Here’s the third installment in our series walking landlords through the process of marketing and renting their properties like a professional real estate agent. Today we’re talking about how to price your rental property like an agent.
How Agents Price Rental Properties?
Real estate agents price rentals in the same way that they price homes for sale. We can do a comparative market analysis. Typically we look for homes that are in the same general area that are of a similar size and condition.
Within the MLS, we track the days on market of those properties and any changes to the price. A price reduction let’s us know that the market could not support the list price. That can be due to oversaturation (too many properties on the market), the condition, or other factors.
We can track the list and closed price of similar properties. This is one advantage agents have that homeowners do not. Consumer-facing websites that allow you to advertise your listing don’t include closed/rented price only the amount advertised price. The thing is many times these are two different numbers.
3 Common Ways Unrepresented Landlords Price Rentals
There are three ways most landlords use to determine their rentals rental’s price
- Neighbors. Some homeowners will check online websites and see what other homeowners nearby are charging.
- Mortgage. Other homeowners use their mortgage to determine what they’ll charge. They calculate the cost of their mortgage, insurance, and any HOA fees and decide the rent based upon those numbers.
- Same. Landlords may elect to keep the rent the same as the previous year. This may not be ideal if your cost are increasing. If your tax assessment or HOA fees have increase and you keep the rent the same you are now losing money every month.
Pricing a Rental Like an Agent with the Tools You Have
The market sets the rental amount – not you. Keep this in mind when pricing your property. Your job is to discover what the market will allow for your property and do your best to get the “fair market rent.” The best way to figure out how much your property will rent for is by doing market research.
Your house will generally rent for the same amount as other rental properties that are similar in location, size, and condition. Here are a few resources to help you conduct market research:
How can you price your home with the tools available to you? For starters, you can check out the Zillow Zestimate. While it’s not always an accurate tool because it doesn’t take any updates or intangible features into account, it can still be helpful.
You can also view the comparables. Check out websites that advertise rental properties and find out the rental price of properties in your area. Be sure to read the descriptions and view the pictures to find those that are most like your property.
Lastly, you can track listings. A few months before you plan to advertise your rental, create a simple spreadsheet, and keep track of homes in the area as they are listed. Keep track of which ones are renting quickly and which ones sit on the market. Price your property like those that are renting quickly.
Now that you know how agents price rentals you should be well on your way to pricing your rental in a way that should help you find a tenant quickly. I hope you found this information helpful. Don’t forget to check out our Ultimate Guide to Renting Your Home Without an Agent. If you’re thinking about renting your investment property and want to enlist the help of a professional, give me a call at 703-539-2053 or email me.
About the Author
The above article was written by Abraham Walker, Your Northern Virginia Real Estate Agent, helping clients market their homes to achieve high sales with a quick closing time is my main priority. He’s the co-founder of Ask A Walker and can be found on YouTube, Facebook, and HERE on this blog.
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