the place clean enough to show well.

All of this….in a BUYER'S market?

You are setting yourself up for failure.

Buying a house is a want, not a need, in your case. I knew of a family that had 4 small children in a 2 bedroom home for 3 years, so the could save enough money to buy a home that would accomodate everyone….THAT is how smart people buy a home.

PS: Don't assume that the Realtor will do open houses…that is a joke in the industry, and HGTV had made people think that they actually work. Do you know the REAL reason why Realtors do open houses? To generate BUYERS for OTHER properties that are looking and haven't signed a contract with another Realtor.
References :
beverly_campbell62
2009 May 28 5

You should be careful considering this since you have a mortgage on the property. If you check your mortgage, it probably is a mortgage on a primary residence, not an investment or rental property. If your lender discovers that you are renting the property, they could call your loan. Check with your lender to find out what other options are available to you before considering renting. Also, keep in mind that it is often very difficult to sell a property occupied by a tenant, since the house is now their place of reisdence and all showings, open houses, etc. would have to be at the convenience of the tenant.

Hire a good realtor and price the house to sell!
References :
Over 20 Years in Real Estate
Ms. E
2009 May 28 6

Hi there,

First, congrats on your new baby!

I understand your situation to be that you are already buying the second home.

If this is correct, I'm thinking that you may be better off renting out the NEW home instead of the one you want to sell.

My reason is that you can be in control of what happens when prospective buyers come to your place. You know you can get the place clean and give a great impression to prospective buyers. You can't count on a renter to do that. Especially a renter who's having his/her privacy and home invaded constantly.

Why not rent the new place out to tenants on a month to month. You won't have to tell them you plan on moving into it when your other house sells. They won't be invaded regularly by real estate agents and open houses, or give prospective buyers bad impressions or leave the place messy - possibly deliberately.

Everybody's happy this way, then you sell your old place (that you've continued to live in), give 30 days to the renters in your new place, and then move into your new place.

For what it's worth.

Best of luck to you!
References :
jeanniep
2009 May 28 7

this is what gets people into to trouble,
they want what they want and they want it right now!
you don't think things out before hand.

you should have put your house on the market first and then found another house to buy, but since you didn't, good luck in selling or finding a tenant to suit your time frame and needs.
References :

Sell Your Home Without A Realtor