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Have you ever wondered how people manage moving across the country? In the movies, they just load up a truck and start driving, but that doesn’t begin to cover the logistical challenges that accompany a real long-distance move.
This type of move is such a concern that there’s an entire industry dedicated to solving this exact problem. Real estate relocation companies, or relo companies, exist to simplify long distance moves, but they also provide a few more services. Whether you’re a first-time homebuyer or switching houses on opposite coasts, real estate location companies may be good options for your home purchasing and moving needs. But before you do business with one, you should understand what you’re getting into.
Here, we’ll explain real estate location companies, explain how the homebuying process differs when working with one, and examine some of the pros and cons.
What is a real estate location company?
Moving is never cheap. Moving across the country may be extraordinarily expensive.
Real estate location companies are companies built to help you with the various stages of moving, especially if you’re moving a long distance. From finding a new home, to moving into a new house, and even helping to sell your old one, real estate location companies aim to make moving smoother. Real estate location companies often work with corporations to assist in relocating companies.
The name “relo company” comes from the type of sales these companies manage. Relo sales are sales managed by relocation companies rather than by real estate agents or individual buyers and sellers.
Corporate relocation services often cover selling the employee’s current home and managing the purchase of a new home in a new location, saving the employee a lot of time and money. The relo company may also help a transferred employee hire movers or find a rental home if the move is only temporary.
In some instances, relo companies manage sales or rentals of homes they already own. In fact, if you’re using a relo company to move, the company itself might eventually buy part or all of your property if it doesn’t sell to a third-party buyer in a timely manner. That’s because they’re under contract to sell the property and you need money to buy a new home in a new location. You hired them to do a job, so it often makes sense for the company to give itself more time to broker a sale, or to have a property to relocate future clients into.
Relo companies are not cheap, which is why they tend to cater to corporations rather than individuals. The average relocation package for a homeowner is between $61,000 and $79,000, a premium price for any individual to pay for convenience.
What do relocation companies do?
Relocation companies offer a variety of services between moving coordination and handling real estate transactions. This is a non-exhaustive list of some of the specific services offered by relo companies.
From packing up and physically moving your belongings into a new home, to providing resources in your new city and even dry cleaning services, relo companies can help with every aspect of the moving process. Most offer concierge services to help you adjust to a new city and to personalize the moving help you need.
If you’re moving abroad, relo companies may even help with visas and language lessons in a new city.
Assistance selling your home
Sometimes, relo companies will help you sell your current home so you can focus on packing up, getting your life in order, and planning the move to your next location. As mentioned before, if you can’t sell your home right away, many relo companies will offer to buy it outright to help you move on.
While the relo process is more or less the same as the traditional sale process, it’s important to note that relo companies accept fewer contingencies and may require more paperwork during the closing process. They’re providing a service, but they’re doing so to ultimately make a profit, so they won’t rush to sell unless you (or they) get the best deal possible.
Help finding a new home
Depending on the service, a relo company may help you find a new home in your new city. If you’re required to move for a new job, some relos may cover the closing costs on the new home as a service to your corporate entity.
This isn’t always offered so before you use a relocation company, make sure you fully understand what’s included in the agreement.
Moving expense coverage
Depending on the level of service, you or your company can delegate a number of expenses and services to a relo company. Some of these expenses include:
- Transportation and lodging expenses while you explore your new location and look for homes.
- Home purchase costs like closing costs, real estate commissions, and other purchase-related expenses.
- Job search costs for spouses/partners who need to find new employment in a new area.
- Temporary housing costs if a new home found by a relo company isn’t ready by the time you move.
Moving comes with a lot of planned and unplanned challenges. Relo companies aim to make the entire process easier for you. That’s why they’re an expensive service and one usually only reserved for corporations and their employees.
How to buy a relo
As we’ve touched on, relo companies also manage property sales. While the company can handle the entire sale process for an employee relocating to a new area, third-party buyers may also find an opportunity to buy the property that that same employee just vacated. These properties owned by relocation companies are called “relos.”
Buying a relo is not much different than a traditional sale. That said, you are buying from a company rather than an individual so there are bound to be a few hurdles.
For one, negotiations may take longer. Since relocation firms usually only operate during business hours, you may not hear back about an offer or counteroffer for a few days. For instance, if you make an offer at 4 p.m. on a Friday, it’s very unlikely you’d hear anything from the company until midday Monday.
Also, relo companies have little patience for non-serious buyers. If you’re shopping for a relo, make sure you’re pre-approved for financing and have a ready source of earnest money you can use as a deposit. These companies exist strictly to make a profit and they know how competitive the market is. Making an offer without financing and earnest money lined up wastes their time and yours.
If possible, try to sell your old home first. Relo companies don’t like contingencies so they are unlikely to wait for you to sell your home as a contingency for buying a relo. If your current home is under contract with a buyer and awaiting closing, that should be fine, but make sure you’re transparent about the details of your sales contract and expected closing date. (If on the other hand you need help buying before you sell, a company like Orchard may be the way to go.)
The pros and cons of buying a house from a relo company
- You’ll get a fair deal: Relo companies want to get back the money they spent on the property. They’re selling a lot of properties, so they don’t necessarily need to gouge the market. You probably won’t get a steal, but you won’t get ripped off either.
- Houses are in good shape: When a relo company buys a property, they’ll put the money in to fix it up and make sure it looks great. It’s easier for them than it is for an individual to make that investment. As a buyer, you’ll reap the benefits.
- Negotiations can be quick: Relo companies are strictly business. You won’t have to negotiate with sentimental or capricious sellers who may drag out or complicate negotiations. Come with a fair offer and the documentation to back it up, and you can get through the process fast.
- Paperwork: Buying a relo property comes with additional paperwork. Relo companies must minimize their liability, so they’ll include additional riders, amendments, and disclosures to protect themselves. That’s more time reading and signing things for a buyer.
- Very few contingencies: Most relo companies won’t bend on what they want. Relo companies prefer no-contingency offers which can mean the buyer incurs more risk. Before making any offer on a relo, consult an agent who knows something about the company and the property for your protection.
- Properties sold as-is or without warranties: Sometimes relo companies offer homes as-is, which means they will not put any money into repairs or warranties regarding the condition of the home. This is usually only the case for homes that will cost more to repair than the company can get from a sale. If you find a home for sale as-is from a relo company, you’re probably better off continuing your home search elsewhere.
If you must relocate due to a job change or life event, you should probably do the hard work yourself. Relo companies offer an amazing service but at more than $60,000, it’s just not feasible for most individuals. That said, if your company offers a relo service, you should absolutely jump at the opportunity. And if you see an opportunity to purchase a home from a relo company, you can feel good about the quality of home and price you’ll get.