Today's homebuyers are familiar with traditional home sales and short sales. But few know about another type of sale: a home on the market because of an employee's out-of-town job transfer. A relocation sale, or relo, can have distinct advantages for buyers.
A relo is a home sale completed with a relocation firm's help. Companies hire such firms to help a transferred employee hire movers and find a rental home, maybe even to help sell the former home.
Sales assistance comes in two stages. For the first few months the home is on the market, the house usually remains in the employee's name, with the relocation company advising on price and marketing. If the home isn't sold during that period, the employee's company may totally or partially buy out the property, freeing the employee to buy a home in the new location. The relocation company becomes the chief party in sale negotiations.
"Once the company takes over, the buyer has an advantage, since they're dealing with a seller who has no emotional attachment to the property," says Kim Skumanick, an executive with the Pennsylvania Association of Realtors and an agent with Lewith and Freeman Real Estate in Clarks Summit, Pa. "It becomes more of a business transaction than an emotional process."
Negotiations may be simpler and shorter than normal seller-to-buyer transactions.
While relocation sales don't necessarily translate into fire-sale prices, buyers can count on the home to be fairly priced, says Michael Nimer, chief operating officer of OneSource Relocation in Marietta, Ga.
"If we buy a home for $200,000 for a client, our goal is to get as close to that $200,000 (as) possible," Nimer says. "We're not trying to make more money, just trying to get back the money we spent."
Relocation properties also tend to be in good condition. "In today's market, we want to have every advantage possible," Nimer says.
Buying a relo property isn't that different from any other traditional sale, says Adam Kruse, a real estate agent with Hermann London in St. Louis. However, buyers should prepare for a few twists:
Price negotiations may take longer. With normal home sales, the back-and-forth can last just a few hours as sellers and buyers hurriedly consult with their real estate agents. But relocation firms typically operate during business hours and might not be available to respond to a weekend offer, Kruse says. Make an offer, but be prepared to wait a few days.
Get preapproved for financing. Buyers always should line up financing before they start looking for homes, but it's especially important when buying a relo property, Skumanick says. "They need to show that they are prepared and in a good position to buy."
Buyers should have a ready source of earnest money they can quickly send to the relocation firm, says Tonya Hamilton, vice president of relocation at Prudential Woodmont Realty in Brentwood, Tenn.
If you need to sell your current home before buying another, do so before trying to buy a home from a relocation firm, Nimer says. "We typically don't like to take a contingent sale," he says.
If your current home is under contract with a buyer but has not closed yet, that's usually acceptable. Be prepared to provide copies of your sales contract and information on the expected closing date.
Expect more paperwork. Relo sales typically require buyers to sign additional riders and amendments to minimize the relocation company's liability, Kruse says. "Instead of eight pages with one signature, it'll be 16 pages with 10 signatures, for example," he says.
The relocation firm may provide the buyer with additional disclosures, such as the results of radon and water testing, which should be inspected carefully, Hamilton says. She adds that buyers should still get their own inspections done.
The 30-year fixed-rate mortgage fell 1 basis point to 3.79 percent. A basis point is one-hundredth of 1 percentage point.
The 15-year fixed-rate mortgage rose 1 basis point to 3.04 percent. The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, fell 5 basis points to 4.33 percent.
The 5/1 adjustable-rate mortgage fell 4 basis points to 2.76 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.
The volume of mortgage applications decreased 2.5 percent last week compared to one week earlier, according to the Mortgage Bankers Association.