Your-homesale-program-is-good

Your homesale program is good. Or is it?

There are many dimensions to homesale programs that not only affect the ability to attract talent and global mobility success but also risk management. What is the trend in your industry?

Guaranteed Buyout vs. Buyer Value Option: Blending talent management goals with risk tolerance.

The trend of offering a structured, tax efficient home sale plan has not wavered for many years.  Companies understand that home sale assistance is necessary to attract talent.  Approximately 90% of surveyed companies offer structured homesale assistance (such as a guaranteed buyout or Buyer Value Option (BVO) sale) in their mobility programs.  What has fluxed in the last five years is the breakdown of whether a buyout or BVO is a company’s primary home sale program. The statistics may surprise you. While there is no doubt that BVO has been gaining in usage over the years, the progression has not been straight, which means that many factors are at play. Today, recruiting talent has become more challenging, even as (and maybe because) the real estate market continues to improve.  

Is your homesale program competitive with your peers? Below are the general differences between the two programs.


Guaranteed Buyout
Buyer Value Option
Marketing Assistance
Available

Required or recommended initial list price parameters help ensure home is priced correctly from the outset of marketing

Marketing may be required prior to the start of the appraisal process, usually 30-60 days


Available

Required or recommended initial list price parameters help ensure home is priced correctly from the outset of marketing

Marketing begins immediately

Offer Calculation
Most commonly average of two independent appraisals if values are within 5% of each other

If  values are out of spread, a third appraisal is ordered. Most common method is to average the two closest values

Determined by the buyer’s offer

Appraisals are not completed

Inspections
Completed concurrent with appraisal process

Employee responsible for repairs

May or may not be completed upfront/prior to a sale. If completed, employee responsible for repairs

Buyer will likely have inspections completed

Home Sale Incentive
Depending on real estate market, may be offered to help encourage employee to sell the home and keep homes out of inventory

Depending on real estate market, may be offered to help encourage employee to sell the home quickly

Offer Period
Once guaranteed buyout offer (appraised value offer) has been presented, set offer period of 30-90 days (most commonly 60 days) to accept or reject offer

N/A

Sale Process
Follows Worldwide ERC’s 11 Key Elements of an Amended Sale

If sold prior to establishing the guaranteed buyout offer, contract reflects sale price. If sold after guaranteed buyout offer has been presented, contract is amended to reflect the sale price

Follows Worldwide ERC’s 11 Key Elements of an Amended Sale

Contract reflects sale price

Pros
Higher level of service to the employee with potential for increased productivity

Reduced upfront costs

Cons
Can be costly if home does not sell during the offer process/period and employee accepts the guaranteed buyout offer; home comes into inventory

May not provide enough support in difficult real estate markets or for challenging homes, which may result in increased temporary living and storage costs

                                                                                                              

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