Home Sale Program Options for 2020
By Bobbi Maniglia
Feb 12, 2020
Having choices is essential in creating a relocation policy that not only helps companies control costs, manage risk and offer flexibility, but that also offers the level of benefits needed to recruit top talent. Offering a home sale benefit is one of those value-added benefits that can set a company apart for sought after candidates. Read on for details on how expanding your relocation program in 2020 to include a home sale benefit can help your company recruit and retain top talent.
Having choices is essential when creating and maintaining your relocation policy. There are innovative products and solutions that can help companies keep costs in-line, manage risk, and ensure they have flexibility in what they offer to their employees. Today’s competitive talent landscape has led to many companies looking to their relocation policies as a means to differentiate themselves and act as an incentive to recruit top talent. Home sale programs can be an attractive offering to employees and potential employees who may balk at the potentially overwhelming prospect of selling their own home. Today, home sale program options are numerous and while that is a good thing for those who want choices, it can get confusing if you don’t understand the differences between them. Getting familiar with home sale program options allows you to apply them strategically depending on the conditions of a given real estate market, a specific relocation, and your company’s relocation objectives.
So, what are the home sale program options available and how do they all work? First, we need to group them into two categories: Traditional cost-plus home sale programs and fixed-fee home sale programs. Let’s first explore cost-plus home sale programs.
About Traditional Cost-Plus Home Sale Programs:
It is important to understand that while the three traditional cost-plus program options below differ in function, what they have in common is that all costs and fees associated with the sale of the home are the responsibility of the client company, not the relocation provider. If a buyer falls through, the client company is responsible for the additional costs required for the continued marketing and selling of the home. Important also, is the fact that if the employee’s home does not sell within the mandated marketing period, the home ultimately goes into the client company’s inventory as an asset, not the inventory of the relocation provider. Now, let’s get into how each type of cost-plus program option functions.
Buyer Value Option: Once the employee receives an outside offer, your relocation provider then matches that offer and purchases the property on behalf of your company. Then, the relocation company closes the sale with the buyer who made the initial outside offer. Under this option, appraisals are not ordered by the relocation provider and they do not extend preemptive guaranteed offers.
Amended Value Sale: Two appraisals are ordered by your relocation provider; the averaged value of those appraisals dictates the amount offered by the relocation company to the employee for their home. The home is put on the market by the provider company. If an offer is made and accepted, your relocation company extends a guaranteed offer for the net sales price to the employee that amends the initial offer. The relocation provider places the home in their inventory and completes the sale of the home with the buyer.
Guaranteed Buy-Out/Appraised Value Offer: The client company completes the valuation process and extends a guaranteed offer to the employee based on the appraised value. A mandated period of time to market the home is set by the client company. If an outside buyer cannot be secured by the employee, your relocation company then buys the home from the employee on behalf of your company for the guaranteed offer price. The sale is then managed by the relocation provider in a separate sale until the home is sold to a final outside buyer. This option differs from the previous two in that it gives the relocating employee a guaranteed purchase of their home.
About Fixed-Fee Home Sale Programs:
Depending on your relocation provider, fixed-fee programs may be an available option for your company. As the name suggests, companies that opt for these programs only pay one fee, one time to the relocation provider for the sale of a given home. Another significant difference is that fixed-fee home sale programs never require the client company to own a home. Instead, the employee’s home is owned by the relocation provider. Overall, these programs make for simplified budgeting and accounting of home sales while also mitigating the risk of additional asset ownership and its associated tax burden. There are two main types of fixed-fee home sale programs to choose from.
Fixed-Fee Buyer Value Option: The relocation provider matches an outside offer the employee has received from a potential buyer. The property transfers directly to the relocation provider from the employee. The provider then sells the home without the client company ever having to bring the property into inventory.
Fixed-Fee Appraised Value Program: If the employee’s home does not sell within a predetermined time frame, the relocation provider offers a guaranteed purchase to the employee at the appraised value. The fee paid by the client company lessens as the period of time for selling the home extends. If the home has not sold by the end of the mandatory marketing period, the employee accepts the appraisal value offer and the relocation provider takes the home into its inventory.
To learn more about home sale programs including how to measure their performance, the specific benefits of fixed-fee options, and more, click here to download The Ultimate Guide to Home Sale Programs.
While choosing the right home sale program for your relocation needs is a great way to experience cost savings, there are other essential areas within your relocation program where you can save money as well. To learn more, download our guide entitled, “Top 6 Ways to Save Money on Your Relocation Program in 2020”.
For a free, no-obligation review of your current home sale program, contact Bobbi Maniglia, VP of Corporate Sales and Moving Services for northAmerican® Van Lines at Bobbi.Maniglia@northamerican.com