It seemed like a smart idea at the time. The apartment was lovely — new construction, three bedrooms, three and a half baths, nearly 2,000 square feet on the Upper East Side. The asking price was $2.995 million. A year earlier it would have gone fast. But this was early 2009 and the economy was in tatters. Offers were pathetic — the best, $2.2 million. Forget it, the owners said. We’ll rent the place.
And so they did. With the approval of the condominium board, a family signed a one-year lease for $10,500 a month, with an option to renew for a second year. The owner’s expenses were covered. The plan was working nicely.
Except now the buyer who offered $2.2 million has come back — this time with an offer of $2.83 million, all cash.
“They’re coming up almost to asking price, but I can’t get the renter out,” sighed Victoria Shtainer, a senior vice president of Prudential Douglas Elliman, the real estate company. She is holding her breath until April, when she will hear whether the tenants intend to exercise their option to extend the lease for another year.
Over the past year or two, many owners who couldn’t sell — or didn’t dare try — made a similar calculation. Rather than accept an impossibly low offer (if they even had an offer), they decided to rent out their properties. The idea was to cover expenses while waiting for the market to right itself.
But in recent months, a number of these accidental landlords have been surprised to find renewed buyer interest in their properties. The problem is, the renters are happily in place. And that can complicate showings — let alone negotiating an actual deal.
A 4,100-square-foot loft on East 24th Street has sat on the market for nearly two years, despite a drop in price to $3.995 million in July 2009, from $5.535 million in April 2008.
In September 2008, the owners put the place up for rent. When their tenant moved out last summer, with no buyers in sight, they decided to rent it again, though this time the best monthly price they could get was a few thousand dollars lower.
Then last fall, shortly after the new tenant moved in, the long dry spell ended and brokers started showing up with prospective buyers in tow. Now a buyer wants to make an offer, said Gina Tramontano, the exclusive agent and a vice president of Halstead Property. But he’s saying that he will wait until the fourth quarter of the year — after the lease expires.
Ms. Tramontano said the buyer had not explained his reason for holding back. But she observed, “Once buyers hear there is a tenant, they are always concerned that the tenant won’t leave.” And that is even though the loft’s lease has a rider saying the owner can request that the tenant move out, with two months’ notice.
There are other frustrations. Whenever Ms. Tramontano wants to show the apartment, she has to have the permission of the tenants, who are not as motivated as owners to keep it in museumlike shape for viewing. When she arrives with clients, there’s often a wife, a baby and a nanny at home — and the corresponding toys and other evidence of family life.
At least she can show the place. A 19th-century seven-bedroom house in New Canaan, Conn., having failed to sell, has been occupied by a renter since Oct. 1. The lease contains a 90-day “show clause,” which means the house can’t be shown to prospective buyers until July 1 — 90 days before the lease expires.
That was not a problem when prospective buyers were nonexistent. But recently brokers have inquired about the property on behalf of two clients.
“I explained to them that you can buy it with the tenant in place until Oct.1, and I can give you photographs and detailed information about it,” said Mary Higgins, an associate broker at Halstead, who has the exclusive on the property. “But what I can’t do is open the door and let you see it.
“They say, ‘Well, if I’m still in the market in a few months … ’ ”
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