Relocation Home Sale Benefits

by | Oct 13, 2016 | News

There are benefits to a real estate sale during a relocation. The process begins with the sale of the home. When it comes to selling a home as part of an employee relocation, corporate buyouts come in two main varieties:

  1. An appraisal
  2. An outside offer

There are other types of relocation-specific home sales, such as direct reimbursement of expenses, but these open the employee up to unnecessary taxation.

relocation benefits

More on Buyouts

A guaranteed buyout (GBO) is based on the value of two appraisals, which average a guaranteed offer to buy a relocating employee’s home. A second type of buyout, a buyer value option (BVO), offers a buyout based on an outside buyer’s offer.

In both cases, the employer would take over the financial responsibility and (sometimes) title until closing with a buyer. This allows the employee to move on to his or her new location with less of a burden and to escape taxation. This happens because the money relating to the home sale never actually passes through the employee’s hands. A real estate relocation specialist can help understand these types of offers.

Additional Home Sale Bonuses

In addition to a buyout, employers often offer add-on benefits, such as loss on sale (LOS) protection or a sale bonus. Both LOS and a sale bonus can be engineered to incentivize a home sale. The former by reducing any negative impact of a sale and the latter by “sweetening” the deal if the sale happens in a timely manner.

These benefits are not tax protected. Employees may incur a tax on these benefits if the employer does not elect to “gross up” the incentive.

Home Sale Bonus Trends

A consideration for both additional home sale benefits is the employee’s status within the company. It is not uncommon for these relocation house sale benefits to only be offered to existing employees and those in higher tiers. New hires may fall into a different policy tier altogether.

Based on our benchmarking data, the average percentage of offering relocation home sale benefits is 67.5%. A breakdown of these benefit offerings by industry is detailed below.

  • Homesale Benefit – Manufacturing Industry 33% 33%
  • Homesale Benefit – Pharmaceutical Industry 91% 91%
  • Homesale Benefit – Restaurant & Quick-Service Chains 50% 50%
  • Homesale Benefit – Insurance Industry 100% 100%
  • Homesale Benefit – Food & Beverage Manufacturing 56% 56%

Sale Bonus

In general, employers are more prone to offer a sale bonus when a GBO is involved, since there is more risk of the home not selling. This bonus is often based on the sale price (1 – 5% being the most common), but some companies will offer a flat rate instead of a percentage.

Since some employers also require a mandatory listing period before accepting a GBO, it is common to see the bonus amount decrease over this time, starting at its highest amount before the appraisals are ordered or concluded (e.g. a 4% sale bonus before appraisals, 3% within 30 days of appraisals, 2% within 60 days, and 1% within 90 days).

It is common to see the bonus expire when the buyout expires.

Loss on Sale Protection

Homes bought during the peak of the housing bubble suffered losses in many markets over the past decade. But with the housing market strengthening and stabilizing, there are fewer losses today. To counteract any possible losses during a relocation home sale, the LOS benefit comes in many shapes and sizes.

Traditionally, loss is calculated based on the amount paid for the home and does not include capital improvements. Once the loss is determined (sale price minus purchase price), employers have two choices:

  1. Cover all of it (often up to a capped amount)
  2. Cover a portion of it.

As a further breakdown, some companies offer to cover 50 – 75% of the loss, and the employee must cover the remainder. Often, we see employees pay 100% of the loss but only up to a capped amount (e.g. anywhere from $20,000 – 50,000). If the loss is greater than this cap, the employee can either pay the difference and continue to market and sell the home, or decide against selling the home entirely. Our research has shown caps up to $150,000, but amounts this high are uncommon.

On average, 49.5% of companies offer LOS benefits. A breakdown by industry is detailed below.

  • LOS Benefit – Manufacturing Industry 17.5% 17.5%
  • LOS Benefit – Pharmaceutical Industry 91% 91%
  • LOS Benefit – Restaurant & Quick-Service Chains 12.5% 12.5%
  • LOS Benefit – Insurance Industry 62% 62%
  • LOS Benefit – Food & Beverage Manufacturing 56% 56%

WHR Group can help with LOS benefits and a home sale bonus. We can help structure per tier to meet your organization’s unique needs. Insulating the business from unnecessary risk is important. Real estate and home relocation services can be tricky to navigate. Our 20 years of relocation service expertise will guide you to the right policy for your organization.

Global Workforce Symposium 2016 Takeaways

by | Oct 10, 2016 | News

relocation

As the world around us continues to feel more accessible every day, employers are forced to reassess the way they manage their global mobility strategies. Compliance demands, immigration changes, and pricing tariffs are all examples of trending topics global mobility professionals deal with on a daily basis. The Worldwide ERC®’s annual Global Workforce Symposium is a fantastic opportunity to learn from some of the most talented, world class experts in our field.

WHR Group sent its own top experts to the symposium once again this year. Some of them were able to share their thoughts, takeaways, and experiences.

Roger Thrun: CEO

I took away these main items this year:

• International short-term assignments from 6 months to 2 years are rising quickly

• Ireland is no longer the “it” country in Europe… Germany is the “new one” because of its employment base to choose from.

• If you cannot offer technology to complete a relocation on a handheld device in the next 5 years, you’re out as a viable relocation provider

• Companies want to be able to measure ROI, spend, and future costs on a dashboard at any time

• Technology is great, but customer service is still the backbone of the relocation… We move people with family, not machinery.

David Bronder: Vice President of Business Development

WHR Group is a member of ERC®’s Government Affairs Committee, which focuses on regulatory issues that impact the global mobility industry. Along with other industry representatives, I met with Senate and Congressional staff members to review three areas of concern for our industry: 1. Federal relocation (cost savings through industry best practices), 2. Tax (moving expense deduction), and 3. Immigration (the need for high-skilled immigration into the US). The Government Affairs Committee divided into three groups based on industry experience. All meetings were bi-partisan with the focus on educating staff members on our industry, the impact of tax and immigration regulations, and government relocation best practices.

WHR Group will continue to work with the ERC® Government Affairs Committee to ensure these important issues receive the support for the challenges they represent in our industry. A Senate staff member in the government relocation meeting stated, “The meeting was very beneficial, and bi-partisan support should not be an issue.”

Paul De Boer: President

The keynote speaker, Mick Ebeling, demonstrated a conviction of purpose that guides his life, and we can all take lessons from his experience. His life is “rich” in helping others as he drives Not Impossible Labs to help people overcome obstacles previously thought of as impossible. His motto is “If not now, then when?” Meaning you need to find something in the world you want to change and associate yourself with an amazing group of people that can solve the seemingly impossible.

What he has done and what he is doing with his life makes your daily issues and problems seem like small hills compared to the mountains he is climbing. I would highly suggest anyone to visit his website to see his story and the lives he is impacting: http://mickebeling.com/.

Building a Relocation Policy

by | Aug 31, 2016 | News

sample relocation packages

If you are considering revising your current relocation program, or creating one for the first time, you’re probably wondering where to start. Just like building a house, you want to start with the foundation.

When building a relocation program, begin with the policy structure. Remember, you have a couple options to consider when creating your program. If you’re looking for assistance, our benchmarking studies have helped uncover some key trends in building the right policy structure.

Building or Revising Your Employee Relocation Policy

A common trend among companies offering relocation assistance is to provide different levels of benefits to their relocating employees. This allows for a company to be cost conscious and flexible.

The Tiered Approach

A set, tiered policy gives a company the ability to easily select which employee will receive which benefit package. Our research indicates an average of four tiers within any relocation policy. This allows for enough variation between each benefit package while not creating too much complexity between your levels of employees.

While a tiered policy gives the ability for a company to be selective regarding which benefits are offered and to whom, some benefits may be offered to all packages. For instance, a household goods move may be offered to all relocating employees, but only certain employees might receive a homesale benefit. You will need to consider which benefits make the most sense for your different levels of employees.

 

%

of surveyed companies use three tiers

%

of surveyed companies use four tiers

Building Tiers

There are several different factors companies use when creating a tiered policy. In fact, most companies use multiple factors. The most common factors we’ve identified in our studies include employee position level, homeowner versus renter status, new hire versus existing employee status, and budget.

The most frequently used factor to create policy tiers is the employee’s position or level within the company. Companies will most often offer richer benefits to C-level employees compared to middle managers, as the C-level role may be considered more integral to the employer. Cash allowances may be bigger, timeframes may not be as stringent, and the policy itself may become less constrictive overall for higher level tiers.

Homeowner versus renter status is another factor commonly used in creating a tiered policy. For example, a homeowner tier will likely be richer than a renter tier. Homeowners have more associated move costs in order to complete any home repairs and get their homes ready for market. Longer househunting might also be offered for homeowner tiers as more time is typically needed to purchase a home than rent.

The A La Carte Approach

An alternative approach to having a tiered policy is using an a la carte, or menu, policy. This can be ideal for companies that like to be extremely selective about which benefits are given on an individual basis.

Building A La Carte Benefits

The discretion used in deciding which benefits to offer can be based on the need for the employee to relocate, the distance in which the employee is moving, or simply based on budget.

The employees themselves can also be in charge of deciding which benefits they receive. The company may offer an employee a specific lump sum amount or use a “points” system. The employee can then determine, based on the dollars or points being received, which benefits he or she would like provided by the employer versus what the employee would like to manage on his or her own.

This type of policy is currently more “on trend” due to several factors, such as more employees electing to retain their homes in their departure location and therefore not having use for a formal homesale benefit.

Your company’s culture, talent development strategies, and much more need to be taken into consideration when you’re deciding how to develop your employee relocation policy. Offering too many benefits can prove costly to your organization while not offering enough can negatively impact your success in recruiting and retaining your employees. Take careful consideration when determining what structure fits your relocating employees’ needs best.

policy designer

Mexico: An Emerging Market for Business and Expats

by | Jun 9, 2016 | News

If you weren’t able to attend this May’s Worldwide ERC® Americas Mobility Conference in Houston, then you missed out on Dwellworks’ VP of Latin America, Jack Fraind, present on Mexico as the latest (and slightly misunderstood) emerging market.
expat assignment, what is an expat

Market Opportunities

Imagine relocating to Mexico. What do you see?

According to Fraind, you should be envisioning a robust economy in many parts of the country, no longer simply related to manufacturing. Design, engineering, and other “white collar” roles are taking a foothold.

Mexico is emerging above the typical “beachy” (or perhaps cartel-related) imagery. Because beyond the weather and cuisine, Mexico is the world’s eighth largest producer of automotive parts and the world’s largest supplier of flat-screen TVs.

Mexico’s infrastructure is reliable and modern. There are malls, cinemas, and private hospitals specifically catering to medical tourism. Oaxaca and Playa Del Carmen are short vacations away from such bustling metros as Monterrey and Mexico City.

Market Challenges

While its global image is starting to change, there are, of course, challenges to consider regarding Mexico as an expat destination.

Fraind cautioned on corporate housing and rental issues for transferees in Mexico, such as low suitable inventory, the lack of modern appliances in many units, and needing a co-signer in most leasing agreements.

Fraind also explained there are long wait times and application processes for schooling—posing an issue for relocating families.

Visa processing is straightforward and relatively quick, but any delays in the application process means a delay in other destination services: applying for a bank account, applying for a driver’s license, and finding housing in a timely manner. Working with a professional destination support organization should eliminate the chances of delays.

Thanks in part to rebranding efforts alongside the country’s growth (“Mexico: The place you thought you knew”), businesses’ initial perceptions of Mexico are starting to shift to envision something more rich in infrastructure and opportunity. And a market where employees could thrive.

Keeping Relocation Data Safe

by | May 12, 2016 | News

Data security has always been a top concern for businesses, but with the increasing amount of online transactions and exchanges of personal information, data security means more today than it did years or even months ago.

The relocation industry in particular needs to hold data security in the highest regard. The online portals, mobile apps, and self-serve technology that today’s clients and transferees demand mean a person’s entire life (ID, banking information, home address) is potentially accessible to hackers.

What should you and your relocation provider do to ensure the integrity of such important information? Here are two important items we recommend as crucial to protecting your employees and their relocation data.

Keeping Relocation Data Safe

1. Conduct a SOC audit

Since 2008, we have participated in an annual SOC 1® (SSAE 16, formerly SAS 70) audit by an independent, CPA-licensed firm. The audit tests our system design, operating effectiveness, and internal controls.

According to Schneider Downs, SOC reports are the “de facto standard” for using the work of a third-party firm as “a substitute for performing first-hand testing in conjunction with financial statement audits or Sarbanes-Oxley compliance.”

Specifically, the auditor checks for:

  1. The existence and description of internal controls
  2. That these controls are operating with sufficient effectiveness to achieve security goals

2. Try to get “hacked!”

Annually, we also contract with a third-party IT security firm to perform an external vulnerability and penetration test against our network and websites.

If your provider completes similar tests, the report’s firm will break down the Critical Items, Areas of Concern, and Potential Problems to ensure the framework for protecting data meets the necessary standards.

The bottom line is that you should never overlook the importance of third-party and unbiased audits. If your current provider does not undergo any third-party and unbiased audits, be sure to ask how the provider is ensuring proper controls through other means.

It’s easy to connect with experts to help test data security, so make sure it’s not just as easy for your provider—and your data—to be compromised.

Relocating with Pets

by | Apr 14, 2016 | News

What do you tell your employees when they let you know their relocation includes two dogs or cats? While most employers do not reimburse for these “family member” relocation costs, it’s good to know you have a resource available for your employees. WHR Group works with the IPATA, international pet shipping experts, and understands that when you move a person, you can oftentimes expect to move a furry friend (or two). Is your relocation counselor poised to offer assistance?
pet relocation, employee relocation
What costs are associated with animals on airlines?
In addition to the actual charge from the airline to fly a pet, there are other fees to consider. Companies that agree to pay for fees will want a thorough understanding in advance. Most countries require a health certificate from a veterinarian before any travel is permitted, even domestically. On international flights, pets may need to get passports or other country-specific regulatory approval, which generally is associated with a fee. Additionally, treatment of parasites is sometimes required, even in healthy animals, before these permits will be issued. Lastly, some countries require animals to be quarantined, sometimes in excess of 30 days, and individual countries can charge costly per diem fees before the animal will be released.
Are there other options besides flying for traveling with pets?
Unfortunately, traveling with pets on a bus, train, or ocean vessel is extremely restricted. According to the IPATA, there are two ocean vessels that accept animals on transatlantic trips, but space is very limited. Busses and trains are usually subject to local restriction, but Greyhound Bus, for example, does not allow any animals other than service animals (IPATA FAQs).
All airlines will fly pets, right?
Wrong! Some airlines do not allow animals in the cabin while others do not allow pets to fly as checked baggage—and some do not allow pets at all. It is important to call ahead to the airline before booking your tickets to ensure that you, your family, and your pets all arrive in the destination city at the same time. BringFido.com is a great resource that offers a list of all animal-friendly airlines and their policies.
How big is too big for pets to fly in the cabin?
Most airlines only allow dogs or cats to fly in the cabin if they fit into a carrier that can be stowed beneath the seat. One exception is service animals, which must carry proper identification. The airline must be notified in advance to arrange seating that will accommodate. Flying your pets in cargo is a safe alternative. According to Air Cargo World, there are less than 0.01% of any incidents, with specific airlines like United having even lower incident rates (IPATA FAQs).
Why can't a transferee's bulldog fly in the summer?
Respiratory issues are common with “snub-nosed breeds” of both cats and dogs. Because of the higher incidence of heat exhaustion in these animals, which can sometimes lead to death, these breeds are generally regulated more than other breeds. In general, however, all animals are restricted when the temperature gets above or below a certain point (or is predicted to during the flight). Each airline will have its own policy on these regulations.
Will an assignee moving internationally need to have their pet quarantined?
Each country has different restrictions on pets entering their country, and sometimes these restrictions vary depending on where the pets came from as well. The only way to know for sure is to call the destination country’s Embassy or Consulate for the most current information. Typically, animals on a layover are excluded from these restrictions, with only the original departure and the final destination considered.