CRP 2013 Boot Camp
A 3- day Exam review
Daniel Bloom & Associates, Inc.
Welcome to CRP 2013
• CRP 2013 is co-sponsored by Relocation
Taxes LLC who provided your copy the
Relocation Tax Advisor
D...
Disclaimer
• The material contained in this seminar is based on the
published list of source material for the 2013 Certifi...
Disclaimer
• As part of your seminar materials you
each received a 796 question sample
exam.
• None of those questions per...
Ground Rules
• Simple requests to aid the flow
– Class meets 9:00 AM to 5:00 each day
– Lunch from 11:45 to 1:00 PM
– Brea...
Ground Rules
• Simple requests to aid the flow
– No pagers
– No cell phones
– No recording of this seminar
Your Turn –
Getting To Know You
• Name
• Title
• Company
• Years in Relocation
7
Your Facilitator
– Corporate Headhunter
– Internal Corporate HR Staff
– Relocation Director and
Appraiser
– Formerly licen...
Your Facilitator
– Senior Professional in Human
Resources Certification
– Chief Executive Officer of
Daniel Bloom and
Asso...
Collateral Material
• Basis of next 3 days
– Review Manual
– Set of the overheads
Confucius Says
– I hear and I forget
– I see and I remember
– I do and I Understand
The Process
• Cover approximately 100 pages per day
– Skip Sections that May Not Be As Important
– Certain sections will g...
CRP Program Goals
• Major purpose of the Certified Relocation
Professional Examination Program is the
– Achievement of a c...
CRP Program Goals
• Four Key features
– Raise the professional standards of the
industry
– Encourage Professional developm...
Do I Qualify For Exam?
• Option # 1 Requirements
– The candidate must have held membership*
with Worldwide ERC® for at lea...
Do I Qualify For Exam?
• Option # 2 Requirements
– A CRP/SCRP that is a member n good standing with
Worldwide ERC can atte...
Do I Qualify For Exam?
• If You Meet These Requirements
– Real Estate Brokers must have
relocation-related experience
– Wo...
Worldwide ERC Membership
Types
• Each segment of the industry
– Category 1: Corporations
– Category 2: Relocation Service ...
Test Design
Policies and Procedures 33 Questions
Residential Real Estate 22 Questions
Relocation Appraising 17 Questions
T...
Test Design
– 125 Multiple Choice Questions
• 15 non-scored questions
– 3 Hours to complete
– 4-6 weeks to get results
– N...
The Designation
• Two levels
– Certified Relocation Professional
– Senior Certified Relocation Professional
• Receiving th...
The Designation
• Renewal
– Designation expires on July 31
– Must Maintain ERC membership
• Membership is defined as holdi...
Do I Qualify For Exam?
• How many people hold the CRP®/SCRP® designation? As
of August 1, 2012
• Total 3948 Certified Relo...
CRP 2013
Resource Materials
(Primer, Manuals and Research Reports)
History of Worldwide ERC
• Evolution of Industry
– 1964 Called Employee Relocation and Real
Estate Assistance Council (ERR...
History of Worldwide ERC
• Original Membership
– Eastman Kodak
– FMC
– Hercules
– General Electric
– General Mills
– Massa...
History of Worldwide ERC
Original ERC Members
• Eastman Kodak
• FMC
• Hercules
• General Electric
• General Mills
• Consol...
History of Corporate Relocation –
1955- 2004
• Evolution of Industry
– Door Prize
– “Just Get Me There”
– First comprehens...
Primer: Households Goods
Movement
• Policy Criteria
– Needs to be concise
– Needs to be clear
– Describes What items are g...
Primer: Households Goods
Movement
• Standard Service Components
– Packing
– Unpacking
– Shipping
– Storage in Transit
Primer: Households Goods
Movement
• Tariffs
– In effect since 1936
– Prior to January 1, 2008
• Governed by Surface Transp...
Primer: Households Goods
Movement
• Valuation of Shipment
– Released Value
– Full Replacement with Depreciation
– Full Rep...
Primer: Appraisal Concepts
• Home Buyout Process
– Five Basic Steps
– Begins with corporate need
– Ends with transferee’s ...
Primer: Appraisal Concepts
• Home Buyout Process
– Relocation Services Contract signed
– Contract Fact Sheet is Prepared
–...
Primer: Appraisal Concepts
• Home Buyout Process
– Transferee notified and program explained
– Client services begins the ...
Primer: Households Goods
Movement
• Home Buyout Process
– Appraisals are reviewed to see if they are in
tolerance
– If the...
Primer: Real Estate Assistance
• Policy Evolution
– Lump Sum Program
– Direct Reimbursement (DR)
– Guarantee Against Loss ...
Primer: Real Estate Assistance
• Direct Reimbursement
– Not a home purchase program
– Covers the cost(s) of relocation
– C...
Primer: Real Estate Assistance
• Guarantee Against Loss
– Direct reimbursement with a twist
– Employee receives no less th...
Primer: Real Estate Assistance
• Policy Phases
– Initiation/ Application
– Counseling
– Pre-marketing assistance
– Marketi...
Primer: Real Estate Assistance
• Amended Value Transaction
– Transferee receives an offer for the home
– Offer reviewed by...
Primer: Real Estate Assistance
• Assigned Sale Transaction
– Transferee receives an offer for the home
– Offer reviewed by...
Primer: Real Estate Assistance
• Buyer Value Transaction
– No appraisals
– Market based offer determines value of the
home...
Primer: Real Estate Assistance
• RELOCATION FACT
– First Buy-Out Program created by Western
Electric (Bell Labs)
– First C...
Primer: Real Estate Assistance
• Loss on Sale
– Occurs in depressed real estate market
– Does not involve appraisals
– Val...
Primer: Mobility Policy
Administration
• Corporate Cultures
– Womb to Tomb
– Cost Conscious
– Rough Justice
Primer: Mobility Policy
Administration
• Exempt vs. Non-Exempt
– Non-exempt paid hourly wage
– Non-exempt eligible for ove...
Primer: Mobility Policy
Administration
• Lump Sum Allowances
– Provided prior to Move
– Covers house hunting and temporary...
Primer: Real Estate Relocation
Departments
• Affinity Groups
– Added Benefit for All Employees
– Added Convenience
– Ease ...
Primer: Real Estate
Relocation Departments
• Service Packages
– Home Finding
– Rental Assistance
– Home Marketing
Assistan...
Primer: Real Estate Relocation
Departments
• DBAI Business Tip
– Professional Memberships should include
your local and na...
Primer: Homefinding Services
• Mortgage Qualification
– Pre-Approval
– Pre-Qualification
– Pre-Approval carries more weight
Primer: Homefinding Services
• Involves Basic Rental Services
– Lease Breaking Penalties
– Finder’s Fees
– Security Deposi...
Primer: Homefinding Services
• Are You Protecting Your Transferee?
– Standard Inspection Clause
– “Purchaser reserves the ...
Primer: Homefinding Services
• Are You Protecting Your Transferee?
– Suggested Inspection Clause
– “Purchaser reserves the...
Primer: Mortgage Assistance
• Secondary Mortgage Market
– Federal National Mortgage Association (FNMA) or
Fannie Mae
– Fed...
Primer: Mortgage Assistance
• Permanent Buy Down
– Points paid at closing to lower the interest rate
– Extends to the life...
Primer: Mortgage Assistance
• Temporary Buy Down
– Points paid at closing to lower the interest rate
– Covers early years ...
Primer: Mortgage Assistance
• Private Mortgage Insurance
– Private Mortgage Insurance = PMI
– Mortgage Insurance Premium= ...
Primer: Group Moves
• Warn Act
– Worker Adjustment and Retraining Notification Act
– Effective February 4, 1969
– Requires...
Primer: Group Moves
• Four faces of the Mobile Workforce
– The Lemmings
– Reluctant remainders
– The Marathoner
– The stea...
Primer: International Moves
• Tax Policies
– Laissez Faire (Every person for themselves)
– Ad Hoc (Let’s Make a Deal)
– Ta...
Primer: Mobility Procurement
• Traditional Purchasing Function
– Commonly responded to business purchase
needs
– Reacted t...
Primer: Mobility Procurement
• Strategic Sourcing Approach
– Seeks to maintain costs at continually
competitive levels
– S...
Binder: Relocation Tax Issues -
• Section 217 Three Tests
– Time - 39 weeks out of the following 52 weeks
– Distance - 50 ...
Binder: Relocation Tax Issues -
• Section 217 Three Tests - Distance
228. ABC Corporation has decided to further the caree...
Binder: Relocation Tax Issues -
• Section 217 Three Tests - Distance
9.8 miles
59.8 miles
Binder: Relocation Tax Issues -
• Section 217 Three Tests - Distance
9.8 miles
90 miles
Binder: Relocation Tax Issues -
• Section 217 Three Tests
– Time - 39 weeks out of the following 52 weeks
– Distance - 50 ...
Binder: Relocation Tax Issues
• Amdahl vs. Commissioner
– Issue: Whether expenses incurred in buying and selling
employee’...
Binder: Relocation Tax Issues
• Amdahl vs. Commissioner
– Each relocation management company had a contract under
which it...
Binder: Relocation Tax Issues
• Amdahl vs. Commissioner
– If market price higher than offer, offer changed
accordingly
– E...
Binder: Relocation Tax Issues
• Amdahl vs. Commissioner
– Court found that nothing showed the parties treated the
transact...
Binder: Relocation Tax Issues
• Revenue Ruling 72-339
– Led to the creation of the 11 Key Elements
• Revenue Ruling 2005-7...
Binder: Relocation Tax Issues
• Qualified Residence Interest
– Interest on debtness up to $1,000,000 deductible if
secured...
Binder: Relocation Tax Issues
Binder: Relocation Tax Issues
• Sarbane Oxley Act
– Result of Enron Scandals
– Section 402 - Unlawful for any public compa...
CRP 2013
END OF DAY 1
Binder: Property Disclosure
• Remember this about state mandated forms
– Each state form is different
– State law as deter...
Binder: Property Disclosure
• Only federally mandated disclosure
– Title X
– Residential Lead Based Paint Hazard
Reduction...
Binder: RESPA Basics
• Regulates
– Disclosure of settlement costs and fees
– Referral and other fees among settlement
serv...
Binder: RESPA Basics
• Defines federally related mortgage characteristics
– Originated by a regulated lender
– Originated ...
Binder: RESPA Basics
• Defines exceptions to federally related mortgage characteristics
• Cash sales
• Sales where the sel...
Binder: RESPA Basics
• Who are Settlement Service Providers
• Lenders
• Mortgage Brokers
• Title companies and insurers
• ...
Binder: RESPA Basics
• Disclosure Requirements
• At time of Application
– Special Information Booklet
– A Good Faith Estim...
Binder: RESPA Basics
• Exceptions to Anti-Referral Prohibitions
• Attorneys
• Duly Appointed Agents
• Promotional and Educ...
Binder: Appraisal Issues
• Private Letter Ruling 95-52040
– Implies that a Broker Market Analysis is based
on the evidence...
HomeSale Terminology Guide
• Time Value of Money
– Based on $50 a day carrying costs
– Assumes 3000 homes in inventory
– C...
Appraisal Guide
• Different Perspectives
– Appraiser - Surrogate Buyer
– Broker - Market perspective
– Inspector - Conditi...
Appraisal Report
• Property Views
– Actual Age - Chronological age of the home
– Effective Age - The Feel of the home
Appraisal Report
• Two Basic Principals
– Principal of Substitution - Given the option, purchaser
will pay no more for a p...
Broker Market Analysis
• If it looks like a rose and smells like a rose, it is a
rose
– BMA (Brokers Market Analysis)
– BP...
Broker Market Analysis
• Causes for Changes to Report
– Dramatic shifts in housing market
– Dramatic shifts in economic en...
Broker Market Analysis
• Typical Procedures
– Relocations are confidential
– Client responsible to explain brokers role to...
Broker Market Analysis
• Characteristics of a Condominium
– Docs on file with the state
– Condo association
– Mandatory co...
Broker Market Analysis
• Characteristics of a Planned Unit Development
– No docs on file
– Homeowner’s association
– Homeo...
Broker Market Analysis
• Pricing Estimates
– Most Likely Sales Price that Buyer would pay for house in its as
is condition...
US Mobility Trends Survey
• Three types of Relocations
– Regular Relocation Assignment
– Split Family Relocation Assignmen...
Relocation Assistance: Transferred
Employee
• Original Third Party Companies
– Homerica (Eventually became Homequity)
– Po...
Relocation Assistance : New
Hires
Recruitment is a challenge
– Lack of available talent in technical areas
– Corporations ...
CRP 2013
• Mobility Articles
Mobility: BVO with a Sunset
Clause
• Buyer Value Option
– Nothing more than a properly structured
Amended Value Transactio...
Mobility: BVO with a Sunset
Clause
• Buyer Value Option
– Sunset Clause contains essential element
– Corporate buyout WILL...
Mobility: Reality in the
Workplace
• Commuter Marriages
– Maybe a substitute for a relocation
– Used by high level executi...
Mobility:
Cost Management 2.0
• Primarily centered around international moves
• Based on Brookfield Global Mobility Survey...
Mobility:
Cost Management 2.0
• Five Next Generation Strategies
– Based on Cost Management through Policy
– Based on Cost ...
Mobility:
Cost Management 2.0
• Cost Management through Policy
– Offering Flexibility in Policy
– Obtaining flexibility th...
Mobility:
Cost Management 2.0
• Cost Management through Policy
– Companies working through a number of challenges
– Decidi...
Mobility:
Cost Management 2.0
• Cost Management through Policy
– Companies working through a number of challenges
• Decidi...
Mobility:
Cost Management 2.0
• Cost Management through Policy
– Obtaining Flexibility through Segmentation
• Policies exp...
Mobility:
Cost Management 2.0
• Cost Management through Policy
– Adding policy issues need attention
• Process, tools, and...
Mobility:
Cost Management 2.0
• Cost Management through Tools and Process
– Focusing on Cost Projection
– Enhancing except...
Mobility:
Cost Management 2.0
• Cost Management through Tools and Processes
– Companies working through a number of challe...
Mobility: Alternative Valuation
• Valuation Criteria
– Property characteristics
– Sales Price
– Historic market trends
Mobility: Alternative Valuation
• Assessing Risk
– Accuracy
– Reliability
– Cost
– Timeliness
Mobility:Trailing Spouse
Old Guidelines
• Track record of previous
employment for two years
• Employment in the same line ...
Mobility: Have it Your Way
• Tier Challenges
– Too Rigid
• Alienate existing human capital
• Alienate potential human capi...
Mobility:
Relocation Challenge
Mobility Issues
• Taxation
• Compensation
• Benefits
• Housing
• Totalization Agreements
Mo...
CRP 2013
•END OF DAY 2
Mobility: Basics of Moving
Taxation
• What is a Reasonable Amount of Time?
– “Reasonable period will depend on the facts a...
Mobility: Basics of Moving
Taxation
• IRS Tax Code Section 217 - Requires 3 tests
– Time - 39 weeks out of the following 5...
Mobility: Basics of Moving
Taxation
• Revenue Ruling 72-339
– Company Selected three qualified independent appraisers
– Ea...
Mobility: Basics of Moving
Taxation
• Revenue Ruling 72-339
– None of the closing costs imposed on the seller were paid by...
Mobility: Cross Cultural
Training
• Challenges
– Culture becoming homogeneous
– Internet
– Lack of Time
– Lack of funds
Mobility: Direct Homeselling
Costs
• Two ways to reduce direct
homeselling costs
– Improve the amended value sales rate
– ...
Mobility:Foreclosures
Old Guidelines
• Track record of previous
employment for two years
• Employment in the same line or
...
Mobility: New Square Footage
• Two types of Policies
– Lenders Policy
– Owners Policy
Mobility: Isolation of
Repatriation
• Two types of Policies
– Lenders Policy
– Owners Policy
Mobility: Property
Management
• Property Management Responsibilities
– Rent Collection
– Monthly carrying costs
– Rental m...
Mobility: Property
Management
• Inspection Schedule
– Tenant Occupied
• Quarterly
– Vacant Properties
• Weekly
– All Inspe...
Mobility: Short Sales
• Factors as to whether a short sale is warranted
– Updated appraisal value
– Forecast of home value...
Collateral Charts:
Seek and You Shall Find
• DBAI Business Tip
– Make looking at Expansion Management
website regularly
– ...
Collateral Charts:
Seek and You Shall Find
• DBAI Business Tip
– If you are going to survive in the business of tomorrow y...
Collateral Charts:
Seek and You Shall Find
• DBAI Business Tip
– If you are going to survive in the business of tomorrow
y...
Collateral Charts:
Seek and You Shall Find
• DBAI Business Tip
– Would you believe
– First Line Connections - 1254
– Frien...
Test Taking Tips
• Arrive 30 minutes ahead of scheduled starting time
• Bring several #2 pencils with you
• Read over the ...
Test Takers Prayer
Now I lay me down to study,
I pray the Lord I won’t go nutty
If I should fail to learn this junk,
I pra...
Boot Camp Special Offer
• Paying Forward
– Daniel Bloom & Associates, Inc. Ares of Expertise
• HR Strategic Initiatives
• ...
Stay in the loop
Join the Boot Camp Community
• http://www.linkedin.com/groups?gid=4576205&trk=hb_
side_g
• https://plus.g...
Getting Your Results
• Have Further Questions :
– Daniel Bloom SPHR,SSBB,SCRP
– Chief Executive Officer
– Daniel Bloom & A...
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CRP 2013 Boot Camp

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CRP 2013 Boot Camp

  1. 1. CRP 2013 Boot Camp A 3- day Exam review Daniel Bloom & Associates, Inc.
  2. 2. Welcome to CRP 2013 • CRP 2013 is co-sponsored by Relocation Taxes LLC who provided your copy the Relocation Tax Advisor David Oltman Relocation Taxes LLC 203-529-3020 .
  3. 3. Disclaimer • The material contained in this seminar is based on the published list of source material for the 2013 Certified Relocation Examination. • Purpose of this seminar is to provide you with vehicle to prepare for the exam • Daniel Bloom & Associates, Inc. has not nor shall we see the actual examination • Daniel Bloom & Associates, Inc. does not in any way guarantee that by attending this seminar that you will pass the exam.
  4. 4. Disclaimer • As part of your seminar materials you each received a 796 question sample exam. • None of those questions pertain to the 2013 exam .
  5. 5. Ground Rules • Simple requests to aid the flow – Class meets 9:00 AM to 5:00 each day – Lunch from 11:45 to 1:00 PM – Breaks morning and afternoon – No such thing as a stupid question
  6. 6. Ground Rules • Simple requests to aid the flow – No pagers – No cell phones – No recording of this seminar
  7. 7. Your Turn – Getting To Know You • Name • Title • Company • Years in Relocation 7
  8. 8. Your Facilitator – Corporate Headhunter – Internal Corporate HR Staff – Relocation Director and Appraiser – Formerly licensed Real Estate professional – Senior Certified Relocation Professional
  9. 9. Your Facilitator – Senior Professional in Human Resources Certification – Chief Executive Officer of Daniel Bloom and Associates, Inc. – Certified Six Sigma Black Belt – Author “Just Get Me There” – Working on book 2 – “Achieving HR Excellence through Six Sigma”
  10. 10. Collateral Material • Basis of next 3 days – Review Manual – Set of the overheads
  11. 11. Confucius Says – I hear and I forget – I see and I remember – I do and I Understand
  12. 12. The Process • Cover approximately 100 pages per day – Skip Sections that May Not Be As Important – Certain sections will get further explanations – No way to memorize everything – Some sections maybe read verbatim
  13. 13. CRP Program Goals • Major purpose of the Certified Relocation Professional Examination Program is the – Achievement of a common and universal understanding of the ENTIRE employee relocation field – Recognition of those professional who demonstrate mastery of the information.
  14. 14. CRP Program Goals • Four Key features – Raise the professional standards of the industry – Encourage Professional development – Encourage self-development – Certify demonstration a comprehensive knowledge of the industry
  15. 15. Do I Qualify For Exam? • Option # 1 Requirements – The candidate must have held membership* with Worldwide ERC® for at least 18 months during the three-year period prior to the May exam date (May 2009 through May 2012*); – The candidate must have a current membership* established with Worldwide ERC®.
  16. 16. Do I Qualify For Exam? • Option # 2 Requirements – A CRP/SCRP that is a member n good standing with Worldwide ERC can attest to a candidate’s eligibility to sit for the exam – The CRP® candidate must have two full years of corporate relocation-related experience. The experience does not have to be from within the same company, but two full years of experience in relocation are required. – Both the attesting CRP®/SCRP® and the CRP® candidate currently have memberships** established with Worldwide ERC® at the time that the candidate submits the CRP® exam application. The candidate must maintain membership through the exam date
  17. 17. Do I Qualify For Exam? • If You Meet These Requirements – Real Estate Brokers must have relocation-related experience – Working only with transferees does not count as experience – Must be involved in administering relocation policy
  18. 18. Worldwide ERC Membership Types • Each segment of the industry – Category 1: Corporations – Category 2: Relocation Service Providers – Category 3: Real Estate Brokers and Appraisers – Category 4: Professional ERC Member – Appraisers join individually
  19. 19. Test Design Policies and Procedures 33 Questions Residential Real Estate 22 Questions Relocation Appraising 17 Questions Tax and Legal 17 Questions Mobility Issues 11 Questions Mobility Strategies 11 Questions
  20. 20. Test Design – 125 Multiple Choice Questions • 15 non-scored questions – 3 Hours to complete – 4-6 weeks to get results – Need a score of 500 or more • Scores will range from 200-800
  21. 21. The Designation • Two levels – Certified Relocation Professional – Senior Certified Relocation Professional • Receiving the Distinguished Service Award • Based on contributions to the industry • No second examination required – Valid for 3 year period
  22. 22. The Designation • Renewal – Designation expires on July 31 – Must Maintain ERC membership • Membership is defined as holding an individual PERC™ membership and therefore receiving Worldwide ERC® member benefits. – Need 30 hours of continuing education – Payment of $135 renewal fee
  23. 23. Do I Qualify For Exam? • How many people hold the CRP®/SCRP® designation? As of August 1, 2012 • Total 3948 Certified Relocation Professionals SCRP® CRP® TOTAL Corporate 31 305 336 Real Estate Broker 23 814 837 Appraiser 10 165 175 Relocation Service 96 2504 2600
  24. 24. CRP 2013 Resource Materials (Primer, Manuals and Research Reports)
  25. 25. History of Worldwide ERC • Evolution of Industry – 1964 Called Employee Relocation and Real Estate Assistance Council (ERREAC) – 1972 Name changed to Employee Relocation Council – 2003 Name changed to Worldwide ERC
  26. 26. History of Worldwide ERC • Original Membership – Eastman Kodak – FMC – Hercules – General Electric – General Mills – Massachusetts Mutual – Walker Manufacturing – B.F. Goodrich
  27. 27. History of Worldwide ERC Original ERC Members • Eastman Kodak • FMC • Hercules • General Electric • General Mills • Consolidated Natural Gas • Packing Corporation of America • Massachusetts Mutual • Walker Manufacturing • B.F. Goodrich
  28. 28. History of Corporate Relocation – 1955- 2004 • Evolution of Industry – Door Prize – “Just Get Me There” – First comprehensive history of the relocation Industry
  29. 29. Primer: Households Goods Movement • Policy Criteria – Needs to be concise – Needs to be clear – Describes What items are going to be moved – Describes what services are going to be offered
  30. 30. Primer: Households Goods Movement • Standard Service Components – Packing – Unpacking – Shipping – Storage in Transit
  31. 31. Primer: Households Goods Movement • Tariffs – In effect since 1936 – Prior to January 1, 2008 • Governed by Surface Transportation Board • Standardized, common tariff – Post January 2008 • Every mover now published its own schedule • Companies may no longer meet, discuss, formulate and publish a common tariff schedule
  32. 32. Primer: Households Goods Movement • Valuation of Shipment – Released Value – Full Replacement with Depreciation – Full Replacement with no Depreciation – National Accounts
  33. 33. Primer: Appraisal Concepts • Home Buyout Process – Five Basic Steps – Begins with corporate need – Ends with transferee’s home sold
  34. 34. Primer: Appraisal Concepts • Home Buyout Process – Relocation Services Contract signed – Contract Fact Sheet is Prepared – Eligible Employees identified
  35. 35. Primer: Appraisal Concepts • Home Buyout Process – Transferee notified and program explained – Client services begins the process – Orders reports – Reports are reviewed
  36. 36. Primer: Households Goods Movement • Home Buyout Process – Appraisals are reviewed to see if they are in tolerance – If they are, values averaged and become offer – If not, third appraisal is ordered
  37. 37. Primer: Real Estate Assistance • Policy Evolution – Lump Sum Program – Direct Reimbursement (DR) – Guarantee Against Loss (GL) – In-House Program (IHP) – Third Party Program (TP) – Lump Sum Program
  38. 38. Primer: Real Estate Assistance • Direct Reimbursement – Not a home purchase program – Covers the cost(s) of relocation – Covers the cost of selling the home – Taxable Income to the Transferee
  39. 39. Primer: Real Estate Assistance • Guarantee Against Loss – Direct reimbursement with a twist – Employee receives no less than what they paid for the home – Value based on the completion of two appraisals – Not the same thing as loss on sale – Taxable Income to the Transferee
  40. 40. Primer: Real Estate Assistance • Policy Phases – Initiation/ Application – Counseling – Pre-marketing assistance – Marketing incentives
  41. 41. Primer: Real Estate Assistance • Amended Value Transaction – Transferee receives an offer for the home – Offer reviewed by the relocation management firm – Corporate offer is amended to higher offer value – Transferee signs the corporate offer – Equity paid up to the amended value
  42. 42. Primer: Real Estate Assistance • Assigned Sale Transaction – Transferee receives an offer for the home – Offer reviewed by the relocation management firm – Transferee signs the contract for sale – Transferee assigns the sale to the relocation management firm – Equity paid up to the corporate offer – Primary user was the US Government
  43. 43. Primer: Real Estate Assistance • Buyer Value Transaction – No appraisals – Market based offer determines value of the home – Follows the Amended Value Transaction Process
  44. 44. Primer: Real Estate Assistance • RELOCATION FACT – First Buy-Out Program created by Western Electric (Bell Labs) – First Company to Offer Buy-Out Program - Potere Relocation – First Company to offer Home Purchase program - Homerica
  45. 45. Primer: Real Estate Assistance • Loss on Sale – Occurs in depressed real estate market – Does not involve appraisals – Value determined by formula • Purchase Price + improvements - Sales Price – Taxable Income to the Transferee
  46. 46. Primer: Mobility Policy Administration • Corporate Cultures – Womb to Tomb – Cost Conscious – Rough Justice
  47. 47. Primer: Mobility Policy Administration • Exempt vs. Non-Exempt – Non-exempt paid hourly wage – Non-exempt eligible for overtime – Exempt paid annual salary – Hours worked do not apply
  48. 48. Primer: Mobility Policy Administration • Lump Sum Allowances – Provided prior to Move – Covers house hunting and temporary living – Covers meals and personal services – Money can be used anyway the transferee chooses – Requires no documentation or itemization – Taxable income to the transferee
  49. 49. Primer: Real Estate Relocation Departments • Affinity Groups – Added Benefit for All Employees – Added Convenience – Ease of Use – Quicker response to employee concerns – Resources that employee might have been unaware of – Presence in community for broker
  50. 50. Primer: Real Estate Relocation Departments • Service Packages – Home Finding – Rental Assistance – Home Marketing Assistance – Inventory Property Management – Broker to Broker Referrals – Asset Management – Affinity Groups – Group Move Assistance
  51. 51. Primer: Real Estate Relocation Departments • DBAI Business Tip – Professional Memberships should include your local and national SHRM membership – http://www.shrm.org – Annual dues $180 per year for national dues – Local chapter dues vary by chapter
  52. 52. Primer: Homefinding Services • Mortgage Qualification – Pre-Approval – Pre-Qualification – Pre-Approval carries more weight
  53. 53. Primer: Homefinding Services • Involves Basic Rental Services – Lease Breaking Penalties – Finder’s Fees – Security Deposits
  54. 54. Primer: Homefinding Services • Are You Protecting Your Transferee? – Standard Inspection Clause – “Purchaser reserves the right to obtain a professional home inspection within 10 days of the acceptance of this contract” – What is wrong here?
  55. 55. Primer: Homefinding Services • Are You Protecting Your Transferee? – Suggested Inspection Clause – “Purchaser reserves the right to obtain a professional home inspection and accept said report within 10 days of the acceptance of this contract” – What did we change?
  56. 56. Primer: Mortgage Assistance • Secondary Mortgage Market – Federal National Mortgage Association (FNMA) or Fannie Mae – Federal Home Loan Mortgage Corporation (FHLMC) or Freddie Mac – Government National Mortgage Association (GNMA) or Ginnie Mae – Purchase Mortgage Backed Securities
  57. 57. Primer: Mortgage Assistance • Permanent Buy Down – Points paid at closing to lower the interest rate – Extends to the life of the loan – Usually does not cover higher costs
  58. 58. Primer: Mortgage Assistance • Temporary Buy Down – Points paid at closing to lower the interest rate – Covers early years of the loan only – More bang for the buck
  59. 59. Primer: Mortgage Assistance • Private Mortgage Insurance – Private Mortgage Insurance = PMI – Mortgage Insurance Premium= MIP – Essentially same thing – Depends on who is offering it
  60. 60. Primer: Group Moves • Warn Act – Worker Adjustment and Retraining Notification Act – Effective February 4, 1969 – Requires corporations with 100 or more employees to notify workers, unions, state and local governments of pending closing – Requires 60 days notice
  61. 61. Primer: Group Moves • Four faces of the Mobile Workforce – The Lemmings – Reluctant remainders – The Marathoner – The steadfasts
  62. 62. Primer: International Moves • Tax Policies – Laissez Faire (Every person for themselves) – Ad Hoc (Let’s Make a Deal) – Tax Protection (Windfall) – Tax Equalization (Best approach)
  63. 63. Primer: Mobility Procurement • Traditional Purchasing Function – Commonly responded to business purchase needs – Reacted to fulfill them efficiently
  64. 64. Primer: Mobility Procurement • Strategic Sourcing Approach – Seeks to maintain costs at continually competitive levels – Seeks to maintain costs at continually advantageous levels – Relies on cyclical, frequent buying processes
  65. 65. Binder: Relocation Tax Issues - • Section 217 Three Tests – Time - 39 weeks out of the following 52 weeks – Distance - 50 mile minimum requirement – Work related - It must be for the expectation of services delivered for employer – IRS Revenue Ruling 8-47 - If employee responds to job posting for new relocation creates nightmare. Not considered for employer’s benefit
  66. 66. Binder: Relocation Tax Issues - • Section 217 Three Tests - Distance 228. ABC Corporation has decided to further the career development of James Jones and have made the decision to relocate him to the Middle Atlantic States from the Northeast. Currently James Jones commutes for two hours over a distance of 9.8 miles to work each way. The new plant is situated 90 miles from the old job location. In order for the move to be tax deductible what is minimum distance from his old home should he fall into when searching for a new home?
  67. 67. Binder: Relocation Tax Issues - • Section 217 Three Tests - Distance 9.8 miles 59.8 miles
  68. 68. Binder: Relocation Tax Issues - • Section 217 Three Tests - Distance 9.8 miles 90 miles
  69. 69. Binder: Relocation Tax Issues - • Section 217 Three Tests – Time - 39 weeks out of the following 52 weeks – Distance - 50 mile minimum requirement – Work related - It must be for the expectation of services delivered for employer – IRS Revenue Ruling 8-47 - If employee responds to job posting for new relocation creates nightmare. Not considered for employer’s benefit
  70. 70. Binder: Relocation Tax Issues • Amdahl vs. Commissioner – Issue: Whether expenses incurred in buying and selling employee’s home were ordinary business expenses or capital losses – Tested the basis of Revenue Ruling 82-204 – Covered period from 1983-1986 – Amdahl used 3 relocation management companies and offered a variety of home sale assistance – Program administered by the HR department
  71. 71. Binder: Relocation Tax Issues • Amdahl vs. Commissioner – Each relocation management company had a contract under which it was to offer to purchase any employee home – Purchase was at Fair Market Value – Determined on the basis of average of two appraisals – Appraiser selected by employee from list of approved vendors – Purchase offer expired in 60 days – Employee able to try and beat the offer price
  72. 72. Binder: Relocation Tax Issues • Amdahl vs. Commissioner – If market price higher than offer, offer changed accordingly – Employee accepted the contract – Assigned sale to relocation company – Court found that gains and losses were credited to Amdahl’s account – Employee paid any gain on sale – Relocation company reimbursed for any costs plus a 1.25% of appraised value fee for the services delivered
  73. 73. Binder: Relocation Tax Issues • Amdahl vs. Commissioner – Court found that nothing showed the parties treated the transaction as a sale between the relocation company and the employee – No evidence of title transfer – Contracts for sale were merely executory and did not purport to convey ownership – Decision highly flawed
  74. 74. Binder: Relocation Tax Issues • Revenue Ruling 72-339 – Led to the creation of the 11 Key Elements • Revenue Ruling 2005-74 – Major impact on industry – Endorses Amended Value and Appraised Value transactions – Deed in Blank does not effect favorable result of sale – Sets out conditions for non sale
  75. 75. Binder: Relocation Tax Issues • Qualified Residence Interest – Interest on debtness up to $1,000,000 deductible if secured by a residence used to acquire the home. – Interest on additional $100,000 deductible if it is secured by a residence and represents equity in the property and the vehicle(I.e. mortgage) must be recorded
  76. 76. Binder: Relocation Tax Issues
  77. 77. Binder: Relocation Tax Issues • Sarbane Oxley Act – Result of Enron Scandals – Section 402 - Unlawful for any public company to extend or maintain credit, or arrange for the extension of credit, in the form of a personal loan to or for any director or executive officer either directly or indirectly – No exceptions for Bridge Loans
  78. 78. CRP 2013 END OF DAY 1
  79. 79. Binder: Property Disclosure • Remember this about state mandated forms – Each state form is different – State law as determined by the courts still applies – Completed by the seller
  80. 80. Binder: Property Disclosure • Only federally mandated disclosure – Title X – Residential Lead Based Paint Hazard Reduction Act of 1992 – Applies to homes built before 1978
  81. 81. Binder: RESPA Basics • Regulates – Disclosure of settlement costs and fees – Referral and other fees among settlement service providers
  82. 82. Binder: RESPA Basics • Defines federally related mortgage characteristics – Originated by a regulated lender – Originated by a government assisted lender – Originated by a lender which intends to sell the mortgage to a regulated agency – Originated by a Truth in Lending Creditor
  83. 83. Binder: RESPA Basics • Defines exceptions to federally related mortgage characteristics • Cash sales • Sales where the seller takes back the mortgage • Rental property transactions of more than 4 units • Temporary financing • Vacant Land • Properties of more than 25 acres • Some mortgage assumptions and conversions • Commercial or agricultural property
  84. 84. Binder: RESPA Basics • Who are Settlement Service Providers • Lenders • Mortgage Brokers • Title companies and insurers • Closing services • Real Estate Brokers and Appraisers • Home Warranty Companies • Credit Reporting Agencies • Home and Pest Inspectors
  85. 85. Binder: RESPA Basics • Disclosure Requirements • At time of Application – Special Information Booklet – A Good Faith Estimate – Mortgage Servicing Disclosure • Before Settlement – An Affiliated Business Arrangement Disclosure • After Settlement – An Annual Escrow Statement – A Servicing Transfer Statement
  86. 86. Binder: RESPA Basics • Exceptions to Anti-Referral Prohibitions • Attorneys • Duly Appointed Agents • Promotional and Education Activities • Affiliated Businesses • Referral Fees between real estate agents and brokers
  87. 87. Binder: Appraisal Issues • Private Letter Ruling 95-52040 – Implies that a Broker Market Analysis is based on the evidence is as accurate as an appraisal and can be used in place of appraisals – Basis for failed policy by Homequity in early 1980’s
  88. 88. HomeSale Terminology Guide • Time Value of Money – Based on $50 a day carrying costs – Assumes 3000 homes in inventory – Close 3 days earlier = Save $450,000 – Close 7 days earlier = Save $1,050,000
  89. 89. Appraisal Guide • Different Perspectives – Appraiser - Surrogate Buyer – Broker - Market perspective – Inspector - Condition perspective
  90. 90. Appraisal Report • Property Views – Actual Age - Chronological age of the home – Effective Age - The Feel of the home
  91. 91. Appraisal Report • Two Basic Principals – Principal of Substitution - Given the option, purchaser will pay no more for a property than the cost of acquiring an equally desirable property. – Equilibrium Price - Markets reach the point where the home remains affordable to the purchaser and the seller maximizes his return on investment within the property.
  92. 92. Broker Market Analysis • If it looks like a rose and smells like a rose, it is a rose – BMA (Brokers Market Analysis) – BPO (Brokers Price Opinion) – CMA (Comparative Market Analysis) – BOV ( Brokers Opinion of Value)
  93. 93. Broker Market Analysis • Causes for Changes to Report – Dramatic shifts in housing market – Dramatic shifts in economic environment – Shifts in Corporate Policies and Practices – Form changed to meet the needs of the industry
  94. 94. Broker Market Analysis • Typical Procedures – Relocations are confidential – Client responsible to explain brokers role to transferee
  95. 95. Broker Market Analysis • Characteristics of a Condominium – Docs on file with the state – Condo association – Mandatory condo disclosures – 3 Day right of recession – Condo ownership with shares of common areas – Only responsible for your unit – No Survey – Insurance on complex from complex
  96. 96. Broker Market Analysis • Characteristics of a Planned Unit Development – No docs on file – Homeowner’s association – Homeowner’s Association condo disclosures – No right of recession – Own unit and shares of common areas – May be responsible for exterior of unit – Survey may be required – Individual owners responsible for insurance
  97. 97. Broker Market Analysis • Pricing Estimates – Most Likely Sales Price that Buyer would pay for house in its as is condition in today’s market – Suggested List Price for a 30 day turn-around • Marketing Strategy – Five creative ideas to sell the property – Challenges solutions – Buyer profile
  98. 98. US Mobility Trends Survey • Three types of Relocations – Regular Relocation Assignment – Split Family Relocation Assignment – Commuter Marriage
  99. 99. Relocation Assistance: Transferred Employee • Original Third Party Companies – Homerica (Eventually became Homequity) – Potere (Small NJ Based Real Estate Company) • First Company to use Third Party Program – Bell Labs
  100. 100. Relocation Assistance : New Hires Recruitment is a challenge – Lack of available talent in technical areas – Corporations claiming there is a lack of skills in the marketplace – More headcount then openings
  101. 101. CRP 2013 • Mobility Articles
  102. 102. Mobility: BVO with a Sunset Clause • Buyer Value Option – Nothing more than a properly structured Amended Value Transaction – With no appraisals
  103. 103. Mobility: BVO with a Sunset Clause • Buyer Value Option – Sunset Clause contains essential element – Corporate buyout WILL occur if employee can’t locate bona fide purchaser during marketing period – Should take effect after the home has been on the market for 6 months
  104. 104. Mobility: Reality in the Workplace • Commuter Marriages – Maybe a substitute for a relocation – Used by high level executives
  105. 105. Mobility: Cost Management 2.0 • Primarily centered around international moves • Based on Brookfield Global Mobility Survey for 2012
  106. 106. Mobility: Cost Management 2.0 • Five Next Generation Strategies – Based on Cost Management through Policy – Based on Cost Management through Tools and Processes – Based on Cost Management through Housing Costs – Based on Cost Management through COLA – Based on Cost Management through Allowances
  107. 107. Mobility: Cost Management 2.0 • Cost Management through Policy – Offering Flexibility in Policy – Obtaining flexibility through segmentation
  108. 108. Mobility: Cost Management 2.0 • Cost Management through Policy – Companies working through a number of challenges – Deciding on an appropriate type of flexibility – Providing tools and guidance for managers – Communicating and managing flexibility to avoid negotiation – Addressing issues of equity and consistency – Fulfilling an appropriate level of “duty to care”
  109. 109. Mobility: Cost Management 2.0 • Cost Management through Policy – Companies working through a number of challenges • Deciding on an appropriate type of flexibility • Providing tools and guidance for managers • Communicating and managing flexibility to avoid negotiation • Addressing issues of equity and consistency • Fulfilling an appropriate level of “duty to care”
  110. 110. Mobility: Cost Management 2.0 • Cost Management through Policy – Obtaining Flexibility through Segmentation • Policies expanding policies based on employee need • Been strong focus on short term assignments and localization • Requires trade-off between polices and extra resources
  111. 111. Mobility: Cost Management 2.0 • Cost Management through Policy – Adding policy issues need attention • Process, tools, and internal governance to manage the selection of assignment types based on purpose • More complex compliance requirements • Assignment timing and duration to ensure cost-benefits
  112. 112. Mobility: Cost Management 2.0 • Cost Management through Tools and Process – Focusing on Cost Projection – Enhancing exception management
  113. 113. Mobility: Cost Management 2.0 • Cost Management through Tools and Processes – Companies working through a number of challenges – Deciding on an appropriate type of flexibility – Providing tools and guidance for managers – Communicating and managing flexibility to avoid negotiation – Addressing issues of equity and consistency – Fulfilling an appropriate level of “duty to care”
  114. 114. Mobility: Alternative Valuation • Valuation Criteria – Property characteristics – Sales Price – Historic market trends
  115. 115. Mobility: Alternative Valuation • Assessing Risk – Accuracy – Reliability – Cost – Timeliness
  116. 116. Mobility:Trailing Spouse Old Guidelines • Track record of previous employment for two years • Employment in the same line or similar work • Employment in an easily employable field • An intent to work in the new community New Guidelines • I - unit primary residence at least 35 miles from prior job • Maximum 95% LTV and TLTV • Ratios must not exceed 28/36 • Spouse must have been employed in same profession for 2 years • Can not be self-employed • Documentation that spouse has a current position in new location • Spouse income cannot exceed 33% of total qualifying income • Lender must verify previous employment and new position
  117. 117. Mobility: Have it Your Way • Tier Challenges – Too Rigid • Alienate existing human capital • Alienate potential human capital – Too Flexible • Exceptions become the rule • Benefits become inequitable • Costs spiral
  118. 118. Mobility: Relocation Challenge Mobility Issues • Taxation • Compensation • Benefits • Housing • Totalization Agreements Mobility Issues • Foreign entrance visas • Work authorizations • Residency permits • Re-entry permits • Immigration status 118
  119. 119. CRP 2013 •END OF DAY 2
  120. 120. Mobility: Basics of Moving Taxation • What is a Reasonable Amount of Time? – “Reasonable period will depend on the facts and circumstances” • US Tax Code Section 1.62.2-2(g)(1) – “Substantiation furnished within 60 days or excess reimbursements returned within 120 days will be considered reasonable” • US Tax Code Section 1.62.2(g)(2) – “Holds that 90 days is a reasonable period in which to account for moving expenses per section 82 of the IRS Tax Code” • IRS Private Letter Ruling 9313015
  121. 121. Mobility: Basics of Moving Taxation • IRS Tax Code Section 217 - Requires 3 tests – Time - 39 weeks out of the following 52 weeks – Distance - 50 mile minimum requirement – Work related - It must be for the expectation of services delivered for employer – IRS Revenue Ruling 8-47 - If employee responds to job posting for new relocation creates nightmare. Not considered for employer’s benefit
  122. 122. Mobility: Basics of Moving Taxation • Revenue Ruling 72-339 – Company Selected three qualified independent appraisers – Each made separate appraisals of the property – Employee offered the average of the three appraisals – Company purchased the residence for the average appraised value – Resulted in a gain on sale for the employee
  123. 123. Mobility: Basics of Moving Taxation • Revenue Ruling 72-339 – None of the closing costs imposed on the seller were paid by the employer – No sales commissions were paid or incurred by either party – Court held that • Employee must account for the gain on sale • No part of the transaction will give rise to income as compensation for the amount of real estate commissions that were neither paid nor incurred
  124. 124. Mobility: Cross Cultural Training • Challenges – Culture becoming homogeneous – Internet – Lack of Time – Lack of funds
  125. 125. Mobility: Direct Homeselling Costs • Two ways to reduce direct homeselling costs – Improve the amended value sales rate – Minimize days on market for inventory properties • Marketing time should run 60-90 days
  126. 126. Mobility:Foreclosures Old Guidelines • Track record of previous employment for two years • Employment in the same line or similar work • Employment in an easily employable field • An intent to work in the new community New Guidelines • I - unit primary residence at least 35 miles from prior job • Maximum 95% LTV and TLTV • Ratios must not exceed 28/36 • Spouse must have been employed in same profession for 2 years • Can not be self-employed • Documentation as to intent to find work and what type of work • Spouse income cannot exceed 33% of total qualifying income • Lender must verify previous employment and job prospects
  127. 127. Mobility: New Square Footage • Two types of Policies – Lenders Policy – Owners Policy
  128. 128. Mobility: Isolation of Repatriation • Two types of Policies – Lenders Policy – Owners Policy
  129. 129. Mobility: Property Management • Property Management Responsibilities – Rent Collection – Monthly carrying costs – Rental marketing – Tenant screening – Lease administration – Vendor management – Repairs and maintenance
  130. 130. Mobility: Property Management • Inspection Schedule – Tenant Occupied • Quarterly – Vacant Properties • Weekly – All Inspections should be completed by trained professionals
  131. 131. Mobility: Short Sales • Factors as to whether a short sale is warranted – Updated appraisal value – Forecast of home value depreciation rates – Current stage of delinquency – Standard foreclosure timeline – Average time on the market – Foreclosure carrying costs – Presence of a second lien
  132. 132. Collateral Charts: Seek and You Shall Find • DBAI Business Tip – Make looking at Expansion Management website regularly – http://www.expansionmanagement.com/NEWS BRIEFS.asp – “Reports announcements of companies moving their operations
  133. 133. Collateral Charts: Seek and You Shall Find • DBAI Business Tip – If you are going to survive in the business of tomorrow you need to access the world – Join the conversation– Join the Web 2.0 world – Get connected to Twitter • Look at http://www.tweetdeck.com – Get connected to Facebook professionally – Get connected to Google+
  134. 134. Collateral Charts: Seek and You Shall Find • DBAI Business Tip – If you are going to survive in the business of tomorrow you need to access the world – Get connected to LinkedIn – Worldwide business connections – Collaborative resources at – http://www.Brandergy.com
  135. 135. Collateral Charts: Seek and You Shall Find • DBAI Business Tip – Would you believe – First Line Connections - 1254 – Friends of my Connections – 730,900 – Friends of friends of my connections – 13,026,200 – New members in the network since May 3– 19,540 – Total members accessible one way or another - 135,000,000 Worldwide
  136. 136. Test Taking Tips • Arrive 30 minutes ahead of scheduled starting time • Bring several #2 pencils with you • Read over the entire test • Answer those questions you positively know the answers • Circle questions you are unsure of • Go back and answer the circled questions • Review answer sheet • ON MULTIPLE CHOICE TESTS, YOUR FIRST CHOICE IS USUALLY THE CORRECT ANSWER
  137. 137. Test Takers Prayer Now I lay me down to study, I pray the Lord I won’t go nutty If I should fail to learn this junk, I pray the Lord I will not flunk. But if I do, don’t pity me at all, Just lay my bones down in the study hall. Tell my teacher I did my best, Then pile my books upon my chest. And while I lay me down to rest, I pray I’ll pass tomorrow’s test. If I should die before I wake, That’s one less test I’ll have to take. **************Suffering Student***************
  138. 138. Boot Camp Special Offer • Paying Forward – Daniel Bloom & Associates, Inc. Ares of Expertise • HR Strategic Initiatives • Retained HR • HR Process Improvement • http://www.dbaiconsulting.com • Training – The Boot Camp deal • Refer me a potential client • Signed contract • Your receive 10% of my service fee each year for as long as the client remains as an active client • Paid directly to you not your company
  139. 139. Stay in the loop Join the Boot Camp Community • http://www.linkedin.com/groups?gid=4576205&trk=hb_ side_g • https://plus.google.com/communities/11826179807969 0305651
  140. 140. Getting Your Results • Have Further Questions : – Daniel Bloom SPHR,SSBB,SCRP – Chief Executive Officer – Daniel Bloom & Associates, Inc. – PO Box 1233 – Largo, FL 33779 – (727) 581-6216 – dan@dbaiconsulting.com – http://www.dbaiconsulting.com

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