Selling Vs. Renting

The Record has an interesting article today about people who are offering both sales and rentals - and also rent to buy provisions for their properties.

Here are some interesting numbers to look at Gross Rent Multiplier (GRM) to calculate if the houses are overpriced. While it is recommended that all areas be calculated on its own - a general average is 160 - lower than 160 means house is priced low and will sell, over means that the house is priced too high.

When they listed the home a month ago, they priced it for sale at $1.8 million, but also offered it for rent at $7,200 a month.

The GRM is 250 which is very high, recommend price via GRM is $1,152,000

Two newly constructed, six-bedroom, 4 1/2-bath homes on Spring Avenue in Bergenfield. One is priced for sale at $928,888 and can be rented with option to buy for $5,000 a month. The other is priced at $899,999 and can be rented for $4,995.

The GRM for house 1 is 185 sales should be priced at $800,000. House 2 is 180 and should priced at $799,200.

In Saddle River, a four-bedroom, 3 1/2-bath French Colonial, renovated and rebuilt in the last few years, is listed at $1,475,000 for sale and $6,000 for rent.

The GRM is 245 which is also very high. According to general rule the house should be priced at $960,000. These people are probably taking a loss each month they lease - just trying to stop the bleeding a bit.

In Upper Saddle River, a five-bedroom, 3 1/2-bath stone-fronted contemporary with a pool and an elevator is priced at $1,375,000 and can be rented for $6,250 monthly.

The GRM for this house is 220 and price should be $1,000,000.

In Englewood Cliffs, a new eight-bedroom, 7 1/2-bath home with three fireplaces and a full, finished basement is listed at $2,990,000 for sale and $15,000 monthly for rent.

The GRM here is 199 and the price should be $2,400,000.

Allan Dorfman of Classic Realty Group in Fort Lee has been marketing a $3.2 million home in Tenafly for months. The sellers, who are downsizing, have already purchased an apartment. A month ago, they and Dorfman agreed to list their home for rent as well, at $25,000 a month.

Finally this house has a 128 GRM with a projected price of $4,000,000. The only house in the entire article that is priced to sell and rented accordingly.

It is no wonder that lowballs are on the rise with so many people still over pricing their properties.