It’s estimated that as many as 1.5m employees make use of relocation companies when obliged to move for work commitments every year. As one would expect from such a large and growing sector of the real estate market, some companies are much better than others. In an ideal case scenario they will work via an employer to arrange for an easy sale of an existing property and assist with ensuring the employee finds a new home as quickly and at as fair a price as possible.
How Relocation Companies Work
In most cases the relocation company works as a third party via the employer. Each company has different policies regarding the amount they contribute to the process. In some cases they will offer a lump sum towards the relocation – usually enough to cover any standard fees that would otherwise have been obliged to be covered by the employee. After all it’s in their interest to have their employee relocated as swiftly and smoothly as possible.
In order for employees to move easily, in most cases they need to sell an existing property as quick as possible. Relocation companies work as a broker whereby after valuation surveys performed by themselves and the employee, they will essentially purchase the home on behalf of the company. This provides financial liquidity for the employee to use towards their next purchase. While they then assist an individual with moving and finding a new home, they then look to sell the property as swiftly as possible at a figure that recoups the purchase price.
Why Buying A Relo Property Can Be A Great Investment
Many relocation companies work nationwide as part of a network. Clients who are being relocated will often find that they are offered properties also subject to relocation arrangements, and by no means is this necessarily a bad or limiting factor. Unlike foreclosed or short-sold properties, good quality relocation companies usually perform comprehensive improvements to the home in order to maximize its appeal. It’s very unusual to find a property within such an arrangement that is substandard.
Remember that relocation companies are highly competitive and will look to source a new home that fits the employees exact requirements. All good companies will go through an interview and assessment stage that factors in the client’s needs. These may range from distance to the workplace through to location of schools, amenities, airports and so forth. All these value-added features can really help make a relocation far easier and less stressful, especially when moving across the country.
As they are not usually sold for a direct profit and have no financing chain/emotional attachment that often hinders and slows down home purchases, the transaction is much more ‘business like’ than a typical real estate deal. While business hours can make the acceptance of an offer take longer than usual (often a few business days), when it is agreed upon then that’s the end of negotiations as far as they’re concerned. Providing everything falls into place deals can be completed surprisingly quickly.
One other advantage of buying a property through a relocation company is that as a third party they will have access to the vendor’s financial circumstances. This ensures that a fair price can be negotiated for a privately owned home. Bear in mind that should the seller reject multiple offers, this can significantly lengthen the time it takes to purchase the property.
Issues To Bear In Mind with Relocation Companies
As mentioned above buying a relocation property is a business matter. In order for the process to go smoothly they will expect financial arrangements to all be agreed and in place. It’s unlikely they will accept an offer based upon principle – they’ll expect all financial aspects to be basically ready to go. Very few accept contingent sales of existing property unless it is very close to the date of completion.
Expect considerably more paperwork. This is due to the relocation company needing to cover themselves for liability as they are working directly with an employer. In most cases properties will have been thoroughly appraised before coming to market, and paperwork will be in place, but always be ready to conduct a private survey to ensure the valuation is reasonable according to the local market. Assuming the employee has their affairs in order, all this means in any practical sense is signing several more documents than would be used on a typical purchase.
How Much Do Relocation Companies Cost?
As outlined at the top of this article, in most cases the employee’s company will pay for all or the vast majority of the bill. Generally speaking the cost varies depending upon the price of the property, as well as distances involved if they are also responsible for the cost of transporting possessions. A general basic estimate that again varies significantly is either a flat fee or a percentage of the property value, whichever is greater.
The cost to you or your employer can also vary based on the services that are included in the relocation package. For example, some relocation companies offer the following: pack all of your items, move a car, unpack all items, coordinate a pre-move visit to check out housing and schools, rental assistance, travel allowances, and storage to name a few. Depending on the services offered, the cost will vary.