Maybe you’ve heard whisperings that your landlord is considering buying out tenants in your building or maybe you have already been approached with a buyout offer. If a buyout is something you’re interested in, you undoubtedly want to get the best price possible. After all, you are giving up your home and undertaking the hassle of moving.
BraschLegal has helped dozens of Tenants get more money from Landlords in buyouts.
At Brasch Legal, we help tenants evaluate and negotiate buyout offers in NYC to ensure they receive a fair amount of money for the things they’ve been asked to give up. Here are 3 tips we suggest every renter consider when negotiating a buyout offer.
1. Know your motivations
Sometimes people jump at the chance to get bought out. Maybe they have been wanting to move but needed money for a down payment, moving, or travel expenses to finally take the leap. A buyout offer can provide them with this extra cushion of cash to finally make the change they have been wanting. In other cases, moving wasn’t part of the plan and will require some time and thought before you can come around to the idea.
The motivations in these two examples are quite different and can have a drastically different impact on the amount of money accepted in a buyout. The renter who wants to move and has been planning it probably has a good idea of just how much money they need to make the move happen. This provides them with an excellent negotiation starting point. In some cases, negotiation may not even be necessary. It all depends on the landlord’s offer and desire to empty the unit and the renter’s ability to make that happen.
In the other situation, the starting point is less clear. The renter may have done no research, have no potential neighborhoods or apartments in mind, and have no idea how much it will actually cost them to move. Negotiations may take a little more time and effort in this case.
Keep in mind that a buyout offer is only good if it meets, the tenant’s, financial needs. An offer that doesn’t even cover moving expenses won’t be worth it to most people unless they have a new home lined up and are just eager to get out of the old place. In those cases, it can make sense to take the money and run, but for most people, the answer is not so clear-cut.
Before entering into any buyout negotiations, you must have a firm understanding of why you want to or are willing to accept the offer. This will keep you focused on the end goal and grounded as negotiations take place.
2. Calculate your new expenses
When presented with thousands of dollars, your knee-jerk reaction may be to accept it and move forward with your life. But it pays to take a step back and figure out how far that money will really go. If you are not planning to use the buyout as part of your living expenses, you can skip this step. But if you do want to use the buyout to live on you need to do a little more work. To start with, calculate how many months of renting/owning a new place you can afford using the buyout offer. You’ll need to have your new home’s rental rate or mortgage on hand to make this determination. Then:
- Calculate the difference between your current rent and your new rent.
- Divide the buyout offer by this difference. This will give you the number of months the buyout offer will last (assuming you use it only to pay rent, not other costs).
- Divide the number of months by 12 to figure out how many years the offer will last.
Here’s an example with real numbers:
New Rent = $1000 more than your old rent.
Buyout Offer = $50,000
$50,000/$1000 = 50 months
50 months/12 = 4.16 years
In this scenario, the $50,000 offer will subsidize the cost of the new apartment for just over 4 years before it runs out.
Once you have those numbers it is up to you to decide if it the offer is worthwhile for you.
Depending on your situation, you may want to consider other expenses to like:
- Travel and moving expenses.
- Down payment expenses.
- Broker’s fees, and realtor fees if you are buying a home.
3. Hire an attorney
There are so many variables in buyout offers that it is impossible to say what’s a good offer and what’s a bad offer without having details. Everyone’s situation is unique. Consulting with an attorney will help ensure you are being treated fairly and receiving the right amount of money. They know what kinds of buyouts are being offered currently and can evaluate yours based on market conditions.
Attorneys are also skilled negotiators, so they can likely get you a better deal than you could get for yourself and they are less emotionally invested in the situation, which can lead to a more productive discussion all the way around.
Contact Brasch Legal for help evaluating a buyout offer
If you have been approached with a buyout offer, contact Brasch Legal. We have worked in the field of landlord–tenant law for over 20 years and bring years of experience negotiating buyout terms. We have helped many tenants get substantially higher amounts in buyouts.
Contact us at 212-267-2500 or online by clicking here or visit www.braschlegal.com to learn more about our landlord-tenant law services.