You've had the property as a rental and it’s now time for you to sell! This is a big checkpoint, and we appreciate the opportunity to have been able to work with you and your investment property. In general, property management services end once the residents have moved out and there are no additional management fees charged as there’s no more rent collected but there are additional tasks that we will complete to close out the file. However, from the day the residents move out you are now entering the sales process where the property has to get ready for sale, you’ll go through the listing phase of having the property on the market and finally the escrow process through closing. The following are the items that will need to be completed by either you or us in order to make this process as easy and smooth as possible.
UTILITIES
Once the resident moves out, the utilities will need to be kept on during the sales process. Therefore, we ask that you call all utility providers and switch the utilities into your name as of the resident's move-out date. This will ensure that there's no interruption in service and will allow us to complete the move out walk-through. We will be sure to provide you with the resident's move-out date. We ask that you confirm with us once the utilities have been changed into your name.
THE TURN PROCESS
The process of getting a property move-in ready is known as The Turn Process. The Turn Process can be boiled down to three simple steps which are addressing Painting, addressing a Maintenance Checklist and finally doing a deep Move Out Cleaning. The main question is, who is responsible for these costs? Here are notes on each:
Painting: You are. Paint has a three-year depreciation schedule and therefore after three years, an owner cannot charge a resident for painting. In addition, in the event that an owner asks for possession prior to the three-year checkpoint, then no charges can be put on the resident as they are being asked to move out. In theory, the resident could have stayed for longer than the three years and therefore there have not been any charges to the resident. The good news is that depending on the condition of the paint, the entire house may not need to be repainted, or there may be minor touch-up needed throughout. We are that you lean on your agent’s recommendation as to what will be the best gameplan to maximize the sales price.
Maintenance Checklist: During the Move Out Walk-Through, we will be testing out all the components. Please note that the default is for items that need repair to be owner responsibility unless it’s clear that an item is damaged by the resident. The good news is that a handyman can address this type of list and is usually completed in a one or two days.
Cleaning: In general, we work to charge the cleaning to the resident. While residents have the ability to perform their own move-out cleaning, we share with them through the Resident Move Out Process blog that cleaning rarely gets done properly and is the number one contested charge. Therefore, the best solution is to have them agree to the price quoted by our third-party cleaning vendor who will do a good job resulting in no disputes.
PROJECT MANAGEMENT
While The Turn Process addresses the basic items of getting a property move-in ready, there may be additional projects that may be ideal to help maximize the return on investment as you listing the property for sale. Some of these projects include exterior painting, kitchen remodel, bathroom remodel, changing the flooring, etc. We suggest that you lean on your real estate agent’s feedback as to what projects will maximize your sales price. While we are happy to introduce you to a vendor that can get this done, we do not offer Project Management services of overseeing the vendors during this timeframe. The good news is that your real estate agent may be able to assist in overseeing the vendors during the sales process.
MOVE OUT WALK-THROUGH
Most of our leases will go through a Sunday, which means that we will work to complete the Move Out Walk-Through on Monday morning. We'll document the condition with our 360 camera and complete the Move Out Condition Report which you'll be getting by end of business day on Tuesday, if not sooner. This report will notate all the items found and spell out which are resident responsibility which can be charged to the security deposit. When a property goes up for sale we suggest being mindful about how much to repair. The reason for this is that it’s easy to get carried away with how much it’s reasonable to repair versus what is just good enough. Please note that the buyer will usually perform their own inspection by a third party licensed inspector which will produce their own list and possibly request a Request for Repairs. Knowing this, your agent will be able to advise as to what repairs are reasonable to grant or perhaps offer a dollar amount as a repair credit. We will suggest asking your real estate agent if they suggest that you complete a Pre-Sale Inspection so you have a better idea as to what items may be needed from their perspective.
REKEY
If your property has Kwikset SmartKey locks, we will re-key them during the move out walk-through. If your property does not have Kwikset SmartKey locks, then a locksmith will be needed to rekey the property. If you desire to have a locksmith rekey the property, please let us know so we can plan accordingly.
POSSESSION
We ask that owners or their agents do not attend the move out walk-through, as the whole goal of the day is to be able to focus on taking the 360 photos to document the condition, completing a Maintenance Checklist by testing out all of the components, finish writing the report which will be provided to you as well as completing a walkthrough with any vendors that may be needed to obtain estimates. We ask that owners and their agents wait up until Tuesday prior to visiting the property and can schedule a walk-through if requested.
LOCKBOX & KEYS
A lockbox will be placed at the property, and the code will be shared with you. The lockbox is usually found either at the front door, gas meter, or water pipe. This will allow us to have the vendors be able to obtain access and get any work completed during The Turn Process. Once all the work is completed please remove the key from the lockbox and let us know so we can schedule a time to remove the lockbox. All of the keys, fobs, remotes, etc. that the property has will be left in a kitchen cabinet the day the move out walk-through is completed for you to obtain.
SECURITY DEPOSIT REFUND
We will process the security deposit refund within the required 21 days after the resident has moved out. We will let you know what can be charged to the resident and deduct it from the security deposit. Here are the rules based on which vendor is completing the work:
Our Vendor: If our vendor completes the work, we will obtain an invoice which will allow us to deduct the security deposit and pay the vendor.
Your Vendor: If your vendor or your sales agent completes the work, we will need to obtain an invoice within 14 days in order for us to be able to meet the 21-day deadline and comply with the rules. In addition, it is crucial to note that if the payment is above $600, we must obtain a W-9 from the vendor in order to issue payment. Please note that in order to be in compliance we will not be able to pay your vendor or your sales agent’s vendor without a W-9.
FINAL OWNER DISTRIBUTION & STATEMENT
To keep things simple, we work to process any final owner distributions and the corresponding owner statement by the end of the month, if not sooner.
GARDENER & POOL TECH
If your property comes with a gardener and/or a pool technician servicing the property, we will notify them that the property will be going on the sales market and that you will be taking over the payments during the sales process. To keep the accounting simple, best practices are to have us as the management company pay the last bill the 1st of the following month. This ensure that we do not have to prorate the bill for service for a partial month. Past that, you will be making the next month's payment. Please note that this will be the default unless requested otherwise.
1099 COMPLIANCE
If the rent collected during the year is more than $600, then a 1099 will need to be issued for that tax year. Please note that you will be getting a printed copy in the mail to the address that we have on file. If your mailing address happens to change, it is your responsibility to update us so we can provide you a copy on a timely manner.
CONCLUSION
We thank you for having us be part of your real estate journey and look forward to making this transition process as smooth as possible!
