Tag: Global Real Estate

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8 Differences Between a Relocation Appraisal and a Mortgage Appraisal

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Many of Global Mobility Solutions’ clients have transferees who may be participating in a home sale program as part of their relocation package and will require a Relocation Appraisal for their home. This type of appraisal has a different purpose and use when compared to a Mortgage Appraisal. An understanding of these differences will help clients as they work with their Relocation Management Company to manage a successful relocation.

GMS spoke with Mark A. Gronke, Vice President at Fidelity Residential Solutions who agreed to share his advice and guidance on the differences between a Relocation Appraisal and a Mortgage Appraisal.

What are the Differences Between a Relocation Appraisal and a Mortgage Appraisal?

According to Mark A. Gronke, Fidelity Residential Solutions points to 8 specific differences between a Relocation Appraisal and a Mortgage Appraisal. Clients should understand what these difference are, and how they relate to their company’s relocation program. These differences cover broad areas including purpose, use, marketing, and analysis of the appraisal:

Purpose of the Appraisal

  • A Relocation Appraisal will provide an estimate of the anticipated sales price. By comparison, a Mortgage Appraisal will provide an estimate of the home’s market value. Some homes may appraise for more than the contract sales price during a Mortgage Appraisal. This only looks at the anticipated sales price, not the value of the home.
  • The decision making timeframe for a Relocation Appraisal is short term. The timeframe only covers up to 120 days. This accounts for the planning, review, and implementation of the transferee’s relocation process. A Mortgage Appraisal has a decision making timeframe that is long term. The timeframe may cover up to 30 years, the life of a 30 year mortgage. Mortgage lenders look into the future to ensure the home’s value will remain intact over the life of the mortgage.

Use of the Appraisal

  • The intention of a Relocation Appraisal is solely to facilitate corporate relocation. The client receives the report. The client may be looking at indicators that relate to how long the home may reside on the market. By comparison, the intention of a Mortgage Appraisal is to facilitate mortgage lending. A mortgage lender receives the Mortgage Appraisal. The lender may be looking at indicators that refer to the value of the home and its condition. They also may be looking at other factors when considering lending on the property.
  • A Relocation Appraisal would be completed using the Worldwide ERC® Summary Appraisal Form (updated 2010). This would be completed by a trained and licensed real estate appraisal professional following the ERC’s specific set of definitions and guidelines, who is working for the client. A Mortgage Appraisal would be completed using the Uniform Residential Appraisal Form (1004). This would be completed by a trained and licensed mortgage appraisal professional, who is commonly working for a licensed Appraisal Management Company.
  • A Mortgage Appraisal notes the design and appeal of a home. By comparison, a Relocation Appraisal emphasizes design and appeal as critical considerations. Since the Relocation Appraisal has such a short time frame of only up to 120 days, these factors may have a major impact on the corporate relocation process.

Marketing Time and Market Value

  • For a Relocation Appraisal, the marketing time is not to exceed 120 days. This timeframe only reflect the period covering the relocation process. A Mortgage Appraisal’s marketing time does not have a limit, as it does not correspond to a specific, time-defined process. While there may be specific dates related to mortgage terms, the ability to change those dates or accept a lower interest rate in return for paying additional points could extend the timing, if the mortgage lender is in agreement.
  • Marketing a home occurs after the date of a Relocation Appraisal. However, a Mortgage Appraisal is conducted after a home has already been on the market. By the time a Mortgage Appraisal is conducted, there could have been changes to the marketing program or a host of any number of other factors. This information may impact the market value of the home, and in turn the Mortgage Appraisal.

Retrospective Analysis 

  • A retrospective analysis for an appraisal is an overall review of factors that could impact the appraisal’s results, such as any risks that could affect the sale price of the home. The client will use the information for forecasting purposes. A Mortgage Appraisal does not provide for any forecasting in a retrospective analysis. A Relocation Appraisal, however, includes a forecasting component. This is important for clients so they can understand aspects of the Relocation Appraisal that may have future budgetary impact.

What Should Employers Expect?

Employers should expect that transferees who may be part of a home sale program may not understand the differences between a Relocation Appraisal and a Mortgage Appraisal. The employer should understand that they are the client for the Relocation Appraisal. As a result, the employer will receive the Appraisal from the professional. Employers should understand that the Relocation Appraisal is not a Mortgage Appraisal.

What Should Employers do?

Employers should communicate guidance for their transferees who may have questions regarding their home’s Relocation Appraisal. Employers should work with their Relocation Management Company to understand the Relocation Appraisal and how it relates to their company’s relocation and home sale program.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their Relocation Appraisals. We can help your company understand how a Relocation Appraisal relates to your company’s home sale program.

Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.

Learn best practices from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

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Buy a Home Global Relocation Global Relocation Challenges Home Purchase Relocation Challenges

Mortgage Loan for Foreign Nationals Relocating to the United States

Happy family is standing with keys from their new house in hand. Smiling and looking at camera.

Many of Global Mobility Solutions’ clients have transferees relocating to the United States from outside the country. Often, they will need a mortgage loan to buy a home. These transferees may not have established credit in the US. As a result, they will not have a credit profile that lenders can use to determine their creditworthiness.

GMS spoke with Michael Farner, an expert at Quicken Loans who agreed to share his advice and guidance on this topic.

How Can a Foreign National Obtain a Mortgage to Buy a Home in the US?

According to Michael Farner, if a foreign national has established credit in the US over a period of time long enough to have all three credit bureaus reporting, Quicken Loans would also be able to lend at that time.

Quicken Loans and other mortgage companies have a program to support foreign nationals who are relocating to the US and want to obtain a mortgage, but who have not established credit in the US. The program entails work on the part of Quicken Loans to create a credit profile for the foreign national.

Important Points to Note for Program Eligibility Include:

  1. There must be 0 credit established in the US to qualify for this program. In other words, the foreign national must not have obtained any other credit instrument. Examples may include a loan to buy a car or a credit card in the US.
  2. The foreign national must provide a social security number.

If the foreign national is eligible for the Quicken Loans program, the lender will then build a credit profile for the customer. To do this, the lender may examine the foreign national’s debt in their departure country. This examination will include:

  1. Information on payments for housing, including rent payments, showing 24 months of history for each credit reference.
  2. Information for three other “non-housing” debts that can establish payment histories. Examples may include insurance, utilities, or automobile loans. These debts must also show 24 months of history for each credit reference.

The foreign national may need to assist the lender in obtaining information. The lender may ask the foreign national to participate in a conference call with their departure country’s financial institution.

Once Quicken Loans gathers sufficient information, they will build a credit profile for the foreign national. The credit profile will determine how much they can borrow on a mortgage loan, and the terms of the mortgage.

What are the Features of a Mortgage for a Foreign National?

A mortgage for a transferee who will be relocating to the US is similar to a mortgage for any US-based customer who is seeking to buy a home.

For a foreign national, a mortgage will generally feature the following:

  1. Finances the purchase of an existing home.
  2. Length may be 15 or 30 years.
  3. Interest rate may be fixed or variable.
  4. Foreign national borrower makes principle and interest payments for the life of the mortgage.
  5. Mortgage is often sold to investors in the bond market.

Do Foreign National Transferees Need to Sell Their Current Home Before Applying for a New Mortgage?

Foreign national transferees who are relocating and who currently own a home in their departure country may want to keep their current home. Everyone’s situation is different, and what is possible depends on a number of factors:

  1. Is there a mortgage on the current home in the departure country?
  2. If yes, what is the amount of the current home mortgage?
  3. What are the amount and terms of the mortgage loan for the home in the US?
  4. Can the transferee obtain approval for the total debt load? This would include their current mortgage and the new mortgage loan in the US.

What does this mean?

Foreign national transferees who want to obtain a mortgage in the US to buy a home should review their current financial arrangements with a qualified lender. Transferees who have a mortgage on their current home in their departure country may be able to obtain mortgage for a home in the US. However, this depends on their financial circumstances. Importantly, transferees should understand that they must obtain approval for the total amount of current mortgage debt and the new mortgage loan in the US.

What should employers do?

Employers with foreign national transferees looking to buy a home in the US should direct them to speak with qualified lenders and financial advisors for guidance. Employers should also review their relocation policies to determine if enhancements can be made to allow for exceptions that may arise from foreign national transferees who want to obtain a mortgage in the US.

Conclusion

Global Mobility Solutions’ team of corporate relocation experts has helped thousands of our clients understand how to communicate to foreign national transferees any issues related to obtaining mortgages to purchase a home in the US. Therefore, our team can help your company understand how best to proceed by providing guidance to foreign national transferees on obtaining information from qualified lenders and financial advisors.

Contact our experts online to discuss your company’s relocation program needs, or give us a call at 800.617.1904 or 480.922.0700 today.

GMS is sharing public knowledge and can help companies more clearly understand mortgage loans for foreign national relocations. However, GMS is not a CPA firm or a lender, and is not giving financial advice. Everyone’s financial situation is different; individuals and employers should consult their lenders and financial advisors prior to making any decisions.

Request your complimentary relocation policy review

Categories
Buy a Home Global Relocation Trends Relocation Challenges

Dublin Housing Market Remains Strong, Prices Begin to Stabilize

Walking through the beautiful streets of Dublin, Ireland

The Dublin housing market is beginning to stabilize after experiencing a period of rapidly rising prices. Residential property prices in Dublin rose in some places from 50% to 100% or more since the 2012 housing bust through 2015, but then moderated when changes were made to Central Bank rules. Over the past few years through 2018, Dublin housing market prices have been rising even higher. Through the second quarter of 2018, residential prices in Dublin rose year-on-year by 6.2%.

Overall, housing in Ireland continues to face strong demand and weak supply. New construction in Dublin generally focuses on new homes in the form of housing estates. Most demand is for apartments located in the city, indicating a mismatch between supply and demand. However, the new home construction in the Dublin housing market has helped prices stabilize.

According to Daft.ie’s Irish Price Report for Q3 2018:

Most Expensive Housing Markets in Ireland

  • South County Dublin
  • South Dublin City
  • North Dublin City
  • Wicklow (located south of Dublin on the east coast of Ireland)

Ireland’s Strong Economic Growth Drives Dublin Housing Market

As the Ireland economy continues expanding with growth forecasts in some cases doubled, the Dublin housing market will experience continually higher demand. New construction adding to the supply will help keep price increases from overheating too rapidly.

There are concerns that the Ireland economy is growing too fast. Growth estimates of over 9% in the first half of 2018 may be high due to multinational currency transfers. However, the underlying economic momentum appears to be two and a half times the European Union average.

What should employers expect?

Employers should expect that the Dublin housing market will continue to experience price increases. Both residential home prices and rents are expected to continue rising. Conversely, employers looking to relocate employees from the Dublin market may experience shorter timeframes for property sales.

What should employers do?

Employers should review their hiring plans and determine how to mitigate the impact of the Dublin housing market price increases. Employers should examine their relocation policies to determine if they would benefit from enhancements that assist transferees looking to relocate into Dublin.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their country-specific employment, visa, and residency requirements. We can help your company understand how to respond effectively to the Dublin housing market. Our experts can help your company understand the impact on transferees and their ability to accept relocations as housing prices continue to rise.

Learn how housing markets impact relocations from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Categories
Buy a Home Global Relocation Global Relocation Challenges Home Purchase

United Kingdom Housing Market Sees Rate of Annual Price Growth Decline

Man and woman smiling towards camera in modern living room, both in their 30s, confident and cheerful

The United Kingdom housing market is experiencing a period with annual price growth in decline. Annual price growth through August 2018 declined to 2% from July’s rate of 2.5%. Additionally, house values on a month to month basis declined by 0.5%, the largest monthly decline on record since July 2012.

What is causing the annual price growth to decline?

The annual price growth is declining due to a number of factors:

  • The UK housing market is coming off an extended thirty-year expansion as economic growth begins to slow.
  • Uncertainty fueled by Brexit has further dampened both the economy and home buyer enthusiasm.
  • In the UK, an increase in stamp duty on second homes to 3% has also hurt demand. Stamp Duty Land Tax (SDLT) is a tax on land transactions in the UK arising from the Finance Act of 2003. SDLT is not a stamp duty, but a form of self-assessed transfer tax charged on “land transactions.”
  • The market typically experiences a period of slow activity during the summer months as well, with many people on holiday.
  • The UK housing market currently has too much stock on the market, dampening prices. The market has the highest amount of stock since September 2015. Up to one third of houses have had at least one price reduction, the highest percentage in summer since 2011.

These factors combined are creating a faster rate of annual price growth declines. The declining rate of annual price growth is further hampered by falling UK home prices.

Where are prices declining the most?

London is currently experiencing an economic slowdown. Home prices in London are falling at their fastest rate since the city experienced the pain of the worldwide financial crisis earlier in this decade. London home prices fell 0.7% on an annual basis through June, the lowest rate since September 2009, and fell 0.2% in May. June was the fifth month London house prices have fallen in 2018. The rate of annual price growth has been slowing in the UK since 2016, and has remained below 5% throughout most of 2017 and 2018.

What should employers expect?

Employers should expect that the UK housing market may present favorable conditions for relocations to the UK market, as buyers may be able to obtain good quality properties at better prices. Conversely, employers looking to relocate employees from the UK market may experience longer delays for property sales. They may also experience some transferees not desiring to relocate in the short term due to lower home selling prices.

What should employers do?

Employers should review their hiring plans and determine if there are opportunities to relocate transferees to the UK while the housing market is presenting favorable buying opportunities. Employers should examine their relocation policies to determine if they should be amended to assist transferees looking to relocate out of the UK as the housing market experiences annual price growth declines and home prices decline overall.

Conclusion

Global Mobility Solutions’ team of global relocation experts has helped thousands of our clients with their country-specific employment, visa, and residency requirements. We can help your company understand how to understand and respond effectively to the UK housing market’s impact on transferees and their willingness to accept relocations as annual price growth declines.

Learn how housing markets impact relocations from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

Request your complimentary relocation policy review

Categories
Corporate Relocation Global Relocation Relocation Challenges

The Yuan Effect on Global Real Estate

Beautiful young couple is holding moving cardboard boxes, looking at camera and smiling

The recent devaluation of Chinese yuan could prompt China’s real estate investors to look towards the global real estate market to protect their investments. Capital is expected to move far from developing markets to be safe from increasing currency risks. There are expectations however that extreme wealthy Chinese real estate investors and developers will invest heavily in an established economy like the US before further yuan devaluation. Thomas Lam, a Senior Director and Head of Valuation & Consultancy with Knight Frank states, “mainlanders mostly buy overseas homes for immigration, for their children who are studying abroad or as holiday homes. They will be unlikely to sell in haste unless significant problems arise with that country’s property market such as political unrest.” Decisions to invest in the United States housing market will rest on how the Xi markets hedge the Renminbi against their currency or the industrial sector.

The Yuan's Progressive Decline

Although the yuan is projected to slip further, wealthy Chinese investors and developers will likely convert their money into other currencies or purchase properties in different countries with higher yields as an approach to fence hazard. David Crowe, NAHB Chief Economist, assures our economy to be healthy, “since the affordability had edged slightly lower in the second quarter. The Housing Opportunity Index (HOI) will remain well above 50. And where half the households can afford half the homes sold, low mortgage rates, pent-up demand and continued job growth should contribute to a gradual, steady rise in housing throughout the year.”

Countries such as Korea, Russia, Portugal and as of late New Zealand will continue to witness investment influx from mid-level Chinese investors as properties in developed economy like the United States may prove to be a greater expense. Some market experts say, more Chinese investors will invest in other countries as they seek diversification. It’s likely to witness a slight drop in the reported investment flow from China when reported in US dollars; one of the effects of yuan devaluation.


Records also show that “China is the largest investor in the American real estate sector over the last year”.  According to Michael Cole, an editor with Mingtiandi, “Chinese investors have already put $13.4 billion into overseas real estate this year, with over $3 billion heading to the US.” This confirms Chinese real estate developers today are experienced when it comes to foreign investment and their decision to invest in any country. However, the level of investiture will depend chiefly on the availability of properties and good exchange rates.

Categories
Global Relocation Global Relocation Trends

Changing real estate trends in Germany may affect assignee housing decisions

The real estate market in one of the most powerful economies in Europe is undergoing a major shift. History has shown Germans would much rather rent their homes than buy them, which may explain the country’s 43 percent home-ownership rate in 2013. However, this trend has recently shifted in a way that could impact global mobility down the road – particularly the way assignees go about finding a place to live.

A nation of renters
According to a recent article by digital business news outlet Quartz, Germans began renting in the 1930s and 1940s. After West Germany was established in 1949, the government created its first housing law. The law was designed to boost the construction of houses, and by 1956, the nation cut its housing shortage in two. Few Germans had enough money for a down payment on a house, though. The mortgage market was weak, so banks required citizens to front large sums of money for home ownership. As a result, the renting trend was born.

History has shown Germans would much rather rent than buy their homes, which may explain its 43 percent home-ownership rate in 2013. “History has shown Germans would much rather rent than buy their homes, which may explain its 43 percent home-ownership rate in 2013.”

 

Cheap rent has been a real estate mainstay for many years in Germany, partly because rent increases are capped at 15 percent over three years. Regulations prevent any increase in rent whatsoever during a tenant’s first year. For those living in urban areas where demand is high, new rent prices will be capped at 10 percent more than the area average, thanks in part to new rent brake legislation signed by Prime Minister Angela Merkel’s cabinet in January, national news outlet DW reported.

Government legislation in Germany traditionally favors renters over homeowners, which isn’t surprising considering this demographic has represented a large portion of the population for many years. For example, the German government does not allow homeowners to deduct mortgage-interest payments from their taxes; a sharp contrast to the benefits of homeownership in the United States.

Times are slowly changing
Despite the federal regulations favoring renters and cheap rent prices, real estate trends appear to be changing in Germany. According to the Cologne Institute for Economic Research, Germany experienced a sharp increase in the number of people buying homes between 2009 and 2013. This trend is largely due to the fact that people are taking advantage of low interest rates throughout the country. What’s more, foreign investors are showing great interest in the nation’s real estate.

Although there is legislation capping rental prices at 10 percent above market average in urban areas, that only limits price increases so much year over year. Research from the VDP Association of German Mortgage Banks found rent for newly leased apartments rose 4.6 percent year over year between the third quarter of 2013 and 2014, Bloomberg recently reported.

That, in conjunction with low interest rates and easy financing for property purchases, has home ownership growing in popularity in Germany. Home values have climbed 5.2 percent from last year, and multifamily housing also jumped more than 7 percent in value. Assignees relocating to Germany can take advantage of low-interest rate mortgages, particularly in Eastern Germany. The CIER’s five-year analysis of 402 German counties revealed that side of the country is a highly feasible region for buying a property. Assignees relocating to Germany can take advantage of low-interest rate mortgages, but need to ensure they consider all of the financial impacts. Higher down payments are usually required from expats because they represent a higher financial risk. Additionally, consideration must be given towards disposing of the property and any potential capital gains tax that might be owed if they relocate again.

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Our Technology

Global Relocation

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U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

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