Home sale programs might help make a relocation policy more competitive and appealing in today’s tight labor market. Potential relocating talent may be deterred from accepting that new job in a different city by the onerous burden of selling their own home. By easing the burden of selling a home, home sale assistance services save both the employee and the firm time and energy so that the former can focus on the latter’s new position.
Besides relieving HR departments of administrative tasks, outsourcing home-sale programs offer them access to specialists in their field and better control over associated costs. Relocation consultants frequently serve as key stakeholders, working with a group of specialists to advertise and sell homes for their clients. Assisting the employee in selling their house as soon and profitably as possible is a top priority for the relocation service.
Programs that help people sell their homes can accomplish this goal in a number of different ways, each tailored to the specific needs of the organization implementing the program. Assistance with advertising the house, introductions to real estate agents and closing companies, or even a lump sum payment to cover commissions and fees may all be part of a home sale program.
Organizations can lessen the administrative load and overall expense of relocating employees by offering tax-beneficial house sale programs. These programs reduce the company’s cost and tax obligation associated with owning homes purchased from employees. Both conventional cost-plus and fixed-price models are accessible for tax-advantaged home sale programs. The method and advantages of tax-free property sales are discussed in this article.
What Are The Main Stages In A Home Sale Process?
- The Market-Driven Buyer Stage: At this first stage, the employee’s real estate agent, the relocation consultant, and the consultant’s relocation company develop a plan to advertise the employee’s home. With the consultant’s and agent’s assistance, the employee may weigh the pros and cons of each potential deal and make an informed decision about which one to accept. Following an accepted offer, the relocation management firm will buy the employee’s property at the agreed-upon price and resell it.
- The Buyout Stage: If an employee is unable to sell their property for a market-driven price during the marketing period specified by their company’s relocation benefits policy, the company may offer to buy the home from them. As part of a buyout program, an employee’s home’s worth is determined by a third-party appraiser.
- The Inventory Stage: If an employee sells their house through the buyout process, the property will enter an inventory stage, during which the relocation management business will oversee ownership and marketing. The objective is to immediately sell the house for the highest possible price while minimizing the cost of holding onto inventory. The company’s corporate customer will work with the relocation inventory specialist to determine the best way to repair and improve the property, as well as how to incentivize potential purchasers. The real estate agent then oversees the sale of the property in a manner that is advantageous to the customer.
Home Sale Program KPIs
Accurate broker market analysis (BMA), valuation, and resale price are some of the key performance indicators (KPIs) for a house sale program. Use these key performance indicators to evaluate the success of your home sale program with your relocation company.
● The BMA: A precise property appraisal is important to any home sale program’s success. As a result, advertising is strengthened, and sales are expedited. The longer a property is on the market, the more unappealing it becomes and the greater the likelihood of a price reduction. Therefore it’s important to have an exact BMA and list price. When a home sale program is effective, the time it takes to sell should be reduced.
● Resale Price and Buyout Valuation: It is possible to tell if properties are being fairly valued during the buyout process by comparing the purchase price to the subsequent sale price. Costs associated with running the program can be contained thanks to a reduction in stock-out times and resale losses caused by an appropriate buyout valuation.
Tax-Beneficial Home Sale Program Options
Programs that help employees sell their homes while minimizing their taxable income are known as “tax-beneficial home selling programs” (e.g., the real estate commissions and closing costs). When an employee sells their house to a buyer without going through a real estate agent, any reimbursement of expenses to the employee is deemed taxable income under U.S. tax law.
Therefore, either the employee is responsible for paying the tax and the difference between the after-tax amount and the real house sale costs, or the employer must gross up the reimbursement to the employee to make the employee whole. An appropriate gross-up could be anywhere around 66 percent of the initial cost.
In terms of home sale programs, you can choose between two primary possibilities. Every plan is designed to help you sell your home quickly and for the most money possible. Companies considering incorporating a home sale program into their relocation policy should research the available options to choose one that meets their and their workers’ demands.
The Buyer Value Option
Relocation providers sometimes make counteroffers to employees who have already received offers on their current homes from prospective buyers. The relocation service provider outbids the client company and successfully gets the property. The closing on the sale of the employee’s current residence takes place in a separate transaction handled by the relocation business.
The Guaranteed Buy-Out Offer Option
The home marketing and appraisal process is carried out in accordance with the corporate client’s established guidelines. The relocation management company, on behalf of the client company, makes a guaranteed offer to the employee based on the appraised value of the employee’s home if the employee has not sold the property based on a market-driven offer during the marketing period as defined in the employer’s relocation benefits policy. If the worker accepts the buyout, the relocation company will buy the home, keep it in inventory, and handle the sale to an outside buyer.
Home Sale Program Pricing
When it comes to home sale program pricing, we have two major options available:
Cost-Plus Model Options: Under the cost-plus model, the corporate client is the true economic party of interest in home sale transactions, even though they are handled under the name of the migration management business. The administrative burden on in-house human resources departments is greatly reduced thanks to the outsourced home-sale program’s provision of subject matter expertise and cost control. All costs, such as real estate commissions, closing costs, appraisal costs, carrying costs, resale losses, maintenance, repairs, post-closure disputes, and other inventory-related expenses, are passed back to the corporate customer by the relocation management business in this model.
Fixed Price Model Options: A variety of home sale programs exist, and some relocation firms provide them at a fixed charge. Rather than paying the client company for each individual expense incurred during the sale of a home, these fixed fee schemes impose a single, all-inclusive price. For their part, client companies benefit greatly from fixed pricing programs since they are relieved of the responsibility of property ownership and can plan for the costs associated with a home sale in advance. There is no chance that the company will ever purchase the home of a relocating worker, and the cost is fixed regardless of whether or not the home sells.
Outsourcing the fixed-price home sale program, like the cost-plus model, provides subject matter expertise and relieves corporate HR departments of the administrative load of program management. In addition, the client company pays the supplier a flat charge equal to a percentage of the total revenue generated. The client company is never handed a bill for any expenses, losses, or repairs. With the same charge, homeowners who qualify for the company’s relocation program will also fund the costs of the program’s management.
What Are The Fixed Price Home Sale Programs Benefits?
- Accurate Budget Prediction: One fixed price based on a percentage of the employee’s home worth covers all relocation expenses. By not engaging in costly home buyouts, keeping any unsold inventory, or taking a loss on a sale, the corporation can keep its budget stable. Less room for error in expense estimates is created by this method.
- Reduced Sale Expenses: With fixed price programs, expenses are frozen regardless of fluctuations in the market, so there are no surprises when it comes time to seal the deal.
- No Risk of Adding to the Inventory: The client firm is not responsible for listing the employee’s home as inventory if it does not sell because it does not own the property.
- Outsourcing: Even though many businesses have their relocation services handled by third parties, they may still be on the hook for employees’ house sale fees, taxes, and responsibility if something happens to their property. Clients can get the most out of their outsourcing with the help of these programs, which allow them to pass on not just the administrative burdens of relocating but also the risk, liability, and unexpected costs associated with selling their homes.
- Minimal Accounting: By eliminating the recurring costs associated with more conventional house-selling programs over time, a one-time fixed fee simplifies accounting for home sales. An all-in-one pricing structure like this one reduces the need for paperwork and the potential for mistakes in the books. Programs that offer fixed prices for houses for sale minimize the need for several bills and refunds.
- Attracting Top Talent: In today’s competitive recruiting environment, home sale programs can be a competitive difference, but the inherent risk in these programs stops many organizations from offering them to top personnel. Companies can safely include a house sale program in their relocation policy thanks to the elimination of this obstacle when using a home sale program that offers a fixed price.
Takeaway
Relocation policies that include home-sale assistance programs are a nice perk for any firm. From a talent acquisition perspective, house sale programs make it easier for top performers to accept other employment and can stand out to candidates as a differentiating factor when they are weighing their options. Companies can lessen the administrative load of relocation with standard cost-plus home sale programs by contracting with competent relocation providers to handle the sale of relocating employees’ houses.
Relocation service providers, as with other areas of the relocation process, employ teams of professionals throughout the many phases of the home sale process to guarantee the best possible sale for both the employee and the company customer. Companies seeking a more predictable, simplified house sale program that provides them with reduced liability for a one-time, fixed charge have another option with fixed-price home sale plans, which give the same tax benefits. Relocation service providers can assist you in deciding what elements should be included in your relocation policy.
