Corporate Home Disposition

Companies have designed specific programs to facilitate quick and efficient home sales through the use of incentives and business related expenses. Renters will also benefit through the reimbursement of certain fees.

  • Lease cancellation fees: reimbursement is provided for the cost of cancelling a lease when moving out of a rental home. The amount covered is normally limited to one or two months rent, and does not include unreturned security deposits or special charges.
  • Home sale programs: there are two approved methods to follow for relocation home sale. The first is the Amended Value method, which is most advantageous for the employee, boasting a cheaper, quicker and less risky process. The second method is a reimbursement of the traditional home sale process, which less efficient. In some instances a company may use a hybrid of these two processes that is not likely approved by the Internal Revenue Service. 

Amended value methodthis method is designed to save you time and money while placing the burden of your home sale completely on your employer. In short, you will sell your home to your employer as a business transaction, while your employer completes the transaction with an outside buyer. The process has several complex components that must be strictly followed to comply with IRS tax code.

·      Establishment of home value: your minimum home value (sale price) will be established through an average of two or three professional opinions, using either real estate appraisals or Broker Price Opinions.

·      Marketing period: the set home value is usually effective for a period time, usually 30, 60 or 90 days. During this time your company may mandate a detailed marketing strategy for you to follow in an attempt to find a buyer. You will be required to follow this strategy to remain in the program.

·      Inspections: your company will inspect and hold you responsible for any and all repairs that need to be completed on the home.

·      Finding a buyer: when you find a buyer, the company will qualify the buyer’s financial means and validate the offer to purchase. The offer should be at or above your established home value, in which case you will get credit for the higher value! Note that many companies will accept an offer below your established value, but still give you your established value price. In either case, your company may offer a Sale Incentive just for finding a buyer.

·      Amend the value: once the buyer’s offer is validated, your company will ‘amend’ your established value with the new buyer’s negotiated price. You will sign a business contract to sell the home to your company, and your company will sign the offer to purchase with the buyer. Once this happens, your company takes full responsibility for the home, even if the buyer’s offer falls through. This shift in responsibility is why the company takes careful consideration when qualifying the buyer.

·      No-buyer option: If you are unable to find a buyer for your home the company will give you the previously established home value price.

·      Cashing out: your company will calculate the equity in your home based on your remaining mortgage, the sale price of the house, repairs, taxes and other fees. You will get a net equity check directly form the company.

Most companies require you to be enroll in the home sale process before you contact any outside real estate professionals, so be sure to speak with your relocation counselor before doing anything. 

Traditional home sale methodAn alternate and only other IRS approved process is the direct reimbursement of expenses. In this case, you bear the full responsibility for marketing and Selling Your Home. After the sale you submit the cost of all sale expenses to the company for a direct reimbursement. Your company may provide you with approved brokerage assistance or mandatory guidelines to follow to be eligible for reimbursement.

If you don’t immediately find a buyer for your home, you may be saddled with the stress of continued marketing from a distant location, and the potential of paying for two mortgages at once, making this the least popular home sale option. 

  • Home sale incentive: if you are successful in finding a buyer for your home under the Amended Value method, some companies may pay an incentive. Why you ask? Bringing in buyer will cost the company considerably less (12% to 18% of home value) than if your company has to market and sell the home on their own (20% to 45% of home value). The incentive you receive is usually a set percentage of the value of the sale.

  • Equity loss protection: many large companies will cover some of your equity loss if your home sells for less than what you bought it for. Coverage may be anywhere from a small percentage to the full equity. In almost all cases the total amount that the company reimburses will be capped to a maximum payout.

Move Acronyms

AMSA  American Moving & Storage Association

CWT   Cost per one hundred pounds

DOT    Department of Transportation

PBO    Packed By Owner

SIT     Storage In Transit

 


Real Estate Acronyms

BPO   Broker Price Opinion

CMA  Comparative Market Analysis

FDR   Formal Dining Room

MLS   Multiple Listing Service

TI      Tenant Improvement

 


Relocation Acronyms

CRP   Certified Relocation Professional

COLA Cost of Living Allowance

FMV   Fair Market Value

MVA   Market Value Analysis

PCS   Personal Change of Station (military)

 

 

Also see Definitions and Terms

MOVING TIPS

The 3 Phases of a Successful Move

 

1] Properly research the new destination before you decide to move. Understand your financial and social impact to you, and download the free assessment form. Stressed Out by Moving

 

2] Learn about each step of the move process to get your move started in an organized way.

 

3] Manage transition and stress from the very beginning. Each family member needs to be fully engaged throughout the entire move to properly assimilate into their new environment.

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Taxes: Personal vs RelocationTaxes for Personal Moves and Relocation

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