At what point do you pull your for-sale property and rent it out?

Question

I’ll start this by saying I’m strictly a Buy-and-Hold investor so I haven’t run into this issue before. I want to sell one of my Washington, DC. properties to have a larger down payment for a new primary residence in Irvine, CA.

The property is a condo in Northeast Washing DC (Brentwood neighborhood near the Red line Rhode Island metro station (0.07 miles) that has been on the market for 135 days and isn’t selling. I’ve lowered the price three times for a total of $25,000, several of the agents that showed the property to buyers commented that the price was too high, It’s priced below all other Comps in the area. Last month I had the property appraised to see if maybe my agent was off on the pricing, it appraised just above the current lowered price so other than selling it significantly below value, I’m thinking about just pulling the listing and placing a tenant into it.

I’m thinking my limit is at the 6 month mark then I’m going to pull it off the market and place a tenant. My question is How long do owners typically wait before placing a tenant as a rental if it isn’t selling when priced near the appraised value?

One agent said it didn't have good curb appeal but the HOA said no to staining the brick exterior front to make it look newer and changing the building entry door.

Property is at - 1304 Adams Street NE, Unit 2, Washington, DC. 20018

Ray Johnson · Answer

Ok, so it seems like my cutoff should have been shortly after the 45 day mark and not the 6 month mark I was thinking about. I think I'll go ahead and place a tenant into the property and revisit selling it in 2019.

Cassidy Burns · Answer

The condo market has definitely slowed in Washington DC and the Brentwood area isn't a sought after location for condo buyers, BUT, it's priced well and should sell. I do believe that taking $2,000 and $3,000 price drop increments is a waste of time and days on market as well. I always suggest 7% minimum, ideally 10% if you want to move quickly and keep buyers circulating through the listing.

Ray Johnson · Answer

Thanks @Jason DiClemente The agent could be a part of the issue, I initially mentioned to the agent that I thought it was priced too high and the justification the agent gave me was it's in line with Comps at the top of the market, and that it also gave us room to negotiate on price if needed. I'm not a Real Estate agent so I went with her advice. If I take it off the market and rent it then try selling it later I will definitely use a different agent, I was initially going to use @Russell Brazil on this sale since he has an exceptional reputation in the DC/MD/VA area and deals with investors on a regular basis but I was keeping my word by using her as I promised due to me getting a discount from a previous transaction. I don't think she's use to dealing with investors, I think her client base is mostly if not all owner occupied/primary residence clients. When we were doing price adjustments she was wanting to do adjustments in $2,000 and $3,000 lower increments, I said no I'm not attached to this property like a primary home owner would be, I had her drop the price in increments of $10k after that first 5K price drop to get some attention.

Brandon L. · Answer

@Ray Johnson I always think it is foolish to sell a property. Keep it and have the tenants pay the mortgage. Have you talked to any lenders to see if a cash out refi would work for you?

Sam Shueh · Answer

Any homes on the market longer than 30 days here shows the seller did not price it correctly. People automatically assume there is something wrong with it and look at next one. In your case I will take it off the market by now. I looked at your small condo. It looks fine except for reduced asking price which needs a fall seasonal adjustment. Buyers want bigger unit like 3/2 or 3/2.5 so yours is tailored toward 1st time buyers.

Russell Brazil · Answer

The condo market has definitely slowed in the last few months in DC. So I do understand the difficulty in getting it sold. Weirdly enough I think how hot the market has been was part of the issue. People are stretching themselves to get into rowhouses or songle families which has pulled buyers out of the condo market.Id go ahead and start advertising it for rent. After 45 days on market...you simply wont get it sold even if priced right because not it is a stigmatized property. If you can Id suggest waiting til the Spring market and trying to list between Feb 15th and March 15th. You want to front run the good inventory that will hit the market in March, April, May...but you also want to be flexible with the weather. The unusual crazy rain of the last 2 months really hurt the market. Less people buy when it is rainy or cold. They dont go out to open houses or to view property...so in that same vain, its always important to be flexible with a listing date to accommodate the weather.

Jason D. · Answer

@Ray Johnson at this point the listing is simply stale and buyers are also wondering why it hasn't sold. At this point, your best bet would probably be to take it off the market, rent it for a bit and try again to sell at a different time. I would also suggest getting a new agent. If what you are saying is that your initial listing was 10s of thousands of dollars over its appraised value, your agent is the reason you didnt sell, unless you insisted on a higher list price.