Relocation Market Update

Types of Employer Paid Home Purchase Programs

There are many choices when it comes to developing the right relocation benefit policy for your company. Here are some of the home purchase options:

1. Appraised value sale
The employee’s residence is appraised by two or more independent appraisers. The employee then sells the residence to the employer or a relocation management company hired by the employer at the average of the appraised values (or at some variation of this method to determine fair market value). TAX ADVANTAGES.
2. Amended value sale
The transaction is the same as the appraised value sale, except that before the employee decides whether or not to accept the offer to purchase at the appraised value, the employee may place the residence on the market to determine whether a higher price can be obtained. If a third party makes a bona fide offer to purchase the residence at a price above the appraised value, the employer or relocation company will raise its offer to equal the third party offer. This new price is called the "amended value" of the residence. The employee then sells the residence to the employer, and the employer attempts to execute a contract with the third party buyer and sell to him/her. TAX ADVANTAGES.
3. Buyer Value Option
The transaction is similar to an amended value sale, except that no guaranteed offer to purchase is made to the employee, and no appraisals are done, at least initially. Rather, the employee markets the house seeking a bona fide offer in the market place. Once such an offer is received, the employer or relocation company will make an offer to purchase the home at the "buyer value" established by the outside offer. Thereafter, the procedures are the same as the amended value sale. In some programs, if the employee does not find a buyer during the initial marketing period, the employer will have the home appraised and make a guaranteed buyout offer based on the appraisals, which the employee can accept after an additional attempt to find a buyer in the marketplace. Such a procedure is better from a tax perspective. TAX ADVANTAGES.
4. Assigned sale
This transaction is the same as the amended value sale, except that when the employee places the residence up for sale and receives an offer to purchase from a third party, the employee accepts the offer, creating a contract of sale. The employee then sells the residence to the employer or relocation company, and assigns the contract of sale to the employer or relocation company, which then sells the residence to the third party.
5. Assisted sale ("Direct Reimbursement")
The employee sells the residence directly to a third-party buyer. The employer then reimburses the employee for some or all of the costs of sale.
6. Directed offer
The employer or relocation company buys the employee’s residence at a price in excess of fair market value.

For more information about the tax advantages and procedures to set up a home purchase policy for your company, call Reliable Relocation.

Houses that Sell By: Paulette Moylan, CRP

We hear the news daily about the oversupplied market and decline in home sales but those of us in the business know that houses are selling. The houses that sell must have two things going on at the same time: they are very attractive & well maintained and priced aggressively from the first day of listing. How do we get our busy, distracted, and often cash poor transferees to understand this concept and do something about it? Again, some practical ideas to get the houses sold before and after they go into inventory. Prior to inventory: Use a formal, professional premarketing program Offer an allowance to cash-strapped transferees to do the work recommended by the premarketing agents BRFORE listing Offer a loss on sale provision and/or sales bonus to encourage home owner’s to list at an aggressive price at the beginning of the process Hold off on appraisals for 60 days and then use the best in the business. Let your vendor select the appraisers based on results or offer a short list to employees. Inventory: List at or below appraised value, after all recommended repairs and improvements are complete. Do the work to make the property sparkle. Make sure you or your inventory manager looks at competitive listing prices every two weeks. If your competition is reducing, you should too. Look at your inventory or have a professional inventory manager do it. Many times, an on-sight inspection reveals poor maintenance, glaring decorating problems not mentioned in the CMA and other reasons the home has not sold regardless of price. Consider staging with furniture and accessories Offer buyer incentives such as closing costs or buy downs, depending on price range Think like a buyer.

Product of Reliable Relocation, Inc.