By William Lee
Imagine a young professional living in Salt Lake City, Utah for less than a year. He moved to the area in early spring after getting a job at one of the many tech companies in town. Now he is thinking of buying his first house. Still, he has decided to wait because his current lease does not expire for another five months.
Is the decision to wait a smart one? That depends on his circumstances. The one thing we can say is that his lease expiration date is only one factor to consider. There may be some very valid reasons to start looking for a house now. And should he find one, there may be equally valid reasons to break his lease and buy.
Lease Dates Are Arbitrary
Lease dates in the real estate industry are nothing more than the bookends of a rental agreement. They are arbitrary dates that were agreed to when property owner and tenant signed their contract. But as with any other legal contract, there are provisions for breaking said lease.
Breaking a lease in order to buy a home is not always the wisest choice. But it is not the end of the world either. In the case of our fictional Salt Lake City resident, he would have to weigh the pros and cons of breaking his lease before making a decision.
So what kinds of things have to be considered? Here are a few:
Total Cost – Sometimes the decision boils down to total cost. For example, what would it cost to fulfill the remainder of the lease before buying? In most cases, breaking costs nothing more than one’s security deposit. It might be cheaper to buy.
Current Market – Another consideration is the current housing market. In a seller’s market, it is possible that waiting will mean not finding a house six months from now. A buyer’s market makes it more palatable to hold off on buying.
Other Opportunities – The choice to break or fulfill a lease often comes down to other opportunities. One might be looking at a better job, for example. Sometimes the benefits of such opportunities mitigate the cost of breaking a lease.
The point of all of this is to say that there is no black and white answer that applies to every situation. The professionals at CityHome Collective say that each potential buyer has to carefully consider their own circumstances when looking to buy a home in Salt Lake City or anywhere in the country.
The Devil is in the Details
Should breaking a lease become a real possibility, renters should keep in mind that the devil is in the details. In other words, it is a very good idea to sit down and read one’s lease in detail. Renters need to fully understand what they are getting into if they intend to break their leases for any reason.
A best-case scenario would mean no adverse consequences. Such situations are rare, though. At the very least, breaking a lease means losing one’s security deposit. There is also the possibility that a renter’s lease contains language allowing the landlord to charge extra fees when leases are broken. They can be things like administrative fees, relisting fees, etc. Such fees could add up to a large enough sum that the renter would want to stay put.
Lease dates are just one factor when determining whether or not to break a lease in order to buy. All things considered, sometimes it is better to break a lease and go. Other times it is better to stay put.
