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Whoa ! You are talking about relocation company buy-out a very different scenario than the topic of this thread.
Most relocation companies order 2-3 appraisals and offer to buy out the transferred owner at the average of all appraised values. Most buy -out offers are good for 90 days.The transferred seller receives a bonus if they are able to get sold without the buy-out.
When markets were appreciating, it was rarely necessary to invoke a buy-out. The transferred sellers almost always were able to obtain a better price during that subsequent 90 day period in the open market.
In depreciating markets, the opposite is happening. Those transferred owners who have the benefit of a buy-out are almost always accepting it because they cannot do better, in the open market.
Whoa ! You are talking about relocation company buy-out a very different scenario than the topic of this thread.
Most relocation companies order 2-3 appraisals and offer to buy out the transferred owner at the average of all appraised values. Most buy -out offers are good for 90 days.The transferred seller receives a bonus if they are able to get sold without the buy-out.
When markets were appreciating, it was rarely necessary to invoke a buy-out. The transferred sellers almost always were able to obtain a better price during that subsequent 90 day period in the open market.
In depreciating markets, the opposite is happening. Those transferred owners who have the benefit of a buy-out are almost always accepting it because they cannot do better, in the open market.
TexasHorseLady is not talking about a relocation company buy out. She is talking about a offer from a international real estate franchise. From her explaination she works under the same franchise I do. The offer is put together at the time of the initial contract. The catch is that the seller has to pay for the appraisal, they have to pay for a home inspection and make the repairs that come back, they have to purchase a home warranty for the buyer(which runs about $350), they have to stage the property, they have to pay a full 6% commission, they cannot list the property more than 5% above the appraisal, and properties above 750K or the top 20% of the market do not qualify. So, it will cost the seller about a thousand dollars upfront. Over all it is a good deal for someone looking to make a move and the stipulations made make sure the property is in move in condition and priced correctly in the market.
This being the case statistically there is a high probability that the home will sell prior to the six months being up and in most cases they do. Here in Texas we were recently told the company purchase 13 homes last year. The CFO said that the program costs no more than any other marketing program.
Jamesww went into the requirements more specifically than I did, and, yes, he's correct. While the international real estate franchise IS the largest relocation company, I believe, it's not exclusively that. (It does provide the relocation benefits for a number of client companies that offer them to their employees.)
However, I was told recently that it was 12 nationwide, not 13 here in Texas. Will have to go doublecheck that.
Let's leave all the requirement stuff. Are you guys saying you predict a price of a house 180 days out? I don't know about real estate price predictions but for all other things we do that's a whole lot of uncertainty and may be two standard deviation. For that, somebody has to eat the uncertanity and looks to me those are the sellers.
It's not really hard. The price of the house is set, via appraisal, at the time the contract is agreed to, just like every other real estate sale out there. The only difference is that the closing is deferred until the end of the 180 days (if it occurs at all, because if another better deal comes in and the seller takes that one, it doesn't).
The seller has a guaranteed price at 180 days if the market should fall and no one wants to pay that price, and if the market should rise and someone wants to pay MORE than that agreed upon price, he can get out of that contract and take the better offer.
Let's be in your company's side. You agree to give a seller X amount of money after 180 days. You pretty much know what the price will be at that time, no? Otherwise, you wouldn't offer NOW. What happen in between is irrelevant. And in order for that to materialize one has to be conservative in the estimate. That's all I am saying and I don't see that helping sellers.
Let's be in your company's side. You agree to give a seller X amount of money after 180 days. You pretty much know what the price will be at that time, no? Otherwise, you wouldn't offer NOW. What happen in between is irrelevant. And in order for that to materialize one has to be conservative in the estimate. That's all I am saying and I don't see that helping sellers.
The real estate company does not know what the market price will be in six months as no one really knows. The objective is not to ever purchase a property. In fact you and your broker get put on the hot seat if the company has to. The price is based on an appraisal of the value now not just some number pulled out of thin air with the companies best interest in mind. The seller does not have to take the offer as they can back out of it anytime for any reason. If the home is purchased by the real estate company and the home sells for more then the seller gets the money. If the company takes a loss on the property that loss comes out of the real estate commission. So, the agent and broker have lots of motivation to see that the home gets sold. This program works out well for a seller that has to move.
Jamesww went into the requirements more specifically than I did, and, yes, he's correct. While the international real estate franchise IS the largest relocation company, I believe, it's not exclusively that. (It does provide the relocation benefits for a number of client companies that offer them to their employees.)
However, I was told recently that it was 12 nationwide, not 13 here in Texas. Will have to go doublecheck that.
When I was at IBC in San Antonio I was told that it was 12 in 2008 nation wide, but 13 in our region over the last 12 months. This was not an official announcement as it was conversation over drinks.
It's a great program for the Company. Gets the seller to price pretty close to the appraisal and guarantees them a 6% commission rate. Listed property $230,000 originally.....listed by this company $165,000. Sold in 3 weeks. Do the math.
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