Thursday, March 15, 2007

Can You Negotiate Rents in this Market?

So the vacancy rate stands at 0.5% and the RE market has priced many first-time buyers, like ourselves, out. Chances are the vacancy rate will stay this way for some time; it's been hovering around 1% for several years now.

Can we negotiate rents with landlords now, or is this purely out of the question? We've noticed some trends with rental suites: you can guess when the properties were bought based on the asking price for suites. Higher, recent purchase, lower, it's been a holding property. Something like that anyway.

I'll use us as an example. We have no dependants (pets included), we're quiet, we don't smoke, we don't party, we're pretty private people, we keep a place clean, have good jobs, and both study full or part time in an effort to advance our careers. We come with good references. We feel fairly confident that we'd present no problems to a landlord if they lived up to their end of the agreement. We're OK with signing a one-year lease.

If we look at a place, that we know is quite nice, and is therefore going to receive plenty of applications, are we in a position to negotiate rent if we think the price is a bit much?

I tend to think that just asking for a rent reduction, even if its low ($50/month on a $1000/month suite) that we'd send the wrong signal to the landlord and we'd get pushed down to the bottom of the pile.

If we do attempt to negotiate, do we wait until we get the call back offering us the place, and then ask? Anyone have any success on this venture in this or similar markets?

3 comments:

Prairieboy said...

I'd be interested in knowing of someone who's had success in negotiating a lower rent. When there are 100 applicants for a suite, I think it would be foolish to request a lower price. We certainly didn't. We moved into our new rental about 6 months ago. We were excited to know we were in the final four. And we could hardly believe it when we were choosen. If we had asked for a lower price, I know that we would not have gotten the place.

Village said...

I haven't tried, so I don't know. But the tightness of the rental market, and the number of people showing up at any suite that is decent and reasonably priced. I think you would be passed over attempting to negotiate rent. It might signal to the landlord that you don't have to required funds to pay full price leading to problems later.

On higher end housing rentals though, at that magicaly expensive $1600+ range for a full house. I would at that range. I wasn't in that market, so I don't know how tight it is. But you could surmise that people who can afford that, by and large already purchased. So it could be significantly softer and allow some negotiation.

Once your 1yr lease is up though. I would attempt to negotiate at that point. A small discount is cheaper then 1 month without a renter. Long time landlords know this, the new wannabe landlords though don't.

I sign a lease this evening for a place at $1200/mo. I figure after 1yr, it is cheaper for them to lower the rent $50, then have it empty for a month. Time will tell though.

HouseHuntVictoria said...

Thanks Village,

Tell me about your new place: neighbourhood, # of rooms etc... I'm curious.