The amount of homes on the market is still at a record level. With 3.5 million homes for sale in the United States, there is enough supply to meet the current sales pace for the next nine months. Tear away the facts and figures, and the picture is clear. There are far too many homes, currently, for sale and that makes selling a home difficult.
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If you're one of those sellers with a home currently for sale, you probably know how frustrating the real estate market is right now. Your home may have that for sale sign in the front yard for many more months, and for those who have to move quickly, two mortgage payments may be the unfortunate reality. Fortunately, there may be options when selling doesn't work.
Renting might be the perfect way to generate income from a home that's been on the market for a long period of time. Even if the income generated only allows you to break even, you're building equity on your property and if you rent it long enough, the real estate market in your area may improve enough that you can sell it at a higher price later.
Renting is not for everybody. Nobody will take care of your home as well as you, and if you later have to evict a problem renter, it could take more than one year, cost thousands of dollars and generate no rental income. Consider paying 10% of the cost to a property manager that will handle all of it for you.
Leasing a car is commonplace and straightforward. You drive the car for a specified period of time, and at the end of that period you have the option to purchase the car at a predetermined price or give it back to the leasing company, forfeiting all of your previous payments.
Leasing a home works the same way. Along with a standard monthly rental fee, an extra fee is added which allows the renter to purchase the home at a specified price sometime in the future. This is a good option for a buyer who has credit problems but wants to lock in a "too good to be true price."
If the buyer later decides not to purchase the home, the home owner keeps the monthly rental and the extra premium.
Short Term Rentals
If your home is in a vacation area, or a region that has employers like military bases, who often have non-permanent employees, you may be able to rent your home on a short-term basis. Terms of a few days through a set amount of months, may generate enough income to make holding on to your home financially possible until you find a longer-term renter.
In vacation areas like Florida and California, there are property management companies who specialize in brokering short-term rental deals.
Sell It to a Realtor
You may have seen signs in your community that say something like, "we buy ugly houses" or "sell your home fast." Although some of these offers should be avoided, some high volume realtors will purchase your home and later sell it for profit.
If you're desperate to sell and can afford to take a price well below market value, this may allow you to liquidate without your credit score suffering. If you have an underwater mortgage, sometimes the buyers have the power to negotiate with your lender. (To know more about real estate agent, check out: 5 Reasons Why You Still Need A Real Estate Agent. )
In order to avoid foreclosure, your lender may authorize the sale of your home for less than the value of the loan. If you owed $120,000 on your loan, but had been unable to pay which put your home in to pre-foreclosure, your lender may accept an offer of $90,000 from a buyer. This allows the lender to get the bad loan off of their books and saves them the expense of the foreclosure process including trying to sell your home.
Other than full foreclosure, this is the worst of all of the options, because your credit is negatively affected in a short sale. (To know more about how to avoid foreclosure, read: Avoid Foreclosure: How To Handle An Underwater Mortgage. )
The Bottom Line
Your home may be on the market for a year or more before finding a buyer, and that is sometimes not possible for those who are on a tight budget. Fortunately, there are other options and although none of them may be ideal, a little bit of income may be better than no income at all.