CapRelo Blog

Real Estate Tiers in Your Global Mobility Program

Posted by Amy Mergler on Fri, Sep 08, 2017

New HomeYour relocation tiers can be as detailed and nuanced as you need them to be. Some companies find it useful to establish specific real estate tiers as part of their packages. Real estate tiers feature different options that may incentivize employees to sell their homes more quickly or give them a guarantee that they won't be stuck paying an old mortgage long after they've moved to their new location

Guaranteed Buyout Program

Sample real estate tiers may include executive level home sale assistance and a Guaranteed Buyout (GBO) program. Executive level home sale assistance is typically reserved for high-level executives. It involves providing a buyout offer after a home has been on the market for a certain length of time. This gives your high-level executives the assurance that they can confidently purchase a new home without the constant worry of whether their old home will ever sell.

To offer a buyout option, your company needs to be prepared to be responsible for the costs associated with carrying a home in inventory until resold. This isn't the optimal situation, but it could be well worth it if it helps increase the productivity of a strategic employee.

Buyer Value Option Program

For mid-level employees, you may consider offering a Buyer Value Option (BVO) program, which offers similar advantages to a GBO once an outside buyer has been identified. This option often focuses on providing employees with sufficient marketing support they need to sell their homes. A BVO minimizes the risk of inventory costs and provides a high level of employee satisfaction.

Home Sale Bonus Incentive

A final aspect of real estate tiers for homeowners is the home sale bonus incentive, which can also be added to relocation packages at any level. This involves providing an additional bonus for employees when they sell their homes within a certain period of time. These bonuses – also known as quick sale bonuses – provide employees with motivation to sell their homes more quickly and make it more cost-effective to invest in repairs and improvements and services like home staging.

Quick sale bonuses benefit employees because they deliver greater incentives to sell their homes faster and relocate without having their attention, focus and efforts pulled away by their old pieces of property. They're also more likely to bring in good prices on homes that are still occupied and that have spent less time on the market.

There are benefits for employers who encourage relocating employees to sell their homes quickly, too. The sooner your employee sells, the shorter the overall relocation process will be, which can save your company major costs on the relocation package. You'll also benefit from having your employees return to full productivity as soon as possible.

Renters

Not all relocating employees will be homeowners and may opt to rent in the new location as well. Additionally, current homeowners may not want to purchase a home in the new location, so it's important to include provisions in your real estate tiers for renters, as well as homeowners. These could include:

  • Lease cancellation penalty reimbursement
  • Connecting the employee with a rental specialist in the destination location
  • Rental finding trip, including transportation costs, lodging, meals and rental car
  • Temporary living assistance
  • Area touring fees or finder's fees, if required.

Save Time & Money Using Tiered Relocation Packages

Topics: relocation packages, Tiered relocation packages, Real Estate

Exclusive Webinar - Real Estate Roundtable: Expert Advice on Relocation's Biggest Challenges

Posted by Amy Mergler on Wed, Oct 07, 2015


Up-to-date real estate policies are critical to the success of your relocation program. Nothing can disrupt your talent management goals faster than a transferee distracted by a house that won't sell. And, nothing can increase your program costs faster than managing policy exceptions for unexpected issues.

Please join our lively roundtable on Tuesday, October 27th at 2:00 pm as we bring together a lender, appraiser, closing attorney and home inspector to discuss the hottest challenges in the U.S. real estate market in our WERC Learning Zone Webinar: Real Estate Roundtable: Expert Advice on Relocation's Biggest Challenges.

In this webinar, you’ll learn:

  • Legal issues that can impact closings
  • Inspection concerns that can cause a home sale delay
  • Appraisal matters that your transferees need to consider when buying or selling
  • Mortgage industry changes that can affect a successful relocation

Presenters for the webinar include:

Brian Shea, GMS
Vice President, Sales and Business Development
CapRelo

Tom Dempsey, SCRP, GMS
Director, Relocation and Business Development
Quicken Loans

Jay Hershman, Esq., CRP
Partner
Baillie & Hershman, Associated Title & Closing Co., P.C.

Frank Wisniewski
Director, Account Management
Fidelity Residential Solutions

Michael S. Cook, MAI, SRA
President
Michael S. Cook & Associates, Inc.

CapRelo presents this free, exclusive webinar through the WERC Learning Zone so you can learn more about creating a successful international relocation policy. This webinar is good for one CRP credit.

Register today for our October 27th Learning Zone Webinar: Real Estate Roundtable: Expert Advice on Relocation's Biggest Challenges.

Topics: caprelo webinars, Relocation Services, international relocation services, Real Estate

Employee Relocation Policies and Real Estate: A Tiered Approach

Posted by Jim Retzer on Tue, Sep 02, 2014

describe the image

Tiered Relocation Packages

An emerging trend concerning employee relocation is tiered relocation packages. These packages are tailored to each level of employee and offer benefits according to those levels. Corporations have started utilizing tiered policies to provide more flexibility for hiring managers and to cut the overall costs of relocations.

Learn more about cutting costs using tiered relocation packages.

Design Your Tiers

To organize a tiered relocation policy, first you must assign each transferee into categories. The options and benefits will be different for each category. For example, consider a corporation with a tiered relocation structure and four categories, or tiers, of employees being relocated. The first tier, Tier One might include a relocation package specifically for executives. Tier Two packages may apply to middle managers and Tier Three for all other employees. The fourth Tier might apply to college recruits and new hires.

How to Categorize Your Employees

In this tiered approach, the benefits allowance and options available in each category will directly correspond with the transferee’s position or level within the company. This is how the company uses the tiered approach to cut costs while still providing for the needs of each group of transferees.

Some companies devise tier policies according to whether an employee has been with the company or are a new hire. This approach would only save on over all relocation costs if the company has a regular stream of new hires coming in. If new hires are the minority, then the company would still be paying the full amount to relocate existing employees, i.e. fewer savings.

Relocating Homeowners

Costs to move a home owning employee are considerably more since homeowner transferees require assistance for closing costs on their sold home (direct reimbursement or Buyer Value Option) as well as reimbursement of the purchases costs of a new home in their new location. The company’s goal is to keep real estate out of company inventory whenever possible, but holding onto a house in order to hold on to a key player in the company is sometimes the better choice.

Buyout vs. Lump Sum

Recent college graduate new hires logically will require minimal pay out, as compared to a relocating executive who would most likely require a much more substantial package. Lower level employees or middle management might qualify for a Buyer Value Option (BVO) program which puts the pressure to sell the home quickly onto the employee. However, in today’s real estate market a guaranteed buyout may have to be offered as a last resort to ensure the sale of the home. Many companies have started providing lump sum payments for lower tiers/new hires since their relocation needs are typically much less.

Conclusion

The bottom line in employee relocations is going to be cost. If a company is paying lump sums of equal amounts to all transferring employees, chances are it is costing the company considerable amounts of money unnecessarily. With a tiered approach, however, the company stands to save significant costs related to relocating their employees. The key to a tiered approach is sorting the employees into groups and tailoring relocation packages according to the different requirements for each tier.

Save Time & Money Using Tiered Relocation Packages

 

Topics: Tiered relocation packages, Real Estate, executive relocation package

Real Estate Services To Offer During an Executive Relocation

Posted by Rick Bruce on Tue, May 21, 2013

Executive relocation programs should focus on real estate services, since these issues are primary concerns of most transferred executives. Real estate-related services can take many varied and diverse forms.

Executives often have similar, but more extensive, needs and concerns than do other transferees. Their homes tend to be upscale, making them more difficult to sell quickly for price reasons, and executives are extremely concerned about duplicating their quality of life in a new location.

 

Important Destination Real Estate Services

Competitive executive relocation policies should include these services, while custom features should also be considered by employers.

  • New location orientation.
    Appropriate neighborhoods in unfamiliar locations can be more 'mysterious' and challenging to locate than finding the "right" home. Internet searches can preview homes, but, regardless of how a neighborhood looks, finding the right location, with proximity to quality schools, medical care and recreation facilities, can be challenging.

  • Home finding help.
    Transferred executives are time-challenged to find the home they want. Working with experienced real estate agents, familiar with relocation necessities, helps executives get a "feel" for the appropriate homes for sale in preferable neighborhoods.

  • House hunting trips.
    Executive relocation programs that include up to two employer-paid house hunting trips usually satisfy the needs and concerns of transferees. If they find the "perfect" house during the first trip, executives can make an offer and skip the second trip. Or, a second house hunting trip can clear up unanswered questions and result in finding just the right house.

  • Real estate advice.
    A knowledgeable real estate broker, experienced with executive relocation and familiar with the new location, can eliminate transferee stress and help the executive make the best real estate decision.

  • Mortgage assistance.
    It's unreasonable to expect executives, however real estate or mortgage savvy  they may be, to be experts on the complexities of mortgage lending. Even well-respected national mortgage lenders have requirements that can vary.  Having knowledgeable help from the best relocation savvy lenders can make a huge difference. If the executive is a new hire, this help is even more important as the transferee will have just started a new job, without a track record with the employer.

As smart, efficient and successful as the transferred executive may be, he or she will deeply appreciate the employer's help in solving the real estate puzzle that always exists at an unfamiliar location. When the executive has a family, children, pets and all, this assistance is even more important and treasured.

Executive relocation programs, properly designed to attract and retain outstanding corporate leaders, should always include these real estate services, at a minimum. The short-term cost of these services will shrink in comparison to the long-term benefits the employer receives from a motivated, satisfied and talented executive.
New Call-to-action

Topics: Real Estate, executive relocation package

Executive Relocation Real Estate Services - Selling and Buying

Posted by Mickey Williams on Tue, May 14, 2013

Executives can be reluctant to relocate because of real estate issues. To solve these concerns and attract top quality executives, employers should provide real estate services that seamlessly help executives transition from one home to another. Replacing an executive's current home in an unfamiliar location is one part of the real estate equation.

The relocation real estate equation has two primary parts: First, selling the employee's current home quickly and without financial hardship to the executive. Second is buying a comparable home in the new location.

The experts have been writing and talking about the housing market crash during the recent recession. However, even though sales and home selling prices have been down, this condition is often not the top concern of executives. The most pressing concern of transferring executives often relates to timing.   In particular, the lack of time it takes to sell one high-end home and buy another.

House_and_ContractSelling the Executive's Home

Transferees worry about selling their home quickly or leaving this difficult task to their spouse and family.

Some of the benefits employers offer include:

  • Providing referrals to a trusted real estate broker with a proven track record of facilitating high-end homes.

  • Offering monetary compensation for a "loss on sale"

  • Offering buyer incentives to motivate interested parties to act

  • Building in a bonus for a fast sale

Home Buying Assistance in the New Location

Executives' faced with buying a new home in an unfamiliar location, compounds time concern. Employers want transferees on the job at their new workplace as soon as possible. This leaves little time to search for a new home.   Some of the benefits employers offer include: 

  • Providing referrals to relocation savvy real estate brokers with experience in high-end properties.
  • Assistance locating the best mortgage lenders and programs

 These real estate services save time while minimizing potential errors in home buying decisions caused by lack of familiarity with the location. Having real estate experts at the executive's disposal makes him or her much more comfortable in house hunting and purchase matters.

Professional relocation firms usually have preferred real estate brokers and mortgage lenders that have proven experience in helping executives relocate successfully over time. The help in minimizing transferee stress and uncertainty these area experts provide allow the transferred executive to arrive at the new workplace energized, comfortable and ready to contribute to employer operations.

The executive's spouse and family also appreciate this help. After finding the appropriate home and neighborhood, family concerns diminish rapidly.

Competitive executive relocation programs should include home selling and purchasing assistance. Duplicating the outstanding location and amenities of a former home often dominate executive concerns.

These real estate services, performed by trusted experts, have a significant effect on the executive's satisfaction with the relocation. New hires are often particularly impressed with their employer's integrity and concern for their well-being, thus reducing "buyer's remorse" that may creep into the executive's consciousness. These services further cement the wisdom of the new executive's decision to come on board with the company.

Similar to other specialized services included in executive relocation policies, the short-term cost of offering this assistance is recouped over the long-term, satisfied executives are high-performing executives.

New Call-to-action

Topics: Real Estate, executive relocation package

What Does a Relocation BVO Program Entail?

Posted by Barbara Miller on Thu, Jan 24, 2013

house1.jpgA Buyer Value Option (BVO) program for your relocating employee can have several benefits for both your company and your employee.

For your employee, it provides peace of mind, both financially and otherwise. It also allows him or her to concentrate on moving and successfully acclimating to the new work environment.

For more information on real estate considerations for your executive relocation policy, read our free article. 

On your end, a BVO program ensures you get maximum value and productivity from your employee in the shortest amount of time upon relocation. Even more importantly, this type of seller assistance program can massively increase your employee's loyalty and productivity in the long run.

How Does a BVO Program Work?

There are several moving parts to a BVO program. While your company (or likely your relocation company) handles the closing of the property the employee is responsible to list the home up for sale and obtain a bona fide offer.

This doesn't mean that you and your business are left out of the process. In fact, many companies help their employees find a real estate listing agent. Unlike an Appraised Value Offer program, there are no appraisals of the home to determine its fair market value. Instead, the value of the home is determined by the bona fide offer from a prospective purchaser.

Once the contract terms are negotiated, your company - instead of the buyer - purchases the property, and sells it to the buyer. (If you use a relocation management company, they will buy the property on your behalf instead.) If the steps are handled properly and in accordance with IRS guidelines, a benefit of this for your employee is that he or she won't need to report any sales expenses associated with the sale as earned income since there are no reimbursements from the company to the employee. Instead, closing costs and other related fees are paid by you (or by the employee relocation company). This is more than just a pass-through - your company must actually own the home, then sell it to the original interested buyer.

As you might guess, there is some degree of risk involved - but the closing occurs a vast majority of the time. One benefit of this method is the immediate productivity you will secure when your employee can settle into their new position without having to worry about a home sale. This is also an effective way to make sure the employee stays in his or her new position, and doesn't leave due to failure to sell their home.

Finally, it's also a great way to secure employee loyalty, which can have huge real-dollar benefits for your business in the future. Add up all these benefits and you'll see why many so many businesses are still utilizing BVO programs inside of their relocation packages - even given the risks involved.

It's also possible to gain all of the above-listed benefits with none of the risks. An employee relocation company can take care of the entire process for you.

In fact, an employee relocation service can usually take care of it better than most HR departments. They have the knowledge, experience, and connections to make it happen more quickly and work more fluidly than anyone who isn't involved in the relocation business.

Free All-Inclusive Guide  Relocation and U.S Taxes

 

Topics: corporate relocation program, relocation taxes, Real Estate, Buyer Value Option

The Current State of Real Estate

Posted by Barbara Miller on Tue, Aug 21, 2012

After several years of sluggish sales, declining markets, and increased REO's we finally see a light at the end of this tunnel that should help transferees trying to sell homes. Across the country, markets are starting to recover with increased sales and decreased inventories, causing a modest increase in prices. In addition, overall mortgage rates are the lowest in 50 years with 30 year fixed mortgage interest rates as low as 3.66%.

We also see the "shadow" inventory of foreclosures and REO's starting to fall. This is good news for the economy, but it also means that there aren't as many homes available to purchase. Distressed properties are still available, but aggressive refinancing programs, as well as the normal foreclosure process, have removed many homes from inventory. In addition, asset management companies have now started looking to the investor community to sell distressed properties in a packaged arrangement, further reducing available inventory.

Another great piece of news is that Congress has passed a five-year reauthorization of the National Flood Insurance Program, extending the program through September 2017. This means that homeowners who have been waiting can now sell properties and no longer have to pay for expensive private flood insurance.

Topics: REO, Real Estate

New Call-to-action

Subscribe to Email Updates

Recent Posts

Posts by Topic

see all