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Employee Home Purchase Programs
1. Employee Home Purchase
Programs
THE BASICS
Home purchase programs are offered by employers to their employees as a benefit.
Relocation management companies work with the employer to manage this
employee benefit and typically do not contract directly with a transferring employee
to purchase a home.
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2. When Do Employers Offer Home
Purchases?
• Corporate realignment causing the move of an
existing key employee or group of employees to a
new location within the company or a subsidiary
company at the company’s request.
• Recruitment of top talent from another city.
• The group move of an entire company or division.
Employers offer home purchase programs for a variety of reasons. The most typical
reasons are Corporate realignment causing the move of an existing key employee
or group of employees to a new location within the company or a subsidiary
company.
Recruitment of top talent from another city.
The group move of an entire company or division.
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3. Why Offer Home
Purchase….Benefits of a Home
Purchase Program
• Home Purchase programs relieve the employee of
the burden of selling the old home, extending
temporary living in the new location or making two
mortgage payments.
• A home purchase will increase employee
productivity, focus and contributions faster.
• The employee and employer will enjoy tax savings if
the program is properly administered.
Home Purchase programs relieve the employee of the burden of selling the old
home, extending temporary living or making two mortgage payments.
A home purchase will increase employee productivity, focus and contributions
earlier in the new job.
The employee and employer will enjoy payroll tax savings if the program is properly
administered.
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4. Types of Home Purchase and
Reimbursement Programs
• Standard Appraised Value Transaction
• Standard Amended Value Transaction
• Buyer Value Option
• Guarantee-against-loss plan (no offer to
purchase)
• Direct Reimbursement (no offer to purchase)
There are three types of home purchase programs that are most commonly used by
US employers. Each has a different effect on the employee and employer. The
three types of programs are Standard Appraised Value Transaction, Standard
Amended Value Transaction, Buyer Value Option. Guarantee-against-loss plan &
Direct Reimbursement are used by a small percentage of companies but do not
offer a purchase.
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5. Cost of a Home Purchase Program
• Costs generally include the real estate
commission, normal selling costs such as title
insurance, transfer stamps and closings fees.
In addition, the company may also have
carrying costs for the time they own the
property, repair costs, and a loss based on
the price paid the employee and the final
sales price.
The purchase and resale of a home is expensive and has risk in a declining real
estate market but compared to the positive results of having the right employee in a
key position, the cost is defendable. Home purchase costs include the real estate
commission, normal selling costs such as title insurance, transfer stamps and
closings fees. In addition, the company may also have carrying costs for the time
they own the property, repair costs, and a loss based on the price paid the
employee and the final sales price. 10-12% of the home value in costs are
moderate and could be substantially more depending on the employer’s policies,
program type and the real estate market.
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6. Cost of a Home Purchase Program
• The employer usually outsources the home
purchase program to a relocation
management company but may choose to
handle within the HR department. The cost to
outsource is usually small compared to the
cost of potential risk and the cost of an
employee with the skills to manage this
complex process.
The employer usually outsources the home purchase program management to a
relocation management company but may choose to handle within the HR
department. Outsourcing is relatively, inexpensive compared to the cost of potential
risk involved and the cost of an employee with the skills to manage this complex
process.
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7. Create a Good Relocation Policy
• Employer’s top management
involvement and support is
critical
• Understand corporate culture
and recruiting objectives
• Human Resources' role in the
process
The first priority in creating a relocation policy that works for your company is getting
involvement from the top management regarding corporate objectives and budgets.
With the talent shortage predicted in the US, making the case for competitive
recruiting and retaining practices is vital.
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8. Create a Good Relocation Policy
• What type of program will you offer?
• How will you manage the program (in-
house vs. outsourcing)
• What will you do meet corporate
objectives?
There are many ways to provide home purchase benefits so deciding what type of
program, who will manage your program and what components to include is key.
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9. Create a Good Relocation Policy
• Mandatory marketing periods
• Sale incentives to buyers or agents
• Incentives to employees for a quick sale
• Mandatory agent selection
• Loss on sale caps
Your relocation policy should be aligned with corporate culture and budgets but
should also be reviewed at least annually to fairly address changes in the real
estate market. Adding a component such as a marketing incentive to get a home
sold faster in a slow market is much less expensive than owning a vacant property.
Consider mandatory marketing periods, sale incentives to buyers or agents,
incentives to employees for a quick sale, mandatory agent selection or Loss on sale
caps.
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10. Relocation Facts
• According to Worldwide ERC, in 2006, the average
cost to relocate a home owner was $62,185.
• Home inventory levels have been rising, causing
decreasing prices and increasing marketing time.
• The labor pool is shrinking as more boomers retire.
• A thoughtful, intelligent home purchase program will
help your company recruit and retain the best
employees.
According to Worldwide ERC, in 2006, the average cost to relocate a home owner
was $62,185.
Home inventory levels have been rising, causing decreasing prices and increasing
marketing time.
The labor pool is shrinking as more boomers retire.
A thoughtful, intelligent home purchase program will help your company recruit and
retain the best employees.
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11. Contact Us for Assistance
Reliable Relocation, Inc.
p/440-546-5660
info@reliablerelocation.com
www.reliablerelocation.com
Contact Reliable Relocation at 440-546-5660 or info@reliablerelocation.com. We
will help you build and manage a great relocation policy.
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