Homes that are offered by sellers who are transferring to a new job can be a great deal, but buyers must be prepared to close the deal quickly.
Q. There's a real estate brokerage in our area that advertises "relocation" properties for sale, and some of them seem like really good homes at below-market prices. How do relocation sales work? Are they a good bargain?
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A. Relocation properties, often called "relos," typically are offered by brokerages that are hired by corporations that are transferring an employee out of town. The corporation pays the agent's commission or, in some cases, actually buys the worker's house first and then remarkets it through the brokerage.
I know a handful of homeowners and realty investors who have purchased nice relo properties at below-market prices. One advantage is that the brokerage firm is often hypervigilant about disclosing defects in the home or making repairs itself, in part to discourage lawsuits that might be filed against the brokerage or corporation after the buyer moves in.
Another benefit of buying a relo is that most big companies that are transferring an employee aren't involved in the real estate business, so they're anxious to unload the home as quickly as possible. They won't take a ridiculously lowball offer, but they'll consider one that's within the range of their offering price.
It's always important for buyers to get preapproved for a mortgage so they know how much they can realistically borrow. But it's a particularly important move if you're planning to make an offer on a relo home: Because the seller usually wants to make a deal quickly, there won't be much patience to wait several weeks for a buyer's loan approval and another 45 or 60 days for the deal to close.
Q. Why do so-called real estate experts like you always put such an emphasis on buying a home in a neighborhood that has good schools? The truth is that a lot of people (including myself and my fiancee) don't have kids and don't plan to have any. Buyers who don't have kids can save a lot of money by focusing on homes in areas with only marginal schools. And even couples who have children can come out ahead financially if they buy in a neighborhood with lesser schools and then put them into a private school!
A. It's always important to focus on areas with good public schools. Even though you don't have children, there's a good chance that your future buyer will. Statistics show that home values in good school districts almost always rise faster than those in subpar districts, and their crime rates tend to be sharply lower.
Your theory that married couples with children can save money by buying in a marginal school district and then enrolling their kids in a private school doesn't hold much water, either. A real-life story that I related to readers several years ago proves the point:
A penny-wise but pound-foolish couple I know balked at paying $275,000 for a home in an area with award-winning schools because they thought the home was overpriced. They instead bought a comparably-sized house in a lesser district for $210,000, figuring that they would save $65,000.
The smaller mortgage trimmed about $390 off their monthly payments. But because their neighborhood school wasn't very good, they decided to send their two children to a private school, at a total cost of $2,200 a month.
In other words, the $390 a month they "saved" by buying a house with subpar schools didn't even come close to offsetting their $2,200-a-month tuition bills. And again, because values of homes served by good public schools usually rise faster than prices with an inadequate educational system, they probably won't make as great a profit when they eventually sell.
Q. If I create the type of money-saving living trust that you often recommend and then put my house into it, would I have to rewrite the whole document and pay a bunch of lawyer fees again if I later want to add other assets, like stocks or bonds?
A. No, you wouldn't have to spend a lot of money to totally rewrite the living trust.
Many homeowners create an inexpensive living trust so their heirs can quickly inherit their house or other property without going through the costly, time-consuming and emotionally painful probate process.
A well-written trust includes a simple provision, usually just a sentence or two, stating that the creator of the trust can transfer property into -- or out of -- the trust by filing a simple amendment, which often can be done with little or no help from a lawyer.
REAL ESTATE TRIVIA: Construction has resumed on "Versailles," the largest new home being built in the U.S. The 90,000-square-foot mansion near Orlando, Fla., will have 23 bathrooms, 13 bedrooms, 10 kitchens, three pools, a bowling alley and a roller rink when it's completed, about two years from now.
• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2013, Cowles Syndicate Inc.