Buying a house before a potential corporate restructure - good or bad?

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Jesteroftheswamp
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Buying a house before a potential corporate restructure - good or bad?

Post by Jesteroftheswamp »

So I have been looking for a house for awhile now and I am starting to narrow it down. Recently I have been informed that there is going to be a restructuring with the company I work for. The company is huge, so I am not sure at all if my division or job will be affected or how, but obviously anyone in this position would worry about potential layoffs.

I think more than likely my job is secure, however like I stated above I really have no clue. I expect to know more in the next 2-4 weeks. That said, should I continue my house hunting unabated by this, or is this an event that you all would recommend waiting to see how it plays out first?

A little financial info: I have enough to cover at least 20% down payment, however after the DP and furnishing the house this leaves me with maybe $20k in my emergency fund. I have more in index funds but preferably I don’t touch this. My biggest worry is buying the house, losing my job, then the clock is ticking with $15-20k in EF. This will be sufficient for my living expenses, however due to COVID there’s a lot of uncertainty in the job market. I have some friends telling me to buy a house as if nothing is even out of the ordinary with my job, as if I already know my job is secure. I can see this angle seeing as I do have the money to cover DP and EF, but I’m not sure if this is truly the most financially responsible decision.

Thoughts?
JBTX
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by JBTX »

I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
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Jesteroftheswamp
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Jesteroftheswamp »

JBTX wrote: Sat Sep 19, 2020 1:10 pm I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
Last edited by Jesteroftheswamp on Sat Sep 19, 2020 1:14 pm, edited 1 time in total.
livesoft
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by livesoft »

A friend of mine told me how he had to lay off dozens of people hired to work in a new location just after they had moved there and bought homes. The folks he fired had worked less than a month in the new place. The employer is a huge corporation and a household name.
Last edited by livesoft on Sat Sep 19, 2020 1:14 pm, edited 1 time in total.
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Watty
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Watty »

Jesteroftheswamp wrote: Sat Sep 19, 2020 1:03 pm I expect to know more in the next 2-4 weeks.
There is virtually no downside to waiting a month.

I would wait.

In addition to being laid off your job could change a lot and you might what to look for some other job anyway.
cu_
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by cu_ »

You didn't mention any family, so assuming you are single. In any case, I wold just hold off - unless you have a unique house in mind and this is a once a life time opportunity to acquire it, committing to a 15-30 year loan does not make sense. If it is not a unique house for whatever reason, there will always be more in the market when you are ready to buy. Full disclosure: We are in a similar situation couple months ago and decided to renew our lease instead of taking on a commitment.
JBTX
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by JBTX »

Jesteroftheswamp wrote: Sat Sep 19, 2020 1:12 pm
JBTX wrote: Sat Sep 19, 2020 1:10 pm I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
OK you live very frugally. I guess the question is what is the plan if you run through your EF? If you have a solid backup plan then maybe you are OK.

Consider when buying a house there are often a lot of additional cash outflows that tend to go along with it.

Also it depends if you were laid off would you stay in the area or would you consider moving?
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Jesteroftheswamp
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Jesteroftheswamp »

JBTX wrote: Sat Sep 19, 2020 1:21 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:12 pm
JBTX wrote: Sat Sep 19, 2020 1:10 pm I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
OK you live very frugally. I guess the question is what is the plan if you run through your EF? If you have a solid backup plan then maybe you are OK.

Consider when buying a house there are often a lot of additional cash outflows that tend to go along with it.

Also it depends if you were laid off would you stay in the area or would you consider moving?

IF I ran through my EF - assuming, of course that I am laid off and unemployed for awhile - then I would have to sell index funds. I have enough in index funds to last probably a couple of years (assuming no MAJOR long term market crash).

And if I was laid off I would stay in the area I buy the house
JBTX
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by JBTX »

Jesteroftheswamp wrote: Sat Sep 19, 2020 1:29 pm
JBTX wrote: Sat Sep 19, 2020 1:21 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:12 pm
JBTX wrote: Sat Sep 19, 2020 1:10 pm I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
OK you live very frugally. I guess the question is what is the plan if you run through your EF? If you have a solid backup plan then maybe you are OK.

Consider when buying a house there are often a lot of additional cash outflows that tend to go along with it.

Also it depends if you were laid off would you stay in the area or would you consider moving?

IF I ran through my EF - assuming, of course that I am laid off and unemployed for awhile - then I would have to sell index funds. I have enough in index funds to last probably a couple of years (assuming no MAJOR long term market crash).

And if I was laid off I would stay in the area I buy the house
I suspect your living expenses will go materially up once you buy a house. You $15-20k probably won't last you six months with a house.
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Jack FFR1846 »

I would not buy a house under these conditions. Too much risk. Independent of that, your EF is about half what I would consider minimum (1 year). In these times, assume that if you won't find a new job besides Amazon warehouse work, Lowe's, or Home Depot for well over a year. When you have an adequate 20% cash down payment plus a full year EF and no more job doom looming, then go back to looking again.
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adamthesmythe
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by adamthesmythe »

1. You need to see enough houses to know what is available and what you can afford. No reason NOT to do some looking now.

2. If it really IS 2-4 weeks- even if you find a house there is usually at least a 2 week and probably 4 week delay before most of the inspections and contingencies are removed. Just be aware of the date where you can no longer get your deposit back.

The mortgage contingency can be tricky because at some point the mortgage will be "approved" (and you will need to remove the mortgage contingency) but they will still verify your employment before closing- possibly even the day before closing.
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Makaveli
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Makaveli »

What’s the rush, right? There’s always more homes coming to market.

I was a top rated employee in 2014/2015 and then was laid off in 2016. In large corp life most folks are just a number. So if you are aware of a re-org, I’d wait to see the outcome. The house will likely be your biggest life purchase. Make sure it’s done at the right time.
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Jesteroftheswamp
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Jesteroftheswamp »

JBTX wrote: Sat Sep 19, 2020 2:14 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:29 pm
JBTX wrote: Sat Sep 19, 2020 1:21 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:12 pm
JBTX wrote: Sat Sep 19, 2020 1:10 pm I would not be buying a house or making any major financial commitment with so little liquidity left over, looming restructuring or not.
What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
OK you live very frugally. I guess the question is what is the plan if you run through your EF? If you have a solid backup plan then maybe you are OK.

Consider when buying a house there are often a lot of additional cash outflows that tend to go along with it.

Also it depends if you were laid off would you stay in the area or would you consider moving?

IF I ran through my EF - assuming, of course that I am laid off and unemployed for awhile - then I would have to sell index funds. I have enough in index funds to last probably a couple of years (assuming no MAJOR long term market crash).

And if I was laid off I would stay in the area I buy the house
I suspect your living expenses will go materially up once you buy a house. You $15-20k probably won't last you six months with a house.
You really think so? Everyone tells me owning a house is expensive but I can’t imagine it costing too much. What makes you think it will get extremely expensive that quickly?
makingmistakes
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by makingmistakes »

Jesteroftheswamp wrote: Sat Sep 19, 2020 5:56 pm
JBTX wrote: Sat Sep 19, 2020 2:14 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:29 pm
JBTX wrote: Sat Sep 19, 2020 1:21 pm
Jesteroftheswamp wrote: Sat Sep 19, 2020 1:12 pm

What would you consider sufficient liquidity? $15-20k is 6 months of living expenses for me. During normal times I should be able to find a job in that period of time. Also I do have a pretty significant amount in index funds - worst case scenario.
OK you live very frugally. I guess the question is what is the plan if you run through your EF? If you have a solid backup plan then maybe you are OK.

Consider when buying a house there are often a lot of additional cash outflows that tend to go along with it.

Also it depends if you were laid off would you stay in the area or would you consider moving?

IF I ran through my EF - assuming, of course that I am laid off and unemployed for awhile - then I would have to sell index funds. I have enough in index funds to last probably a couple of years (assuming no MAJOR long term market crash).

And if I was laid off I would stay in the area I buy the house
I suspect your living expenses will go materially up once you buy a house. You $15-20k probably won't last you six months with a house.
You really think so? Everyone tells me owning a house is expensive but I can’t imagine it costing too much. What makes you think it will get extremely expensive that quickly?
For a first time home owner, there are usually lots of new things to buy like lawn mower, tools, drapes/curtains, furniture, shower rods and curtains, grill, rugs, washer and dryer, and the list goes on 😄
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anon_investor
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by anon_investor »

OP hold off until you find out the details of the restructuring, delaying your home search 2-4 weeks is not a long time. Better safe than sorry.
3feetpete
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by 3feetpete »

Three times I have gone through a corporate restructure. I landed on my feet each time but had to move to do it.
tim1999
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by tim1999 »

I would wait. My personal anecdote was from a time when we suspected a major corporate re-org was in the works about a month before it happened. All the tell-tale signs were there, voluntary early retirement packages offered to older employees, shaking down vendors for price reductions, "the Bobs" interviewing everyone, etc. On the day it all went down, I found out my job was safe, but they wanted to relocate me 1,000 miles away. I accepted. Two months later, right before they would have sent us all on househunting trips and decided our start dates in the new location, they completely changed their minds on this and told those in my position that they now wanted us to remain in our jobs where we were, the relo of our department was off.

Just too much uncertainty to make any major commitment if you know or have strong evidence suggesting something will be happening that could affect your position. Wait until the re-org plays out.
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Cyclesafe
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Cyclesafe »

Keep looking but don't get committed to anything specific. It's lots of work, but there's a better chance of getting what you really want if you take your time evaluating general alternatives. Your company's "restructuring" is ramping up uncertainty, so its better to not needlessly expose yourself to an additional serious financial setback. Also, their treatment of less lucky employees will inform what risk you are taking by staying with your company if/when they restructure again in a year or two.

Two time lay-off survivor here.
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by catlady »

Who notified you there would be a restructuring? If it was your manager and you’re not part of management yourself, I would see that as an early warning sign to be prepared.

How much are you budgeting for furnishings for your new home? How many months of expenses does that equate to? I’d keep up the house search but hold off on making an offer on anything until after the restructuring is done.
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Jesteroftheswamp
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Jesteroftheswamp »

3feetpete wrote: Sat Sep 19, 2020 8:43 pm Three times I have gone through a corporate restructure. I landed on my feet each time but had to move to do it.
Did you work in an office for the company and got relocated?
mancich
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by mancich »

I’d wait to find out for sure. Impatience could very well result in a bad decision.
Olemiss540
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by Olemiss540 »

House hunt? I would job hunt.......

Maybe this will lead to an even more lucrative position at a company less effected by the current pandemic.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
3feetpete
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by 3feetpete »

Jesteroftheswamp wrote: Sun Sep 20, 2020 12:01 pm
3feetpete wrote: Sat Sep 19, 2020 8:43 pm Three times I have gone through a corporate restructure. I landed on my feet each time but had to move to do it.
Did you work in an office for the company and got relocated?
The first time, the company that bought the one that I was working for had unrealistic expectations. After a few years the new parent company disbanded my company and I found a job in another state.

The second time, my new boss layed off everyone the old boss had hired and I got a job in another state.

The third time, I could see things weren't going to work out. All the old management were being treated like unwanted stepchildren. I looked at my finances and decided to retire.

There are undoubtably people out there who fared well from a buyout or restructuring but I haven't met any.

Good Luck with whatever course of action you take.
epictetus
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Re: Buying a house before a potential corporate restructure - good or bad?

Post by epictetus »

wait

you will have a lot more options to respond flexibly to whatever happens if you wait
Focus on what you can control
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