What you need to know when you list a house after a rental!

by Don Den­ton, Branch Vice Pres­i­dent Capi­tol Hill

In the Dis­trict, if you own a res­i­den­tial rental prop­erty, IT MUST BE REGISTERED AS EXEMPT (OR NOT) FROM RENT CONTROL.

Where we run into prob­lems is with harry home­owner who gets trans­ferred to Chicago and decides not to sell but to rent his home or condo until he returns. At some point he decides he isn’t com­ing back and he calls you to list. When you are inter­view­ing a prospec­tive client(a seller) and the prop­erty is ten­anted, the first words out of your mouth should be, have you prop­erly reg­is­tered the prop­erty as a rental. This means that at some point he went to DCRA and reg­is­tered as exempt or not exempt from rent control.

That prob­a­bly also trig­gered a Basic Busi­ness License. If he didn’t and every­thing goes swim­mingly, than life is good. How­ever, if it is a sin­gle fam­ily prop­erty the like­li­hood is nearly 100% that the new buyer will want to occupy and you will have to give the exist­ing ten­ants a notice to vacate. The notice to vacate has a blank for the “exemp­tion num­ber.” With­out that num­ber, you can not give a legit­i­mate notice to vacate. You can write in “applied for” or leave it blank. It could then get bounced back from DC or, more likely if the tenant/landlord rela­tion­ship has gone south, a smart ten­ant advo­cacy type will imme­di­ately notice the lack of an exemp­tion num­ber and thus a defec­tive notice. Besides screw­ing up your set­tle­ment, the ten­ant has just been handed a loaded pis­tol and the land­lord could be sub­ject to repay­ment of up to three years of rent he has col­lected. A lot of money.

If the prop­erty has not been prop­erly reg­is­tered, your seller can do one of sev­eral things. A. Wing it and hope it all works out. B. Con­sult with an attor­ney (Irene Lind­ner 202–429-8888 x 102) and fol­low her advise. C. Call an expe­diter (Scott Ham­mer 202–302-0342) and get the build­ing reg­is­tra­tion straight before you list it. Could take 3 to 4 weeks(requires a prop­erty inspec­tion). D. Nego­ti­ate an agree­ment with the tenants(and hope they abide by it). Basi­cally cash for keys and have them agree to be out by a date cer­tain. Make sure in this agree­ment they agree to exe­cute any nec­es­sary ten­ant pur­chase forms and any TOPA affi­davits required by the title com­pany. Fail­ing to deal with this can place you in a very ugly situation.

Last week I started a Facebook fan page called Wash DC 365. The focus? Well, here is the description from the site:

"Washington, DC is the seat of our nation’s government. Home to some of the most powerful men and women in the world. Washington, DC is a city steeped in tradition whose majesty is unrivaled by any other in the country. To its residents, Washington is something more. It’s a city that is rich in cultural diversity. It’s a place to get immersed in history. It's a place to see, to explore, and to experience. It’s the place we call home.

We welcome you to share in the treasures our great city has to offer, one beautiful, delicious morsel at a time."

Anyway, with mid-year coming up I thought ya'll would like to check it out. Have fun and let me know what you think!

Property Sales

January Property sales were 308, up 15.8% from 266 in January of 2009 and -42.6% lower than the 537 sales last month. January 2010 sales were at a mid level compared to January of 2009 and 2008. January YTD sales of 308 are running 15.8% ahead of last year's year-to-date sales of 266.

Prices

The Median Sales Price in January was $350,000, down -1.5% from $355,156 in January of 2009 and down -9.1% from $385,000 last month. The Average Sales Price in January was $467,660, down - 450 3.8% from $486,252 in January of 2009 and down - 7.3% from $504,219 last month. January 2010 ASP was at the lowest level compared to January of 2009 and 2008.

Inventory & MSI

The Total Inventory of Properties available for sale as of January was 2,244, down -7.4% from 2,424 last month and down -30.2% from 3,215 in January of last year. January 2010 Inventory was at its lowest level compared with January of 2009 and 2008.

A comparatively lower MSI is more beneficial for sellers while a higher MSI is better for buyers. The January 2010 MSI of 7.3 months was at its lowest level compared with January of 2009 and 2008.

Selling Price vs Original Listing Price

The Selling Price vs Original Listing Price reveals the 97% average amount that Sellers are agreeing to come down from their original list price. The lower the ratio is below 100% the more of a Buyer's market exists, a ratio 93% at or above 100% indicates more of a Seller's market. The January 2010 Selling Price vs Original List Price of 94.1% was up from 93.2% last month and up from 90.1% in January of last year.