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Top 50 Relocation Questions: Part 2 of 5

Last week, we began a 5 week series to go over the 50 most common questions we receive from transferees and the answers that we provide on a regular basis. This week, as promised, it’s time to go over questions 11-20.

 

Without further ado, here are 10 more of the most common questions we receive from transferees and the answers that we provide on a regular basis. We hope you find this helpful and if you have anything to add, please let us know!

 

  1. What is a GBO?

 

GBO stands for Guaranteed Buyout. This type of home sale enables you (the homeowner) to proceed with the relocation without the worries associated with identifying a ready, willing and able buyer, and all the emotional back and forth haggling with an irrational buyer. In a guaranteed sale program, the company determines a fair market value of your home, taking recent comparable sales, a reasonable marketing time and property condition into consideration. Typically, in these programs you are given a period of time to try to obtain a better qualified offer from an outside buyer, in which case the company will amend their terms to match those of the buyers. Today GBOs are typically used by exception, reserved mostly for senior executives and/or highly sought talent.

  1. Why are relocation appraisals always low?

 

While there are many factors that influence the appraised value, the biggest culprit for lower than expected valuations is the forecasting adjustment tool. The forecasting adjustment tool is a factor which predicts the price the home will sell for within 120 days. In a balanced housing market, with low inventory, this adjustment would be zero. When there is an oversupply of homes and a lack of ready, willing and able buyers, this adjustment puts downward pressure on pricing. For a transferee’s home to sell first, it has to have the best perceived value for the price. As sellers jockey for best value, prices slide. And so the cycle continues.

 

  1. How can I sell my home before knowing where I am going to live?

 

Remember, when selling your home, you are in the driver’s seat. You don’t have to sell to anyone, even a full priced buy, before you are comfortable with the next step. The entire process begins with your old home. Understanding your home’s value impacts your ability to define a price range at the destination. Compare and contrast two or more broker market analyses. If the Realtors do a thorough job, at the end of the process you should have a good idea what you can do at the destination. Go ahead and list your home and, at the same time, begin the research on the destination. If an offer comes in before you find the right community, negotiate a longer settlement. If the offer is too good to pass up, you can always use furnished temporary housing until you can settle.

 

  1. How do I start the home finding process?

 

Start with the financing. Using a reputable lender, gain an understanding of both what you can afford and what the total payments would look like. Although a pre-approval gives you and the sellers a higher level of confidence, they take documentation and time. Initially, you just need the ballpark. You can shop rates and lenders later. Next, work with a destination broker who is seasoned in working with transferees and the challenges of not being at all familiar with the area and points of interest. Give your Realtor your “must haves” and preferences as far as style of housing, commuting time, education options, houses of worship, etc. Take an area tour, briefly visiting compatible communities and maybe even some properties. The trick here is to get an idea of the communities you want to follow. So when it is time to act, you will be educated.

 

  1. How do I calculate my equity to determine if I will have enough money to sell?

 

Begin with your property value. Using two or more reputable Realtors with a proven track record, ask for a comprehensive marketing analysis. They will also be able to give you a ballpark estimate of anticipated closing costs, such as real estate commission, transfer tax, recording fees and other traditional local fees. If your employer is covering a portion of the closing charges, confer with your counselor on what will be your responsibility. Other deductions to take from the home value would be any mortgage or line of credit tied to the property, unpaid taxes, community dues, vendor liens and community assessments (due or anticipated). Once you have the value and anticipated deductions, you will have a reasonable idea of equity or negative equity (in the event the sales price does not cover the reductions). Lenders will require negative equity be resolved on or before the property closing. If you anticipate a negative position after the sale, you should discuss the possibility and ramifications of a short sale with your Realtor. If you know early enough, choose a listing agent adept in the short sale process. The Realtor is integral in the negotiations with the lender.

 

  1. If a previous potential buyer found a defect that we refute, do we still need to disclose it to potential buyers?

 

If a previous buyer finds a defect that is an actual defect, then you will need to disclose that defect. Of course, if you dispute the defect then you will need to have a specialist determine if the defect exists. If there is a defect, disclose it. If it is not a defect, then you do not need to disclose. You must have this in writing, however, in case the problem arises in the future. All this being said, it is always better to over disclose.

 

  1. Should I rent out my old home to wait for the market to come back, or should I take the hit now and sell at a loss?

 

On the surface this appears to be a win/win solution. However, in most circumstances, we do not recommend renting out your home. Being a landlord is a big job that will require a lot of your attention, causing you even more stress during an already stressful time. Before you take the plunge, be sure to calculate how much extra you will have to pay in insurance to have tenants, any repairs needed to ready the home for tenants, any damage that may be incurred as a result of wear and tear, legal representation to draw up a lease and represent you in the case of a lawsuit, an escrow fund if something breaks and, finally, wages if you need someone to help you manage the home from afar. As you can see, renting out your home is not as simple as handing over your keys. There are financial, legal and regulatory impacts that you will have to consider.

 

  1. Are there things I should consider getting rid of because the cost of relocating them is more than their actual value?

 

More often than not, pantry items are not worth the cost of relocating them. Typically, moves are priced by weight so even though canned goods sell for well under a single dollar, the cost to move them is much more. Rather than wasting pantry items that are still perfectly good, donate them to a local food bank. Or, find out if the mover or relocation company you are working with partners with Move for Hunger, a non-profit that collects unused pantry items from families who are moving and donates them to local food banks for you.

 

Aside from food, there are some instances in which some of your furniture may not be worth the cost of relocation either. For example, if you know that your giant sectional couch won’t fit through the doorway of your new home, there are ways to cut it, move it in, and then put it back together. But, the cost of doing so is pretty close to the cost of a brand new couch. Before you make any decisions on furniture, make sure you know the measurements in your new home and definitely talk to your mover.

 

  1. What items are not allowed to be shipped?

 

Your mover should send you a list of “do not pack” items. This list will include things that fall into one of two categories:

 

  • Extraordinary value items
  • Prohibited items

 

Extraordinary value items include things like large amounts of cash, legal documents like a deed or a will, moving documents, cherished photographs, furs, valuable jewelry, and any form of identification. Prohibited items include some obvious and some less obvious things. Some of the obvious include anything flammable like aerosol cans or gasoline, as well as chemicals (including cleaning liquids and bleach). Other things, like batteries, house plants, and perfume are less obvious but just as important.

 

  1. Why can’t I just load my car with items?

For smaller moves, a lot of people try and just pack all of their household goods into their own vehicle(s) and then head on over to their new home. There are a few problems with this idea. Moving in the summer or winter can mean a lot of extreme weather. An over-stuffed car full of not only all of your belongings, but you and your family as well combined with a heat wave or a cold front is both uncomfortable and dangerous. Professionals can provide a climate controlled environment for your belongings to protect them from damage caused by heat and humidity. Further, you can seriously damage your furniture if it isn’t packed correctly. And strapping your bed on the roof of your car is not only dangerous, but it will ruin the mattress by bending it once it is strapped down.

Stay tuned next week, same place same time for questions 21-30!

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MIKE CANNING
VP, Client Services

RICK CALANNI
VP of Business Development Northeast Region

 

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