I received this rental negotiation success story from a reader via email, and thought it was worth sharing:
As a long time reader of your Seattle Bubble Blog, I knew that rents on their way down in King county. My Equity Residential owned apartment building in Redmond has experienced some huge increases in recent years, causing my rent to go up from $950 a month in 2001 to $1265 per month this year. Yesterday, I was sent a letter regarding my lease renewal. I was offered a relatively anemic rent decrease to $1209 a month, so I decided that I would haggle with them to get it lower.
I checked the Equity Residential website and found they were advertising a larger unit with 1 more bathroom for $997 a month, so I used the handy form on the website to express my interest in the unit, noting that I was a current resident and that I would like to move into this unit instead of paying more for renewing the lease on my current unit. I hoped that this method of sending a counter offer would be more effective than a verbal negotiation, and I was right. First thing this morning, I received a call from the apartment manager offering to renew me at a rate of $940 a month, a decrease of over 25%.
The nice thing for the local economy is that this gives me $325 a month extra in disposable income, which is better than any stimulus I have seen from the government so far. I thought I’d write you and let you know of my success so you could pass on my 21st century method of haggling to your readers. The market has definitely shifted back to favor the renter again.
The current rent price trend in Seattle is clear. If you’re not negotiating a lower rent when your lease comes up for renewal, you’re leaving money on the table—potentially a lot of money.
BubbleBuyer » Apr 24, 2009 at 4:32 pm
Got to be said, typical renter….goes and spends his rent reduction rather than saving it and/or paying down debt.
and for the humorless yes, I’m kidding.
EconE » Apr 24, 2009 at 4:40 pm
The same goes for lower priced homes. The less a person has to spend on a home, the more they have to spend on “stuff” purchased from another person…who can then go buy a home.
Pretty simple concept, eh?
singliac » Apr 24, 2009 at 5:01 pm
There is an identical apartment in my complex advertised for $300/mo less than I’m currently paying! My lease is FINALLY up at the end of May, so I can start haggling as well. That will more than cover the payments and insurance for the new car I just bought.
Dave Lincoln » Apr 24, 2009 at 5:50 pm
“The nice thing for the local economy is that this gives me $325 a month extra in disposable income, which is better than any stimulus I have seen from the government so far.”
Come on… what makes you think that you will spend the money in a more “stimulating” way then your leasing company will? Just playing D.A. here (NO, not District Attorney, Devil’s Advocate). It all depends on what you spent the money on. If it went to meth and hookers, then I can see the stimulation from here ;-) On the other hand, 10% of any locally (oh and legally) spent money goes to the local government, so I see that as anti-stimulus, if you will, as it only goes to bog down the economy.
Anyway, nice job negotiating! I wonder how much you could have gone down without seeing that other unit. I don’t know if it would take a little bluffing or not. I also wonder how much lower they would have gone for, but it is very hard to get to that number without inside information.
David Losh » Apr 24, 2009 at 8:46 pm
This is a really good post.
Real Estate is all about negotiation.
Eastsider » Apr 24, 2009 at 9:09 pm
When we were renting an apartment, I would try to negotiate the new rent during each renewal — and almost always the company agreed to reduce. One year — I talked them down to $1250 from their asking price of $1700.
Ben » Apr 24, 2009 at 9:12 pm
I remember getting a renewal way less than my original rent. My wife got a co-worker to ring them up and get a quote on what the going rate was, and then she called them back and asked for that rate.
A few years back I remember seeing signs for 1-2 months free rent everywhere. One of my friends did the calculation of what it was per month to move to these places, and asked his landlord for that rate. He got it.
Chris » Apr 24, 2009 at 11:33 pm
Just got my renewal. They’re offering to keep my rent the same. I should be able to get at least a month free out of them.
george » Apr 25, 2009 at 3:10 am
RE: Dave Lincoln @ 4 –
10% of any locally (oh and legally) spent money goes to the local government, so I see that as anti-stimulus, if you will, as it only goes to bog down the economy.
This has to be a joke, right?
back2reality » Apr 25, 2009 at 8:00 am
I had similar success negotiating with Equity Residential in Mill Creek. My current rate is $1,260/mo, but we’ll be renewing our lease for $1,050/mo, almost 17% off. Here’s what we did:
-checked current rates online for our community (which confirmed we were overpaying)
-went to the office and discussed possibly moving to other (cheaper and larger) units in our community
-looked at other nearby communities and got email quotes
-offered to sign long-term lease, or pay 6 months up front (they said no)
-spoke to management about getting the market rate for renewal at our current unit (offered $1,080/mo)
-sent one last email to management (cc’d corporate) asking for a fair price, documenting all past discussions, pointing out flaws in our unit, reminding them of their costs for turning the unit and lost income during vacancy, and included the emailed quote for cheaper/larger unit at another community down the street
-got a reply offering $1,050/mo.
If you don’t try to negotiate your renewal, you’re leaving money on the table in this market. Document everything and go for it!
Objectivity » Apr 25, 2009 at 8:19 am
Great story. If only the people buying would use the same diligence…we could get somewheree.
Yesler Hill » Apr 25, 2009 at 9:43 am
My landlord has tried to beat me to the punchline by offering to keep my rent the same as long as I want to live here. Now, that might seem like a good deal over the long long term, but several units are going vacant this month, at or lower than my rent (and they have views), so I’m going to offer to sign a year lease at 25% less than I am now paying, actually, I’ll ask for 30% lower, then settle for 25% lower. We’ll see.
b » Apr 25, 2009 at 9:43 am
I recently renewed at about 12% less, this is a 2bd in a “luxury” new apartment building on the eastside. You can get more traction with the big apt communities by asking for free rent or its equivalent, IME they seem to like to keep the rent amount the same on paper but monkey with it other ways.
Softwarengineer » Apr 25, 2009 at 10:18 am
THE MALTHIS MOMENT IS HERE IN SEATTLE
Just as The Malthis Theory predicted: when Seattle growth exceeds the job market’s capacity [and I'd add even more horrifying application to this theory, federal debt to fund the uncontrolled growth is up to our entire GDP, never has this been so bad in America's history]; wages will spiral downward.
With mitigated wages: home prices and rents must collapse too. The current economic lemming leaders in America are still pushing us over the same old uncontrolled growth cliff that got us into this bubble in the first place.
I see Lou Dobbs is desparately trying to put lipstick on the old home price growth pig in error too [he was even for bailing out individual foreclosed home homeowners]. I suppose from his view point, hoping to keep his million dollar mansion from collapsing in price sounds like a worthy pipe dream. Let’s get real, the very path that got us to this economic mess is clearly not the way out, in my opinion these economic lemming leaders are leading America down a long fall cliff that just makes it far worse in the future.
Enjoy your lower rent :-)
I hear talk to your next door neighbors if you’re renting, their identical unit may be less rent than yours. Just move to a new one in the same complex for rent savings….LOL!
One Eyed Man » Apr 25, 2009 at 10:58 am
RE: b @ 13 –
Great point about free rent. If the landlord needs to refi or wants to sell in the near future, the valuation will be based in part upon proforma financials using the current lease rates. Often they can get away with using the current monthly rent which doesn’t reflect the discount absorbed at the beginning of the term as free rent. The net result is that the landlord preserves the valuation they need and the tenant gets the rent discount.
S-Crow » Apr 25, 2009 at 11:54 am
Commercial real estate rents are also falling, some by a good margin. Never have had so many e-mails and calls to have our business.
Fran Tarkenton » Apr 25, 2009 at 12:22 pm
To add my story, in MLS 390 I renewed my lease on a 1,250 sq-ft duplex unit for $1,300/mo off $1,500/mo. The people in the other half of the duplex (identical unit, but they get a parking place, though street parking is plentiful) are at $1,575 with their lease expiring in a few months.
Where I’ve seen the greatest declines is in Belltown/lower Queen Anne due to all the new construction there. The failed Expo 62 condos (can’t recall the apartment name, but it’s Denny and 2nd) originally listed their 2BR/2BA ~1200 sq ft units for $2500, and my friend got a place there for $1850, a month free, and two parking spaces included.
One Eyed Man » Apr 25, 2009 at 12:35 pm
RE: S-Crow @ 16 –
A commercial real estate attorney I was doing business with in Seattle last January said she had already done six lease modifications decreasing the rent mid term, in most cases without any consideration from the tenant. If there was any condisderation from the tenant it was usually an elimination of a portion of the option to renew. She said she was getting calls about lease modifications to reduce rents several times a week.
Dave Lincoln » Apr 25, 2009 at 1:34 pm
RE: george @ 9 – No, not a joke. I wish it were.
Everett_Tom » Apr 25, 2009 at 1:56 pm
We just renewed a SFH we rent in Everett for 12% less.. there were places we could get for less then that, but after the one-time cost were factored in , staying proved to be less $ over the next year.
patient » Apr 25, 2009 at 2:26 pm
We just renewed our sfh private rental for the same yearly rent we have had the last 5 years. No increase, we also negotiated a new fridge/freezer and a full furnace/air duct cleaning. Our rental level is almost exactly 50% less of what a 30y 20% down (5% interest rate) mortage of current zillowed price would be. Renting still makes a lot of sense.
Eli Goldberg » Apr 25, 2009 at 3:37 pm
I just gotta say I’m really glad to see the occasional post about “stuff renters waiting for the bubble to burst care about” (since many of us are renters!).
And I feel better about my landlord charging me $775/month rent after seeing how much everyone else is paying. ;-) [you guys probably live in nicer apartments.]
Acerun » Apr 25, 2009 at 4:09 pm
We need inflation to save the landlords!!!!!
LUC » Apr 25, 2009 at 4:38 pm
I’m moving next week from a $1170/mth 1 bdrm with a $60/mth parking space at the Overlook at Magnolia to a 1 bdrm in a fourplex 2 blocks downhill for $695/mth.
In addition, the new biotech company I work for has just gone from reveiwing 20 prespective lab and office space to lease to 3. The choices have included: One Convention Place, Bank of America Tower and Vulcan’s real estate at South Lake Union. All of which is less than what we currently pay to lease space across the street from Virginia Mason.
pfft » Apr 25, 2009 at 5:31 pm
how can it be a good time to buy if EVEN rents are falling?
answer.
it isn’t.
wreckingbull » Apr 25, 2009 at 5:47 pm
I love the smell of deflation in the morning.
I too lowballed my landlord for the place I am currently renting. She was a little miffed, but realized she would be a fool not to accept.
Keep up the good work all.
Ron » Apr 25, 2009 at 6:07 pm
Anyone Ever take a Professional Property Management Course:
Believe me, “You will never want to EVER Rent from a Professional Property Management company if you get a chance to take there course..
One of the BIGGEST RULES:
Rental DROPS Are a Last RESORT..
They are and will first and almost always give you 1-2 months free rent Before dropping your Monthly rental rate..
They know from history that Monthly rental increases are hard to get back… its much more cost effective to give 1-2 months free rent and keep the rental value up.
Its much better to get the Free month rolled into rental value drops, because that rental drop usually effects the bottom line when it comes to signing the next year.. also your rent cost drop gives leverage to other tenants and the overall community. Thats a big reason you don’t see that much reflection in overall rents in the area because many of the Apartment owners are giving Free Rental concessions. The Apartment renters need to get smart and make those free rents into actual rental cost drops that end up getting reported to the Media and show the true nature of the market. Your almost just helping the apartment property management companies out by not forcing there hand.
anon » Apr 25, 2009 at 6:24 pm
I just negotiated mine down in a luxury location in the seattle/eastside.
I was paying around 1600 and I noticed a very much better unit for around 1100.. I demanded they lower mine because my lease was up. They said they would not allow me to move into the cheaper better unit! Those jerks! So I got mine down a few hundred bucks at least.
Note.. I believe it is illegal for an apartment to not allow you to move into a cheaper unit that they are advertising.
Dave » Apr 25, 2009 at 6:39 pm
I rent a house through a property management company. We plan on renewing for at least another year before we buy. It’s a two bedroom in Fremont, about 900 square feet. Our rent was raised a year ago from $1.200 to $1,345. I’ve been thinking about trying to negotiate a lower rent but was hesitant till reading this as the listings I see on craigslist seem to be comparably priced. Should I bother asking for a free month or just go for the rent decrease? What would be a good way to phrase it? It’s a nice place in a good location so definitely wouldn’t leave if they said no.
AmazedR » Apr 25, 2009 at 7:12 pm
We just negotiated our rent down from $1800 to $1600…perhaps I should have pushed a tad harder, eh?
Jonness » Apr 26, 2009 at 8:13 am
“They said they would not allow me to move into the cheaper better unit! Those jerks! So I got mine down a few hundred bucks at least. ”
If it were me, I would find a cheaper comparable place in your vicinity and show them the price. Then tell them either give you a fair price or you’ll move. If they don’t comply, move. In fact, after the way they are attempting to rip you off and steal your money, I’d consider moving without givng them a chance to keep your business.
Jonness » Apr 26, 2009 at 8:18 am
“What would be a good way to phrase it?”
It’s business. They had no problem raising your rent and taking your money. The flip side is you should have no problem lowering your rent and keeping your money. Find a comparable cheaper place in your vicinity, show it to them, and say you love where you are, but you’re considering moving because you think they’re asking above what the market will bear.
Of course, if as you say the listings you are seeing are priced about what your rent is, I don’t think you have a lot of bargaining power. You might try asking for $1200 and see what they say.
Eli Goldberg » Apr 26, 2009 at 11:13 am
By the way, has anyone had success when signing a lease with large companies (like Equity) on insisting upon a clause like: “Lease renewals will not exceed the current market rent for a comparable unit in this complex.”
I’m thinking of trying something like that when I inevitably move in the next 12 months.
T » Apr 26, 2009 at 12:55 pm
Any recommendations for those of us who are on month-to-month leases? Our rent just went up ~11% back in October but we didn’t have to sign a new lease. I’m thinking about trying to get rent back down to the previous amount ($1325) or lower. Another unit opened up last month and hasn’t rented (I haven’t seen a unit stay open for more than 2 weeks in the 2 years I’ve lived here (all the units in my building are identical, FWIW)), so I’d have to guess that they’re asking too much compared to the going rate in our neighborhood.
Anyway, does anyone think offering to sign a new lease would maybe offer some leverage? Should I try to go even lower than the previous amount? Is it even a good idea to throw out an amount we’re willing to pay or should we let them come up with an amount first?
Sniglet » Apr 26, 2009 at 3:51 pm
There really isn’t any difference in negiotating a lower rent in a my-to-month situation from a year-long lease. In both cases you 1) make a request of lower payments, backed up with data of lower prices elsewhere and 2) back up your request for lower payments with a threat to move.
The reality is that many landlords simply won’t budge on prices unless (and until) they are faced with the REAL prospect of losing a good tenant. In some cases the landlords will never budge and your only option is to move if you want the lower price.
The good news about a month-to-month situation is that you are in control, and can time things to suit you. Keep watching the rental market until you see something better that you really would like to move to. At that point go to your landlord with an ultimatum (i.e. lower the rent or I move). If you have a long term lease your ability to negotiate is much more limited since you have a short window of time in which to negotiate, and look for better deals.
jon » Apr 26, 2009 at 6:40 pm
RE: Dave @ 29 – “Should I bother asking for a free month or just go for the rent decrease?”
If you plan on staying there after the current lease, having a lower rent base for this year might make it easier to keep the rent down next year. The number of houses for sale at the low end of the market is tightening up. If that persists it seems likely to spill into the rental market at some point.
David Losh » Apr 26, 2009 at 6:45 pm
RE: T @ 34 – RE: Eli Goldberg @ 33 – RE: Dave @ 29 – RE: anon @ 28 –
Leasing is a form of business that is all about numbers. The first response to can a property management company keep you from moving into a cheaper better unit is no, but the numbers are what they look at. They would have to explain why they converted a worse unit renting for more into a better unit renting for less. They have a better chance of getting new blood that they can jack around later rather than jack around a now savvy renter in the building.
Does that make sense?
The premise is that vanacy rate is the killer of the numbers. No one wants to give you a free month’s rent but they can rather than have a unit vacant. Vacancy can run 4% no problem as a normal course of business. 10% is a problem and at 20% some one gets fired. The property manager is paid according to how well they keep the building and the numbers they generate. Some places are just about the rental income, other places are income versus expenses.
OK?
In your negotiation you need to determine the motivation of the owner. No owner wants vacancies. When you negotiate you need to be ready to move. What strikes fear into an owner and I have seen people evicted for this is when a group of renters get together to plan a mass exodus. Renter meetings are bad for business. Tenent coops I think we’ll see again in the near future. Bad land lord lists may be coming back.
if you are in a single residence you should be sensitive to the owners situation. Be prepared to move, but most singles have a budget they follow. They may well let you go, but point out that even on month of vacancy transalates into X number of dollars over the year. If you’ve got a good deal live with it.
When you negotiate the lease lower you need to keep in mind your living expenses in relationship to the owners expenses of having you. The costs they have go up each year so you should factor in a 5% increase, if you want a multiple year lease, which today I would avoid.
Hector » Apr 27, 2009 at 9:49 am
By Objectivity @ 11:
It was kind of funny…my last agent tried to tell me that current listings could not be used as comps when making an offer, only closed sales. Yeah, she’s no longer my agent…
My SFH is up for renewal. The LL just offered me month to month at the same price, but I found a larger house just around the corner for 10% less each month, plus $500 off the first month. I feel bad for my LL, because I know he owns a few houses (including mine) that he bought right at the peak (with bad financing I might add as he planned on flipping them), but I can’t let that affect my decision making.
Dave Lincoln » Apr 27, 2009 at 11:56 am
Hector (dang, can’t believe I’m agreeing with Johness here; I’ll get over it): Why should you feel bad about it, at all? Good people who make stupid financial decisions, such as buying a house that is worth under 300 K$ for 600 K$, need to learn financial lessons just the same. At least, if your landlord can keep those houses rented, even though for a few hundred dollars less per month, he can probably hold onto those houses and keep the grief off of us responsible taxpayers (all 500 of us ;-)
Business is business. “Nothing personal, strictly bidness”, as the man with the fedora said. I’m sure you’ve heard that before Hector. BTW, if your landlord had been raising rent due to various financial reasons (aka, taxes or maybe just because he could get it), he may very well have used the same phrase, even as he thinks you’re a good guy too.
Angie » Apr 27, 2009 at 3:47 pm
I’m amazed at how much you folks are paying for rent. For most of you the cost after the rent reductions is still more than the PITI on my mortgage.
What strikes fear into an owner and I have seen people evicted for this is when a group of renters get together to plan a mass exodus. Renter meetings are bad for business.
Dave, this is really interesting. The only time I ever lived in an apartment complex, I tried to get some social events going to meet the people in my building (because, you know, I’m such a bubbly gal) and the manager came down on me like a ton of bricks. I always thought it was mystifying, and still do, but this gives me some insight into that response.
Hector » Apr 27, 2009 at 9:13 pm
By Dave Lincoln @ 39:
That’s just it Dave, he has raised it twice now, and he of course did so without apologizing (all the while complaining about the raw deal he got on this house). It’s hard not to symphathize with him (haha, because he got a seriously raw deal when the builder screwed him, declared bankruptcy, and then came back into business to finish a few more houses down the street), but like you said, at the end of the day it’s just business. If I can get my rent lowered by $3k a year, that will make up for the raise I didn’t get this year.
Off to draft my request…
Dave » Apr 27, 2009 at 9:35 pm
RE: Angie @ 40 –
I live in a nice convenient neighborhood. Not white center.
Everett_Tom » Apr 27, 2009 at 9:52 pm
RE: Angie @ 40 – Not to be a smart alek, but how much did you put down when you bought the house? That can make a HUDGE difference on the monthly payments…
Angie said:
Mikal » Apr 27, 2009 at 10:25 pm
RE: Everett_Tom @ 43 – Where is Matthew?
Angie » Apr 28, 2009 at 4:36 am
By Dave @ 42:
I live in a nice convenient neighborhood that is not White Center, too.
You don’t have to be bitter; I’m just telling you guys what I see when you lay out those numbers. Aren’t we supposed to be “data driven” around here?
Everett Tom, we put 3% down, in 2006. I will concede that the house was a fixer upper and a screamin’ deal, and we have put a lot of time and effort (and a fair bit of money) into making it much nicer.
Everett_Tom » Apr 28, 2009 at 9:07 am
RE: Angie @ 45 -
not bitter just curious :)
Thanks!
RE: Mikal @ 44 –
eh? I musta missed something…
Samantha » Apr 28, 2009 at 3:38 pm
I have been along time renter and if anyne can remember apartments were in this same predicement in 2001 with rents at an all time low. I received a $300 increase last year and I took it because I had shopped around and it was still less than most other communities. I renewed this year with no increase while I did consider trying to get a lower rent. I then thought I will then become accustom to that money and when the economy picks back up you will all see at least a 17% increase. I am just warning you that while it seems great now the $300 increase back to what they will be charging in a year or 2 is alot more to swallow than just being kept at the same rate.
Do what you will but I would say that no increase is actually better than a decrease.
patient » Apr 28, 2009 at 3:54 pm
RE: Samantha @ 47 –
This got to be a joke or a landlord in disguise.
“Do what you will but I would say that no increase is actually better than a decrease. “