Friday, October 8, 2010
Negotiating Rental Prices In Today's Economy
Build Your Case
No matter how convincing you may be, the ultimate arbiter of rent is market demand. Does the property owner have many vacancies? Does he or she have other prospective renters waiting to lease the unit? Knowing what your landlord needs is the first step towards leveraging a deal. Before meeting with the landlord, gather evidence of your reliability – past rent history, proof of income, a good credit report -- whatever demonstrates stability.
"As a tenant, what can I do to prove I'm not a headache?" asks Gary Zaremba, president of Pepzee Realty, a property management company based in Dayton, Ohio. In his experience, the tenants he is most likely to negotiate with
have done their homework on the neighborhood. "Make sure you know the market price, the way you do any comparison shopping," he says. This could mean everything from price comparisons on listings sites like Craigslist and RentedSpaces to paying for premium access to listings, as Roth did. Paying for listings sites, such as the MLS, lets the realtor know that you mean business, Roth says, and it also gives you access to more exclusive listings.
Tit for Tat
Whether signing for the first time or renewing a lease, there are several arrangements that savvy renters can turn into a discount. There is the popular notion of "2/10, net 30," which Zaremba subscribes to. "If you pay within 10 days of the bill, I take 2 percent off the price," he says. "And if you've set up automatic deductions, that's another 2 percent off."
Aside from reliability, good stewardship is always foremost in the mind of landlords. Offer to provide "sweat equity" deals, in which you help manage an aspect of building maintenance in exchange for a discount. Beautification projects in and around the building are a useful way to prove your value, says Kathy Herzog, president of the Landlord Association, an online property-owner community. Above all else, a "landlord wants to know that their property is going to be well maintained," she says, and can help lead to a rent reduction.
"If the apartment were really non-negotiable, why would they meet with you?" asks Herb Cohen, author of the best-selling book "Negotiate This!" He suggests that prospective renters find a way to differentiate their offer. For instance, offer to sign a longer lease, or to provide several months' rent upfront, if possible. "Remember that a nose that can hear is worth two that can smell," he says. Your landlord's absolute margins are dictated by market trends, but if you can stand out among other renters as a reliable and easygoing tenant, you're more likely to find a better deal.
The same can be true for tenants renewing their lease. Consider timing your negotiation with the opening of a new vacancy in the building or during the winter, when demand is generally softer. "If I can avoid having any interruption of income," says Zaremba, "it's worth keeping a tenant, even at a rent reduction."
Negotiations can take place in even the most competitive markets if you know which levers to pull. Become familiar with the needs of your prospective landlord and offer payment options and a level of reliability that others fall short of.