Like many cities, Washington, DC has landlord-tenant laws that really do protect a tenant's rights. It is extremely difficult to get rid of a tenant who is paying rent, even after the lease expires. If the tenant is a total deadbeat, it is very difficult to evict.
In addition to making evictions a major challenge, the law protects tenants whose homes are for sale. When an offer comes in on a tenant occupied house or apartment, the seller cannot sell until the tenant "rejects" the right of first refusal. And the tenants, even if they don't have two cents to rub together, have a bunch of months to make up their minds.
I once acted as a buyer broker for a tenant who held up the owner of his Logan Circle townhouse for about four years, and during that time, the value dropped from something in the low $300's to the price the tenant matched of $185,000. At settlement, it was pretty clear that the seller and his agent had little love lost for the tenant/purchaser. And it was so unpleasant that, at one point, I excused myself, went into the ladies room and had a huge crying jag. But it did eventually settle.
So what's a poor landlord to do?
A tenant is clearly the elephant in the living room in any listing, but to the seller, the tenant is generating income.
In this market, it's hard to tell how long a place will take to sell. With rents being as high as they are, most landlords are reluctant to lose the income that the tenant provides. And who can blame them?
Still, having the place tenant occupied greatly reduces the exposure to the market on two important counts. First, most tenants place restrictions on when and how their homes may be shown. Forget a lockbox on the door and come on by. They often want 24-hours notice and may even insist on being present at all showings. Not good. Second, many buyers' agents here in DC are reluctant to even show a tenant occupied listing. We know that if our buyer loves they place, it could be a long and difficult road to the settlement table - if it even gets that far.
A few weeks ago, I wrote an offer on a beautiful place that has a tenant. We don't think he's going to match the offer, but we may not know for sure until springtime. It's been on the market for over a hear with two different agents, beginning with an asking price of almost $1.1 when the market was hot, to $899,000 as things cooled off.
And I can't help but wonder - is the amount of rent a tenant is paying is a false economy?