A Family Moving For An Employer
A transferee is an individual whose employer has asked them to relocate. Companies relocate employees for a wide variety of business reasons. In many cases, these new assignments are long term and require that the entire family’s participation in the relocation. Typically, the employee sells their home in the old location to the company. This frees them to purchase a home in the new location. In many of these relocations, the employing company has a relocation benefit in place that assists the employee both administratively and financially in making the move. The relocation benefits available to employees vary widely by the company and industry. The benefits can range from a lump sum program to a total cost protection environment. Employees who have been relocated by their employers are “transferees” as they have “transferred” from one location to another.
Want Your Organization To Add Relocation Benefits?
In some instances, an employee being relocated will seek to convince their employer to add relocation benefits to the company benefit package. While incorporating such benefits is a management decision, there are instances where the company has done so at an employee’s request. Often, management has been so engaged in building the business they are unaware how successful relocation programs can be implemented. If your relocation has created interest in looking into the options available now, DearMonty can help get it done correctly. Read on to understand more about this valuable benefit. It is advantageous for both the corporation and relocating employees.
Impact Of Relocation On The Real Estate Industry
The relocation industry’s trade association, Employee Relocation Council (ERC), reported that in 2009 ERC members relocated just under 300,000 employees in the United States. The impact on the total industry is not so much the number of relocations, but the motivation of the employees involved. In many cases, this group of people experiences moves considerably more often than the average family. They have been through the real estate process before. They have learned through experience. A couple of examples, a). They know the importance of pricing their home to compete with other homes right out of the gate, and, b). They seek out “area tours” in new communities as a method to help them narrow their choices quickly.
Most often these families take their lead from professional relocation assistance providers who work for “third party” relocation companies. The corporations hire the relocation companies to administer the relocation benefit of the employees. Corporations do this as the “third party” relocation company has the specialized expertise to relocate families faster and more efficiently than the employer company can. This service also frees the corporation’s employees to focus on their core activities at the company.
The Core Relocation Company Services
There are three primary programs for helping the employee to the new location quickly and efficiently:
The corporation initiates the procedure by calling the third party relocation company with the name and telephone number of the employee who is eligible to receive the benefit. A trained relocation counselor will call the employee and give them a full explanation of the program. The value and condition of the employee’s property is established by two appraisals. Appraised values within five percent are averaged together to become the Guaranteed Buyout amount. A third appraisal may be required if the original two are not within the five percent tolerances. Inspection deficiencies are repaired at the employee’s expense. The employee is presented the guaranteed buyout amount in a Contract of Sale document. The employee then typically has 30 to 60 days to accept the buyout amount. If the employee does not receive an offer from an Outside Party Buyer that is better than the relocation company offer, the relocation company will close with the employee, and purchase the property on behalf of the corporate client. The relocation company then manages the resale of the property to its final closing to an Outside Party buyer.
AMENDED VALUE SALE
Prior to closing with the relocation company, if the employee receives a bona-fide offer to purchase from an Outside Party buyer, which is greater than the Guaranteed Buyout amount, the employee makes the relocation company aware of the offer to purchase. The relocation company then issues the employee an Amended Contract of Sale showing that the Guaranteed Buyout amount is now the same as the purchase price in the offer to purchase from the Outside Party. The employee can then accept the Amended contract of sale and sell the house to the relocation company. The relocation company then proceeds to resell the house to the Outside Party buyer who made the offer. If the offer from the Outside Party buyer does not close, the relocation company will manage the sale for the property as if the property were acquired under a Regular Acquisition Contract of Sale.
BUYER VALUE OPTION (BVO)
The Buyer Value Option is similar to the Amended Value provision, in that the buyout price is determined by an offer from an Outside Party buyer. The relocation company, on behalf of the corporate client, purchases the property at the price offered by the Outside Party buyer and then manages the resale of the property. The BVO is dissimilar in that there are no appraisals or inspections performed on the property. The employee is required to secure an offer to purchase from an Outside Party buyer, and it is that offer that is the basis for the Contract of Sale price offered to the employee.
There are more programs and options. The examples above are some of the better known programs.
If your company has no relocation benefit, and you and your family are going to be relocated soon, ask me your questions and I will answer them.