If there’s one declaration most new real estate agents don’t want to hear after spending a lot of time with a homebuyer client it could very well be the following:
“We’ve decided to rent.”
On one hand, there goes a hefty commission. But on the other hand, while agents logically prefer sales, they can often assist with the about-face to secure client loyalty for future purchases, providing expertise in competitive, fast-moving rental markets.
RISMedia asked real estate pros for their thoughts on the rental realm. Agent opinions varied from not handling that housing aspect at all to eagerly helping folks find temporary places to live before eventually buying a property. The ones doing that generally view homebuyer decisions to rent as a strategic move to gain flexibility, wait out high interest rates or navigate competitive markets.
“In many cases, buyers who choose to rent are not abandoning the idea of purchasing, they are simply waiting for better timing, greater clarity in the market or more comfort with making a purchase,” says Jill Eber of the Jills Zeder Group in south Florida. “By helping them find the right rental, I remain involved in their decision-making process and maintain the relationship during that interim period. Throughout their lease term, I consistently share market updates and new listings that meet their purchasing criteria, so they have the information they need when they are ready to make a decision.”
Ana Teresa Rodriguez, founder and CEO of ATR Luxury Homes Group at Coldwell Banker Realty in Coral Gables, Florida, expresses that working with a rental client is often a welcome beginning.
“Rentals are often the first step in building a long-term relationship, and they are also key when building a successful real estate career,” she says. “It’s an important service that experienced agents should provide. If you choose not to assist with rentals, you may risk losing an important client. Many people begin by renting before they buy, and as an agent, you want the opportunity to be there from the beginning, to become their first option when they decide to purchase.
“Some buyers rent for a year while they get to know the area better, wait for interest rates to improve or simply take the time to prepare financially. For me, helping with rentals is never a drag; it’s part of the service. Real estate is not just about one transaction. It’s about relationships that grow over time.”
Pam Rosser Thistle, with Berkshire Hathaway HomeServices Fox & Roach, Realtors® in Philadelphia cautions that there’s a difference between rental agents and those working with single-family homes.
“Agents who represent renters must follow specific training due to liability,” she notes. “I put buyers in touch with a trained agent who specializes in renters. Anyone who represents a renter generally has to take classes and get licensed. I don’t know the rental market and don’t want that liability. For me, it’s a business decision.”
Ricky Carruth, chief housing analyst at real estate financial services platform RLTYco, believes that there is no lost time with a client regardless of whether they buy or rent.
“I realized years ago that the more time you ‘waste’ on people, the more deals you close,” he says. “Most agents see a renter as a failed buyer. I see them as a client with a built-in expiration date. Because that lease ends in 12 months, you know exactly when they’re coming back.
“While I don’t advise building a business working with renters, if a potential buyer turns into a renter and you’ve already invested the time with them, why would you abort the mission now? Every relationship you foster is worth 10 to 20 deals over the life of a real estate agent’s career through repeat business, referrals and referral of referrals. It truly compounds.”
Carruth opines that a client isn’t worth zero because there’s no commission today, feeling that they are actually worth one sale in 12 months plus everyone they send you for the next 30 years.
“I advise helping these clients find the right rental, checking in quarterly and on month 10 of the lease, start the conversation about buying,” he says. “When you help someone find a rental, you can become their real estate agent for life and put yourself in a position to receive endless referrals. These are the exact clients who will remember you stuck around when other agents bailed.”
Along those same lines, Patrick Southern, an agent with SERHANT. in Jersey City, New Jersey, explains that “we don’t view a lease or a closing as a finish line; we see it as a starting point. By maintaining specialists dedicated specifically to renters, we ensure we’re there from day one. Then we’re right there to guide the natural transition from renting to buying, and eventually selling to upgrade. It’s a continuous cycle of growth, and our goal is to provide the steady hand that ensures they land where they’re happiest at every stage of their lives.”
The Big Apple scenario
In New York City, where condos and co-ops rule, buyers and renters can often occupy the same buildings, with options to buy not uncommon for someone renting a unit. Three local real estate professionals with Coldwell Banker Warburg—Veronique Perrin, Alana Lindsay and Gerard Splendore—talk about what it’s like in one of the more unique markets in the U.S.
What’s it like when prospective buyers decide to rent for a year?
Veronique Perrin: This is happening a lot in the current market. Buyers have come to accept the mortgage rates, and prices are not the biggest reason either. There are plenty of listings that started at “aspirational prices” with now ready to make a deal. I find that the No. 1 reason is a lack of inventory. At some point buyers get tired of their lives being on hold and just decide to take a break. Or they lost out on homes and are too frustrated or heartbroken by the experience to move on. I see a lot of bidding wars above the ask because anything priced right is taken quickly. Timing is everything, so I am always understanding if the stars don’t align when you need them to. I am ready to pivot with them.
Alana Lindsay: To ensure that you are providing the best service to a buyer client who turns into a rental client, you have to sort out their true motivations for buying, and whether or not renting for a year is just prolonging the process, or if the year off from looking will truly provide clarity to their situation. Once you have established that, you can then guide them properly through the rental process, like what type of lease length is right for them, what buildings they should focus on (condo, co-op or standard rental building), do they need to have amenities, etc. A sale deferred is not a sale denied, so make sure to follow up with them enough to stay top of mind and be there when their lease is almost up. That is when you can reintroduce what is happening in the sales market and see whether they are ready to jump back in.
Gerard Splendore: When I have a buyer who changes their mind too many times, I have to determine whether they are “real” about buying. The first rule of real estate I was taught early in my career is “Do not listen to what people say. Watch what they do.” If a buyer cannot decide where to plant their roots and their savings, then it is far better to rent, just as a seller who is not getting the price they want for their home may be better off renting.
While buyers turned renters say they cannot find anything to buy or are waiting for interest rates to drop, there are usually hidden or unstated reasons. They may have credit issues or trouble qualifying for a mortgage. They may be saving for a bigger down payment. Or they may have lost bids and are frustrated with the process.
Another concern may be that they are not in agreement about which neighborhood or borough to reside in. Renting supplies an opportunity to “test drive” an area. If the renters are going to work from home, they may want to determine what it is like to be home all day in a building or neighborhood, and see if there are necessary amenities close by.
For couples, another reason may be that they are trying out living together before purchasing together. It is far easier to move out of a rental than sell a unit after a breakup. Anyone who is starting a relationship and/or has never lived with a significant other, or even a roommate, may want a “trial run” to determine how easy (or not) it is to cohabitate. Another consideration is buyers who turned renters and are “starting over” from a prior relationship may say they want to purchase but actually think renting is a better idea all along.
Is showing rental properties basically a step down? Is it worthwhile to keep renters as clients for a year simply hoping they will eventually buy?
VP: I qualify all my buyers before starting showings to make sure they are legit and not wasting anyone’s time. If buying does not work out for whatever reason, I have no problem pivoting to renting. This business is all about relationships, and mine is 100% referrals or repeat clients. I am planting seeds with every showing, every phone call, every interaction.
Also, you get to know people when you spend more time with them. They find things that were their must-haves are actually negotiable. You get to know their aesthetics and overall vibes. And I always use this opportunity to introduce them to other neighborhoods they hadn’t considered before.
AL: It depends on how an agent runs their business. For some, rentals are not worth it, and they refer those clients to others so they do not have to service them. For others, this is par for the course, and they will continue to help them find a rental and even stay in touch with them for the long haul to be of service when they are ready to buy.
GS: After I determine how cooperative the buyers-turned-renters are, how willing they are to listen to my suggestions and how serious and devoted they are to trying a neighborhood or building, I discuss timing, financials, rental deposits, potential rent increases and the cost of move-in and move-out. Many tenants are amazed by the bottom-line expenses of renting and may, in fact, return to purchasing. If the clients are cooperative, motivated, honest and realistic, it makes perfect sense to help them rent and keep in touch after the first year.
