We're currently house shopping and came upon a property that we really love. Upon submitting an offer, we were told that the sale is going to go through a relocation company and we have to redo the offer and sign all sorts of binders. I've never personally worked with such a company on a deal and I was curious what others have experienced.
A few things I've discovered:
- These deals sound like they may be easy on paper (less emotional seller), but it seems like they are far more complicated.
- Contracts are almost completely in the favor of the seller (relo company) and there is little negotiation room on changes to their paperwork.
In the end, we're probably walking away from this one because of the restrictive nature of the contracts.
What is your experience?
I haven't bought one that way, but I know somebody who did and it was a steal of a deal. The paperwork is complex I guess because it will either look like a double close or an assignment of contract. But that's just a guess because I have not seen the contract paperwork (although I have seen recorded deeds on purchases such as this).
Personally my wife and I have relocated 4 times, and had to sell our home through a relo company. The home will have TWO (Typically) appraisals done, so the relo company has a good idea on it's value.
From my experience as a Agent, I have seen relo homes sell at a discount due to the fact the relo company no longer wants to maintain the payments and the home. Similar to a bank owned home.
I would let the fact that the home is a relo deter you, just be ready to sign a lot of documents stating the relo company owns the home, and they may be stuck on 'number' due to the appraisals.
If important to you, I MAY be able to dig up some paperwork for Cartus Relo, so you are able to read the verbiage.
We purchased our home in Atlanta through a relo company, but other than a couple addenda, it didn't seem out of the ordinary. That said, I wasn't investing yet at that point, so it's possible my perception would be different today.
Regardless, what are the specific types of things being required that you're uncomfortable with? Things that pose risk? Or additional cost? Or just a pain in the butt?
@Mike Hibbs - I spent 2 hours going through their paperwork last night -- there are a few major issues that are non-negotiable, including the fact that the contract can't be assigned . . . some PRICEY penalties for delays and some traps that offer your earnest as a prize to the relo company if you even sneeze wrong. I'm not averse to tough contracts, but I don't like playing ball when the deck is stacked against me with little recourse.
@Joshua Dorkin - sounds like what you get when buying REO ...
I have bought several relo houses. Check out Chapters 5 and Chapter 13 in my book which you have. The house in chapter 5 is the one where I ended up doing a subdivision plan for 17 more houses in my back yard. And the house in Chapter 13 is the one where the tenants stayed for 13 years. so both of those worked out well.
Were you talking about me or some other friend of yours?
@Cheryl Farley just helped one of our investors purchase a home in Atlanta from a Relo company. There were several extra Addenda that the relo company required, including a Radon Compliance letter and Relocation Addendum. The deal was about 20 days from offer to closing. Nothing too difficult.
All the properties that I have bought from relocation companies have been in superior condition. One the painters were just finishing up painting the entire house the first day I looked at it. I put in an offer that day!
Mechanicals were also superior in the houses, recent HVAC, central air, and good roofs. There was no deferred maintenance like REOs.
I did have an in as I knew well an appraiser hired by the RELO companies. The relo co. had very strict criteria, as they did not want the ultimate selling price to be much different than the appraisal value. If the appraiser deviated more than a couple of %, they would be fired and not get more appraisal assignments.
@Joshua Dorkin There was more paperwork with my purchase, but nothing (from this relo company) seemed totally stacked against me. The company was in a rush to get the property off their books so they were very willing to negotiate. They covered $5k worth of repairs and all my closing costs. I had a great experience!
Thanks for the feedback guys! I really appreciate it.
My best purchase to date came from a relocation company. I made an offer the day it hit the MLS (a Thursday) that expired the next day at 5PM. They asked me to extend the offer through the weekend (lol!), and I refused. The ended up accepting it anyway. If I remember, their contract was definitely in their favor on several terms, but it ended up being a great deal nonetheless.
Originally posted by @David Krulac :
Were you talking about me or some other friend of yours?
Somebody else. He bought close to where I live; when I was digging up comps to appeal property taxes on my house, I came across that purchase. The tax assessor rep had mentioned that quite a number of people used that example in their tax appeals :)
Had my atty look over the contract yesterday -- he agreed that the relo contract had some fundamental flaws. We'll see how things proceed, but thanks again for the feedback all!
We bought our first house through a relocation company in 2010. Given the market downturn, it was pretty much a buyer's market. It was fairly easy to negotiate with the relo company and we got the price down to our target range.
Those days a long gone and the market now is totally different. I am sure they know that too. So I am not surprised by what you described. In the end, it is a seller's market now.
Its only a seller's market in certain areas. In other areas it is still a buyer's market, depends on where you are!
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