Expert: Todd C. Menard - 2/17/2010

Question
QUESTION: Hello Todd,

I am looking for a house to buy.  One of the houses I was interested in has suddenly been de-listed and is apparently being leased.  Could you please tell me what I or my realtor could have done, if anything, to try to prevent this?

Thank you.

ANSWER: Hello Mark - Typically this is a situation of timing... timing of both the offer submissions and the sellers timing. Creativity can offer opportunity in situations like these but even creativity does not always guarantee your offer would be accepted. The seller may benefit from a lease because the property may increase in value over this time... You could inquire as to the length of the lease and write an offer with a close of escrow date after the expiration of the lease... basically, establishing a price based on todays value not tomorrows. You could also agree to buy the residence with the understanding you must agree be a landlord for the duration of the tenants lease but you could close on the property anytime during the lease. The real estate agent is not expected or required to be creative and has not failed to keep your best interests by not being creative. If the property is not listed any longer your agent could now go directly to the seller to inquire into what the seller may consider or if the seller is even interested in selling at this point. Of course, if the property is still listed just taken off the market the seller still has representation and all communication toward the seller must take place through the sellers agent. I hope this has offered a suggestion for additional action as well as an alternative strategy to still achieving the acquisition of this property. - Todd Menard

---------- FOLLOW-UP ----------

QUESTION: Todd,

Thanks for the reply.  Those are some interesting options, but I was hoping for advice that would discuss more proactive measures, i.e. trying to demonstrate interest and/or encourage a seller to keep a house on the market.  Do you have any recommendations in this regard, other than the obvious option of making a bid?

ANSWER: Hi Mark - If you are interested in buying the property why would you desire competition form other potential buyers or investors? It would be a more desirable negotiation position to discover the seller still desires to sell and the property is not on the open market or (MLS). I would be happy to dig deeper and strategize although I am not certain why you would want to encourage the seller to keep a property on the open market when you desire to purchase it? Of course you may desire the seller becomes more distressed... but then again, thats probably why the seller took the lease over an offer for sale? Please reply and let me know more about your expectations and goals for this and I can be much more specific. Thank you - Todd Menard

---------- FOLLOW-UP ----------

QUESTION: Todd,

The point is not that I would want competition, but I want to live in the house.  I don't know what the terms of the lease are or what what the law provides for, and maybe I was wrong to presume this, but it seems less than ideal to have a tenant starting a new lease at the property.  Maybe the problem is that I didn't make that clear in the first place -- it's a new lease and tenant?  Based on a message from my agent, I thought this was not a positive development, but maybe I misinterpreted it.

Answer
Mark - I am sorry for the late reply. I was out of town for a corporate convention. Please accept my apology. I too possibly misinterpreted your position. I understand you desire to occupy the property and the fact that the a new tenant would require that you honor the new lease before occupying the property yourself, providing it was an annual lease not a month to month. Obviously if the seller landlord (S/L) was aware that there was a serious offer, and it was the S/L's ultimate desire to sell versus lease one would imagine the S/L would have entered only into a month to month rental versus a one year lease.  Of course, this would be the first thing to discover. If it was a lease maybe the S/L was testing the market since a seller does not have to sell even if they receive a full price offer. One can only speculate over what could have been done at this point. I do agree that it could have been an excellent strategy to indicate in your offer, or when your agent presented your offer to the seller or sellers agent, that your intention was to owner occupy the premises. It is possible the S/L may have taken a different course of action with this knowledge. From your perspective, with occupancy your desire, this is relatively bad news providing it is a long term lease. Maybe even a conversation with the seller to determine the sellers true position? - Todd