Summer is a busy season for corporate relocations, and many businesses step up to help reassigned workers sell their homes. That often involves bringing in a corporate relocation firm to oversee the sale or, if needed, purchase the property.
“It’s a very common practice, especially for people who work for major corporations,” says Steve Jolly, real estate broker with Benchmark Realty in Nashville, Tennessee. He sees it frequently in his work as companies move key employees into and out of Nashville offices.
Corporate-owned homes offer the opportunity to purchase property from a motivated seller, but homebuyers should be aware of the caveats. While the mortgage process is generally the same, buying a corporate-owned home can involve different timelines, contracts and negotiations than a traditional home purchase.
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How Corporate Relocation Home Sales Affect Your Mortgage
Many companies offer corporate relocation services and each may have its own process for helping workers move.
It’s common for the seller to be involved in setting the price and reviewing offers. Once the house is under contract, the relocation company takes over and handles all the details to finalize the sale. If a house doesn’t sell in a specific period, such as 60 days, the relocation company may be obligated to buy it.
Corporate relocation firms often use preferred real estate agents and will use their valuation of a home — known as a broker price opinion, or BPO — to set the price. However, if a seller doesn’t think that price is accurate, a formal appraisal might be completed, says Lorin A’Costa, strategic financing advisor at Real Estate Bees and branch manager for HomePlus Mortgage Corp. Regardless of how the relocation company determined the asking price, lenders typically require their own appraisal before approving a mortgage.
Homebuyers browsing online listings won’t know if a home is listed or owned by a relocation company. “The only way you can really tell is in the Realtor remarks,” according to Jolly. That’s a section of the listing where the listing agent can leave notes for other brokers.
Can Buying From a Relocation Company Save You Money?
If you find a home listed by a relocation company, you might be able to get a deal, but don’t expect a deep discount.
“In my experience, it’s not like they’re slashing prices,” says Christina Rordam, a Realtor with Florida Realty Investments.
If a relocation company is obligated to buy the house at a specific price, there is not much incentive for the employee to accept offers below that amount. Then, after a relocation company has purchased the home from a worker, it will want to recoup that investment. For these reasons, you shouldn’t expect to score one of these houses far below the market value.
Still, these sellers are motivated, and there may be an opportunity to get a reduced price or win seller concessions at closing, particularly once the relocation firm owns the home. “These companies want to get these deals done as soon as possible,” A’Costa says.
Those concessions can also help buyers reduce their out-of-pocket costs at closing by covering some closing costs or prepaid expenses, depending on the terms of the purchase agreement and loan.
[Read: Best Mortgage Refinance Lenders.]
Mortgage Considerations When Buying from a Relocation Company
One benefit of buying from a relocation company is that they typically have completed an inspection before listing.
“The home will be repaired as needed,” A’Costa says.
Buyers using FHA or VA financing should confirm the home’s condition meets their lender’s requirements before making an offer, since as-is sales don’t exempt the property from minimum property standards.
The downside of buying a corporate-owned property is that the transaction may be exempt from seller disclosures. That could mean you won’t get information about potential or past problems. Sales from corporations are also typically as is, meaning you may not have much legal recourse if you discover issues after moving in.
“They are going to add a significant amount of paperwork,” Jolly says.
In Rordam’s experience, that paperwork included an addendum that resulted in 60 pages for her client to review and sign. In that case, the company also required a wet signature, meaning Rordam’s client had to sign with a pen rather than electronically.
“They had their own contract,” she says. “It was intricate.”
Anyone buying a corporate-owned property should carefully review the paperwork, understand their tax responsibilities and ensure that required repairs are completed before closing. They should also be prepared for a longer timeline to get to closing since the transaction may need to work its way through various people within the company.
Buyers should also talk with their lender about the expected closing schedule. If the transaction takes longer than anticipated, they may need to extend their mortgage rate lock, which could involve additional costs.
“These corporate relocation sales can be similar to foreclosures,” Rordam says. “You’re dealing with a corporate entity.”
That means there is no emotion involved in the transaction, which can reduce the amount of communication and requests you receive leading up to closing. The company may also be willing to allow you to keep furniture or other items left behind, if you’d like them.
“It’s just a business transaction. It’s about the numbers,” Jolly says. “It’s usually a good experience for buyers and sellers, but it’s a little bit different from the average real estate (sale).”
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What Mortgage Borrowers Should Know About Corporate Relocation Home Sales originally appeared on usnews.com
