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Today’s homebuyers are familiar with traditional home sales and short sales. But few know about another type of sale: a relocation sale of a home that’s on the market because of an employee’s out-of-town job transfer. While the process for buying these homes is slightly different, a relocation sale, or relo, can have distinct advantages for buyers.
What is a relo?
A relo is a home sale that is completed with the help of a relocation firm. These firms are hired by companies to help their transferred employees move. A relo firm might help the transferred employee hire movers and find a rental home. If the employee is a homeowner, the relo firm might help the employee sell the old home.
Sales assistance is done 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 providing advice on pricing 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. After the employer buys the house, 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, a first vice president 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, Skumanick says.
Are relo properties cheaper?
While relocation sales don’t necessarily translate into fire-sale prices, buyers can count on the home to be fairly priced for its market, says Michael Nimer, chief operating officer of OneSource Relocation, a relocation firm 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 because most relocation firms recommend needed repairs or do the repairs themselves. “Our job is to get the home in the best possible condition,” Nimer says. “In today’s market, we want to have every advantage possible.”
How to buy a relo
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 on pricing 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 until Monday, Kruse says. Make an offer, but be prepared to wait a few days.
Get preapproved for financing. Buyers are always advised to line up their 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,” she says.
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.
Sell your old home first. If you need to sell your current home before buying another, you should take care of that before trying to buy a home being sold by a relocation firm, Nimer says. “We typically don’t like to take a contingent sale,” he says. “We want a nice, clean sale if at all possible.”
If your current home is under contract with a buyer but has not closed yet, that’s usually acceptable, but be prepared to provide copies of your sales contract and information on the expected closing date.
Be prepared for 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 also 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.