Buying a home from a relocation company
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Homes can be put up for sale for all kinds of reasons: The owners could be retiring, downsizing, upgrading to a larger home or moving to a different neighborhood. Sometimes, a home is on the market because the homeowner has received an out-of-town job transfer. These are relocation sales, or “relos” for short, and the process for buying a relo property can be slightly different than a traditional sale — especially if there is a relocation company involved. Let’s explore how to buy a house from a relocation company.
What is a relocation company?
A relocation company is hired by a corporation to help its employees move from one area to another for employment purposes. The service facilitates the entire moving process for a relocated employee, typically hiring movers, helping to find appropriate living accommodations in the new location and helping the family settle into their new home. Often, relo companies even help spouses find a job in the new location and assist in enrolling kids in new schools.
What is a relocation property?
If the transferred employee is a homeowner, a relocation company might also help sell the employee’s old home. A relo property is one that a relocation company lists and sells on behalf of an employer and their employees. Relo properties remain in their owner’s name for a few months before the employee officially moves, and during this time the relo company offers advice on pricing, marketing and other sales techniques. If the home is not sold during that period, the company may choose to buy out the property, allowing the employee to buy a home in the new location. The relo company then takes over sale negotiations, so a buyer is buying directly from the company, not the homeowner.
Buying a home from a relo company
If you hope to buy a relo property, it pays to be as prepared as possible. For example, it’s even more important than usual to get preapproved for a mortgage. These firms usually prefer clean, non-contingent offers. They may also be offering the home in as-is condition, to avoid any repair-related complications.
Here are a few things to plan for if you want to buy a home from a relocation company:
- Get preapproved for your financing, with a mortgage preapproval letter in hand.
- Wait until your old home is sold, or at least already under contract — relo companies typically don’t want any contingencies on the sale.
- Expect to pay full asking price. It’s not easy to negotiate a lower price on these properties, especially if there are multiple buyers interested.
- Have a ready source of earnest money — you’ll want to be ready to go with a check in hand when they decide to strike a deal.
- Any negotiations involved may take longer than in a traditional sale, since you are negotiating with a corporation and not an individual seller.
- Be prepared for more paperwork than in a traditional sale as well. Relo transactions often involve additional documents and disclosures.
- Consider working with a real estate agent who specializes in relos, or at least has experience with them. The more you know going into the process, the smoother the transaction will be.
Pros and cons of buying from a relocation company
- It’s a more straightforward process: While there’s a lot of preparation necessary beforehand, the transaction itself will likely be less complicated than a traditional sale, with no lengthy back-and-forth negotiations, nitpicking or one-upmanship.
- There’s no emotional attachment: These sales are purely business transactions. You’re dealing with a corporation, not with the previous homeowner, so there’s no chance of someone with an emotional connection to the property changing their mind or backing out.
- You might get a bargain: While it might not be possible to negotiate the price down, the asking price of a relo property typically is not inflated. Companies usually aim simply to get their original purchase price back, or as close to it as possible.
- There’s more red tape involved: Any negotiations required may take longer, as companies operate during business hours only — don’t expect evening or weekend replies. There will likely be more paperwork as well, as relo companies often require more documentation than traditional sales.
- The home may be in as-is condition: Many relo properties are sold as-is, so be sure to do your due diligence to know what you’re getting into. A home inspection is crucial in these cases.
- Contingencies may not be accepted: Unlike a traditional sale between individuals, relo companies usually want their transactions to be as clean and straightforward as possible. They are much less likely to agree to common real estate contingencies.
Buying a home from a relocation company, also called a relocation or relo property, can be slightly different from a typical real estate transaction. Be sure you’re well prepared, with a mortgage preapproval in your hand and a pro agent by your side. And if the home is being sold as-is, be sure you understand what potential problems may exist before you buy.