CapRelo Blog

The Hidden Cost of Losing Key Talent During a Group Move

Posted by Rick Bruce on Thu, May 05, 2016

Office_Relocation-thumb_.jpgThere are many corporate relocation costs to consider before a group move. Typically, easily quantifiable, up-front corporate relocation expenses are foremost in the minds of management and HR staff. Rarely is the cost of losing key talent considered. 

Find out everything you need to know for an effective, low-stress relocation in our Low-Stress Relocation Guide.

Here are just a few of the added corporate relocation expenses you may face if your key talent refuses to make the group move:

  • Potential loss of intellectual property and human assets

  • Cost of key talent going to a competitor if a non-compete clause was not signed

  • Bad public relations if high-profile company leaders leave

  • Loss of company morale during and following the move when a company already in a state of flux loses well-respected personnel

Tangible Corporate Relocation Costs of Losing Key Executives

In addition to severance pay that has the potential to equal up to a year's salary for a top executive, there are other tangible costs associated with losing company leaders. These costs won't be considered part of your corporate relocation expenses because they'll be incurred after the company has settled into the new location. But if you are unable to keep the desired staff on board, you will find that these hidden expenses will add up. Even worse, these hidden costs are not tax deductible like some corporate relocation expenses.

  • The costs of hiring and training new employees, which can equal up to five times the amount of an executive's salary

  • Loss of productivity during ramp-up time with new employees

  • Potential corporate relocation expenses if you need to look outside your new region for talent

If your company is planning a group move, wouldn't you rather have your top performers make the move with you? 

Download The Low-Stress  Relocation Guide

Topics: talent retention, Home Selling and Purchase Assistance, Corporate Relocation Costs, corporate relocation program, talent management

House Passes a grace Period Bill for TRID Rule

Posted by Amy Mergler on Wed, Oct 28, 2015

Mortgage Paperwork

On October 3rd, the new TILA-RESPA Integrated Disclosure (TRID) Rule established by the Consumer Financial Protection Bureau (CFPB) went into effect. The new regulation established new disclosure requirements and forms for most closed-end consumer transactions.

Just four days later, the House of Representatives voted to pass the Homebuyers Assistance Act. The Act is a bipartisan bill that provides a “hold harmless” grace period through February 1, 2016 that will protect the mortgage industry from enforcement actions if they make a good faith effort to comply with TRID regulations.

For additional information, visit The MReport.

Download The Impact of RESPA/TILA on Employee Relocations

Topics: Home Selling and Purchase Assistance

Home-Finding Assistance Services Benefit Both the Employer and Employee

Posted by Amy Mergler on Wed, Sep 23, 2015

istock_000010968215large-resized-600.jpgWhether a homeowner or renter, current senior executive or lower-level new hire, all relocating employees can use their employer’s help in finding a new residence.

Competitive, effective corporate relocation policies include home-finding assistance services in some form or another. All are helpful to your transferees. In addition to the obvious monetary benefits, providing home-finding assistance services will greatly reduce the employees’ stress level.

Learn more about developing relocation policies in our free guide.

Employer Benefits

One of the biggest benefits for the employer is the transferee’s productivity in the new location. Happy, stress-free employees are productive employees.

Additionally, setting reasonable parameters will offer cost containment and management benefits. To provide valuable benefits to your employee while also managing and controlling expenses, provide home-finding assistance and one or more reimbursed house hunting trips in your corporate relocation package.

Common Components in Relocation Programs

Finding a new home is stressful for employees in both good and bad real estate markets. You can help reduce this stress and maintain your transferee’s productivity by offering home-finding assistance. The best executive relocation policies usually include some common features:

  • Services to help hasten and smooth the procedure of locating, buying and moving into the employee’s new home.
  • One or two home-finding excursions (for 7 to 10 days total) for the transferee and spouse or partner.
  • Assistance in selecting a trained and experienced real estate professional.
  • Reimbursement for normal and customary house hunting expenses on an “as-submitted” or lump-sum basis.

While neither the employee nor the employer want a “rush to judgment” in selecting the new home, speed and efficiency are essential to getting the employee productive in the new location. Settling the family into the new home as smoothly and efficiently as possible will minimize stress and increase productivity for the employee.

Most Common Home-Finding Expense Reimbursements

Your corporate relocation policy should account for these common home-finding expenses.

  • Transportation Costs. These expenses can include airfare, auto rentals, mileage and appropriate miscellaneous expenses (tolls, parking, auto service, etc.).
  • Temporary lodging. This may include hotels, motels or other short-stay options for the house hunters.
  • Food and meals. Many relocation policies will offer per diem allowances for meals for each adult house hunter. When no per diem allowance is offered, transferees submit receipts for family meal reimbursement.
  • Daily child care costs. Policies should provide a daily allowance per child, with a maximum daily allowance for all minor children.

These covered expenses, along with other miscellaneous reimbursements, apply directly to the home-finding activities of the transferee. Home sale and/or purchase assistance will be covered in additional policy areas.

The stress of relocating to a new area can be detrimental to your employee’s productivity. Providing clearly defined home-finding assistance services in your corporate relocation policies will help alleviate some of that stress for the employee, while also providing you with a means to manage and control costs.

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Topics: Home Selling and Purchase Assistance, House Hunting Trips

What You May Not Know About Lump-Sum Employee Relocation Packages

Posted by Amy Mergler on Wed, Sep 16, 2015

productivity.jpgThere's a lot to think about if your company is considering changing to a lump-sum employee relocation package rather than reimbursing moving expenses for relocating employees. Here are a few factors you may not have considered.

Employee satisfaction may be lower when employees are left to manage their own funds, as with a lump-sum relocation package. Employees hoping to save money (and pocket the difference) when they receive a lump-sum relocation package to pay for their moving expenses may end up unhappy with the service they receive if they shop by price for relocation service providers. This could result in a slower return to productivity as well as a lower employee retention rate following the move.

Learn more about lump-sum relocation packages by downloading our free guide.

Employees who are busy organizing and managing their move will not be fully focused on their job. Moving can be a stressful time. When employees are left to fend for themselves when selling their home, lining up household goods movers, and even finding a new place to live, their minds are not on their job. This could result in lost productivity.

A lump-sum employee relocation package may not save your company money in the long run. Letting employees manage their own move can result in relocation delays if a house won't sell, and can lead to lost productivity. While lump-sum packages save your company money in administrative costs and time, they may not represent the significant cost savings you believe, especially if employee relocation packages that reimburse expenses lead to all-around greater employee satisfaction and low-stress relocations.

We're not specifically advocating one type of program over another, but it's a good idea to evaluate your situation – or call on a relocation management company to help – if you are thinking of changing your employee relocation policy.

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Topics: employee retention, Home Selling and Purchase Assistance, Relocation Services, relocating employees, relocation management company, executive relocation package, lump sum package

An In Depth Look at the Closing Disclosure

Posted by Brian Shea on Thu, Aug 20, 2015

Last week, we discussed the first new document implemented by the Consumer Financial Protection Bureau (CFPB), the Loan Estimateand how it will affect the residential mortgage industry. Today we will review the second document included in the upcoming regulatory framework known as TRID (TILA-RESPA Integrated Disclosure), the Closing Disclosure (CD).

The current HUD-1 document will be replaced by the Closing Disclosure, which will now hold lenders responsible for the form, content and delivery of the document. Many lenders have already decided that they will prepare and deliver the CD themselves rather than using a closing agent. This is a vast shift away from the long tradition of the closing agent as the central keeper of the form. This has great potential to be the main source of confusion and delay during the transition to TRID.

The mechanics of exactly how lenders will prepare and deliver the CD has yet to be fully determined and many questions and concerns remain unaddressed. However, for lenders who have commented publically, it appears that the lender and the closing agent will now have to collaborate on the CD 10 to 12 days prior to closing. Six days before closing, the lender will have to finalize the CD in order to review and deliver it to the home buyer three days prior to closing.

Currently, many real-life issues occur in the six days prior to closing such as bills being received. Today, the closing agent gets approval from the lender and the buyers and sellers, reconciles the debits and credits and makes certain that all parties are in agreement on the very same document. Beginning October 3rd, these responsibilities will fall solely on the lender. Will lenders be staffed, educated and trained to manage this new and critical role? Will lenders refuse to allow any changes to the CD within the last six days for fear of CFPB scrutiny? We simply do not know the answers yet.

For home sale programs, corporate mobility managers need to be prepared for delays due to the buyer’s lender. These delays will result in additional carrying costs but will not likely result in much disruption to a relocating employee. However, on the destination home purchase, delays can lead to hotel or temporary housing costs, additional storage fees and productivity loss. To guard against the downside of the new regulations, make certain your relocating employees are properly counseled and are using preferred real estate networks, preferred lenders and a preferred closing network.

We hope this overview of the new Closing Disclosure document assists you ─ or your transferring employee ─ to be ready to close on a house after October 3, 2015.

Download The Impact of RESPA/TILA on Employee Relocations

Topics: Home Selling and Purchase Assistance

An in-depth Look at the Loan Estimate

Posted by Brian Shea on Thu, Aug 13, 2015

On October 3rd, the Consumer Financial Protection Bureau (CFPB) will implement new regulations, changing the residential mortgage industry as we currently know it. The CFPB has established new disclosure requirements and forms for most closed-end consumer transactions. The upcoming regulatory framework known as TRID (TILA-RESPA Integrated Disclosure) will combine several forms into two forms, the first being the Loan Estimate.

The Loan Estimate will replace the Good Faith Estimate, the early Truth-in-Lending, Appraisal Notice and the Transfer of Servicing Notice. It is designed to provide disclosures that will be helpful and informative to consumers so they understand the key features, costs and risks associated with their mortgage.

How does a Loan Estimate work? The Loan Estimate requires six items from the home buyer: name, income, Social Security Number, property address, estimated property value and the mortgage loan amount sought. A lender may ask for additional information, but once the initial six items have been collected, a Loan Estimate must be issued within three business days.

The Loan Estimate then has an expiration date of 10 business days, if the consumer has not given intention to proceed with their lender. However, once the homebuyer intends to proceed, unlimited revisions can be made to the Loan Estimate. The Loan Estimate will also differentiate the consummation from the closing date. While the closing date is when the consumer becomes contractually obligated to a seller on a real estate transaction, the consummation date is when the consumer is contractually obligated to the creditor on the loan.

The Loan Estimate will combine the various forms required to acquire a loan into one form, with details laid out more clearly. For example, the total payments over the first five years will be listed and a new total interest percentage will be as well.

Changes to the new Loan Estimate won't directly cause relocation delays; however, any of the following three changes to the loan term could trigger the requirement of a new Closing Disclosure and a delay for an employee relocation:

  • If a change causes the Annual Percentage Rate (APR) to increase by more than 1/8 of a percent.
  • A change in the loan product.
  • The addition of a prepayment penalty.

Overall, the Loan Estimate will clarify what the Good Faith Estimate and the Truth-in-Lending could not and will help clear confusion for the consumer when it comes to applying for a loan. We hope that this overview of the new Loan Estimate document assists you (or your transferring employee) when applying for a loan after October 3rd. Join us next week as we breakdown the new Closing Disclosure form!

Download The Impact of RESPA/TILA on Employee Relocations

Topics: Home Selling and Purchase Assistance

Are You Ready for October 3rd?

Posted by Brian Shea on Thu, Jul 16, 2015

The Consumer Financial Protection Bureau (CFPB) is scheduled to usher in a new era in the residential mortgage industry on October 3, 2015 with a new regulatory framework known as TRID (TILA-RESPA Integrated Disclosure).

(Editor's note: an earlier verison of this article stated the original implementation date, which was August 1st. The CFPB announced the implementation delay on July 21st. Read more.)

Even though we are about two months away from the new rules, many remain uncertain. To assist, we have compiled simplified information about the new regulations and how they may affect your relocation policies and transferring employees.

Overview of the Changes

  • The Truth-In-Lending Disclosure and the Good Faith Estimate are being replaced by one document – the Loan Estimate.
  • The HUD-1 will be replaced by the Closing Disclosure (CD).
  • Timing requirements will be different:
    • The new Loan Estimate must be delivered by the third business day after the loan application.
    • The CD must be delivered to the homebuyer at least three business days prior to closing.

Implications to the Lender and Home Buyer

The new time requirements will force lenders to prepare, deliver and be responsible for the CD themselves, rather than handing it completely off to a closing agent. This could cause confusion and delay early on in the transition to the new regulations.

For lenders, they may need to collaborate with closing agents as early as 12 days prior to closing so the CD can be reviewed six days prior to the closing date and delivered in time to the homebuyer.

The learning curve on the new regulations may cause delays in the closing process initially, as many lenders have reported in industry surveys that they are not ready for the changes.

What Does it All Mean?

For traditional home sale programs, human resource and mobility managers should be prepared for delays by the buyer’s lender. These delays may result in additional carrying costs. In the case of a destination home purchase, delays can lead to additional costs in hotel stays or temporary housing and household goods storage. This in turn may lead to productivity loss and undue stress to the employee.

Get Ahead of the Issue

There are several steps employers can take to reduce possible delays and unintended consequences of the new regulations:

  1. Using preferred real estate networks, lenders and a closing network will help support an employee through the relocation process.
  2. As home purchase or sale closings may take longer than the typical 30 days, household goods shipments should be set for several days after closing.
  3. Advise employees to have all their financial documentation in order before the loan application and contracts need to be crafted in accordance with the new TRID regulations.

Currently, regulators, lenders and other real estate-related businesses are scrambling to understand and prepare for the new TRID regulations. We may be in for a bumpy ride initially until lenders learn and adjust to the new documentation and requirments. Using the advice above, savvy relocation management professionals can help alleviate the negative outcomes that may lie past October 3rd.

Download The Impact of RESPA/TILA on Employee Relocations

Topics: Home Selling and Purchase Assistance

Relocation Packages Designed to Attract the Right Executive

Posted by Jim Retzer on Tue, Sep 16, 2014

 

Are you trying to attract the right executives to your company? If so, you may want to look at the relocation packages your company offers. This video discusses why your company should use specialized relocation packages to attract the right employees.

Download
 

 

Topics: Home Selling and Purchase Assistance, executive relocation package

Relocating Employees: Benefits of Buyer Value Option for Home Sales

Posted by Shirien Elamawy on Tue, Jul 08, 2014

What is a Buyer Value Option? What are its benefits?

money_house.jpgBVO (Buyer Value Option) is a program designed to aid a transferring employee in the quick sale of their home, with no obligation to pay real estate commission or closing costs. There are many benefits to choosing the BVO option, as a transferring employee will want a quick and easy sale of their current home and the employer will want their employee's focus to be on productivity rather than the hassles of trying to move and sell a home at the same time. Choosing the BVO option is favorable, especially since it is a less expensive alternative to an AVO (Appraised Value Option) which for decades was the property sales standard program. BVO programs have become very popular within home sales options.

Learn more about real estate considerations in your relocation policy in our free article.

The Buyer Value Option offers benefits for both parties: the employer and the relocating employee. Here are a few examples:

Reduced Risk of Inventory: Inventory for the Company typically means carrying costs and the potential loss involved in the sale of the property, and a BVO program reduces (but does not completely omit) this risk. This reduction of risk stands to benefit the employer, by lowering overall relocation costs.

Flexibility: Because the risk of carrying inventory has been reduced, companies often believe in being more lenient regarding eligibility and marketing efforts. This does come with other risks, however. Allowing a transferring employee to list their property above market value could mean the property spends more time on the market and carries higher risk of fall through. Marketing a property realistically, priced to sell, limits the flexibility but reduces this risk significantly for the Company.

Eligibility: If the property does not qualify to be in a home sale program, a BVO will not help or change the likely outcome and the risk remains of the property becoming inventory for the Company. Setting and adhering to certain standards surrounding eligibility are crucial for the Company’s benefit.

Taxes: When a BVO is structured correctly, the program can offer the transferring employee significant tax savings on the selling cost of their home in comparison to a direct reimbursement.

When a BVO is handled optimally, the employee enjoys a quick sale of their home and the employer does not carry the inventory of ownership for an extended period of time. This makes the BVO program a win-win for both the Company and the relocating employee. The faster a home sale can be completed, the sooner the transferring employee can complete their relocation and return their focus to their work in the new location, thereby increasing productivity and significantly reducing stress on both the employer and the employee. 

 

 Download

Topics: Home Selling and Purchase Assistance, Buyer Value Option, executive relocation package

Lump-Sum Executive Relocation Package

Posted by Brian D'Orazio on Tue, May 06, 2014

Thinking about revamping your executive relocation policy? Watch our short video to get ideas on how to customize your relocation package. 

 

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Topics: Home Selling and Purchase Assistance, corporate relocation program, executive relocation package, lump sum package

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