Don’t Let Destination Home Purchases Come Back to Haunt You

 Print Article

By Peg Guinta

RISMEDIA, May 22, 2007-Departure-home sale activities of relocating employees receive a lot of attention and a good share of program services during the corporate relocation process. Deservedly so-it’s a hugely significant area of the relocation program for both employees and employers.

But the selection and purchase of the destination-location home can be equally important for transferees who expect another relocation cycle. After all, a new transfer assignment turns the home into the next marketing and sale situation for the homeowner.

According to NAR’s Home Buyer & Seller Statistics Report, 66% of respondents “Definitely would use the same agent again,” so there’s a good chance your buyer could be your next seller. We know corporate transferees tend to move frequently, but even non-corporate moves occur with surprising frequency. According to the U.S. Census Bureau, the general population is very mobile, too-the median duration of homeowners in their residences is approximately eight years.

Real estate professionals have the best opportunity to provide good counsel in support of a wise purchase decision. Assisting transferring employees and their families with practical purchase choices improves future home sale experiences and allows efficient and smooth flow of the entire relocation process.

Professional purchase guidance may also prevent frustration for corporate clients as well. In the relocation industry, stories about challenging property marketing situations abound. These stories are typically about the houses that don’t sell during the transferees’ home marketing period. When a corporate client extends a guaranteed home buyout to an employee unable to sell, that house may linger in inventory for many more additional months after the employee accepts the appraisal offer.

Each month in inventory, the carrying and maintenance costs accrue and eventually combine with the selling costs and loss differential between the appraised value and final sale prices. After an inventory home finally closes, the client’s cost is often staggering and can easily reach 20% of the appraisal value.

Inventory costs can be one of the most expensive and time-consuming areas of the relocation program for the corporate client. Even without a buyout, the transferred employee is still responsible for disposal of the home and this too, can add distraction and costs to the relocation.

Sometimes, selling difficulties occur because the marketplace or the home condition changes after the property is purchased. But other situations are recognizable and can be avoided.

Challenging properties usually involve physical obsolescence or characteristics that may not appeal to the most likely group of buyers for that property. These might include the one contemporary in a neighborhood of capes and saltboxes, the two-bedroom antique colonial or the perfect home for a large, young family-sitting on the corner of a busy intersection.

New construction competition is another common corporate inventory situation. Transferees often purchase a newly constructed home that eventually may compete with ongoing new construction at sale time. Recognizing this at the onset can help create realistic marketing expectations later on. Builder’s pricing terms, incentives and the appeal of cosmetic choices and decorating allowances create a notoriously difficult marketing situation for the resale.

Certainly we want our homes to reflect our personal style, but our homes occupy a unique category as a potentially marketable asset, too.

Awareness of these issues may not prevent a purchase, but buyers will likely make a more informed and less emotional purchase decision. And sellers’ with realistic expectations at sale time may pave the way for real estate professionals to promote stronger listing and marketing plan activities and ultimately better sale opportunities.

Peg Guinta is project manager for the RIS Consulting Group. For more information, contact Peg at peg@rismedia.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Not a real estate professional? » From buying & selling to home improvement, click here for all things real estate.

Wednesday, March 17, 2010