Month: September 2021

Categories
Buy a Home Corporate Relocation Domestic Relocation Relocation Management Relocation Programs Talent Mobility

Relocation Home Sale Programs: BVO, GPO, or Direct Reimbursement

A family with the realtor in front of the house they just had appraised

Keep your Program Competitive with Home Sale Assistance Benefits

When a new or existing employee accepts a position in a different location and is willing to move, some of the main concerns they will have right off the bat are real estate concerns. Selling their current home, then buying a new house in the new city can cause anxiety. But if the company relocating the employee offers benefits with home sale assistance or real estate sale programs, it can make the relocation process much easier for both the employee and the company. 

 

One of the most sought-after benefits to include in relocation packages is a home sale program. In basic terms, relocation home sale programs offer assistance to homeowners so that they can quickly move to their new city for the desired start date. While each relocation management company (RMC) will have different terms on their offered real estate programs, most usually include payments to cover real estate commissions and closing costs. Again, each home selling assistance program is different so it will depend on the seller’s/buyer’s situation on what can and cannot be covered or reimbursed. The type of program offered also depends on your company’s specific relocation policies and the level of support you offer to your relocating employees. Direct Reimbursement, Buyer Value Option (BVO), and Guaranteed Purchase Offer (GPO) are three of the most commonly offered relocation home sale programs. Here is a breakdown of each:

Direct Reimbursement

In most cases, this might be the simplest home sale assistance program for the company and the most involved for the employee. Under a typical direct reimbursement program, the employee is responsible for the sale and closing of their own home. This means they have to hire their own real estate agent and list the home (however many RMCs, like GMS, offer comprehensive home marketing assistance to help sell the property quickly and for top dollar). Once the property sale is complete, the employee then goes through the employer’s process of submitting expenses to be later reimbursed – generally these expenses cover the cost of the agent’s commission, closing costs, and the miscellaneous fees associated with selling a home.

 

With direct reimbursement, the payment to the employee is viewed by the IRS as income and is subject to income tax. This can result in the employee receiving a reduced overall amount of support due to their unique tax situation. However, If the employer is offering the employee tax gross-up options, this could help offset the amount of tax dollars that the employee is having to pay, providing them with an elevated level of financial assistance.

Buyer Value Option (BVO)

Known as a 3-party transaction, the Buyer Value Option program can seem a little confusing to those who are not in the industry. Under a BVO home sale assistance program the employee lists their home for sale until a competitive outside offer is received. Then, the RMC will purchase the home from the employee based on a set sales contract amount. The RMC will then immediately sell the property to the outside buyer. Unlike the single transaction reimbursement program, this option has two transactions. 

 

The main reason companies choose to offer BVOs in their relocation program has to do with the tax benefits, tax protection, and the reduced overall costs of this program. Under a Direct Reimbursement program (as described above), if the employee were to sell the home directly to the buyer, without the RMC middleman, then the IRS would view the reimbursement of expenses to the employee as taxable income. Companies help to offset this by grossing up the reimbursement, which drives up the total cost.

 

Under the advantageous BVO program, the home sale is tax-protected, occurs between the RMC/Company and the buyer, and no reimbursement or gross-up to the employee is required as the company pays the selling expenses. This reduces the tax liability for both the employee and their new company. The BVO home sale assistance program also helps cover the cost of the real estate broker’s commission and closing costs on the home sale. Lastly, the expense of an appraisal is mitigated, as the price of the home is driven by the offer received in the market.

Guaranteed Purchase Offer (GPO)

Sometimes called a Guaranteed Buyout (GBO), the GPO home selling assistance program is a popular one because it gives the moving employee a guaranteed home sale. Under this program, the employee lists the property for a set amount of days (typically 60-120 days) to try to sell on their own. If their home is not sold in the allotted time frame, the RMC/Company will then purchase the home from the employee, allowing them to move on to their ultimate destination without the stress of selling their property. The property then goes into the RMC/Company’s inventory and is now their responsibility to sell.

 

If the employee does get a qualified offer from a buyer within the specified timeframe, then the sale is completed similar to the BVO program (often called an Amended Value under these circumstances), where the RMC buys the home from the employee then sells it to the buyer for tax purposes. Again, making for two home sale transactions. 

 

The major difference between the Guaranteed Purchase Offer program and the BVO is that in a GPO program, an appraisal is completed on the property to establish a fair market value of the property to establish the purchase offer price. 

Choosing the Right Relocation Home Sale Program

Global Mobility Solutions has been helping relocating employees since 1987. Our team is always on hand to help your organization develop competitive and cost-effective home sale assistance programs. Reach out to us today with any questions regarding direct reimbursement programs, BVOs, or GPO. Our team is more than happy to help your company come up with the best relocation home sale programs possible to assist with meeting your talent acquisition objectives and improve the overall relocation experience for your transferees and their families.

Ready to Calculate YOur Program Savings? Request Access Now!

Are you ready to calculate your potential relocation program savings? Request access to our easy-to-use Relocation Cost Savings Calculator. Your Mobility Pro will grant your access request within 1 business day.

Categories
Choosing a Relocation Company Corporate Relocation Domestic Relocation Global Mobility Global Relocation Relocation Best Practices Relocation Management

Advantages of Creating Competition Between Suppliers for Relocation Services

two business people talking
Two serious caucasian men in suits discussing or planning business issues in the office. Colleagues or client and consultant are sitting at the table next to each other and talking.

GMS Always Fields Multiple Bids from Suppliers on Key Services

No one wants to pay more than they need to, this is especially true when it comes to the outsourcing of employee relocation services to a Relocation Management Company (RMC). Cost is generally the #1 driver of any procurement process, and it is wise to ensure you’re getting the most for your money before you sign on the dotted line. While saving money is a no-brainer, have you considered what steps your RMC is taking to ensure they deliver on cost savings for your relocation program?  

Many relocation companies have their own supplier base. These suppliers may consist of critical (and expensive) services, such as household goods transportation companies and temporary housing agencies. It is important to understand how your relocation company is leveraging these suppliers to reduce the impact of these services.

GMS Process to Keep Relocation Costs Down

Global Mobility Solutions, like most relocation companies, has its own, trusted network of suppliers. However, our network model is different due to our Multiple-Bid Process on key services. This process creates ongoing competition between our suppliers which ultimately results in lower prices and major relocation cost savings for our clients’ overall mobility spend. 

So how does it work? GMS analyzes each relocating employee’s unique needs, develops a service delivery plan, and then reaches out to at least two different suppliers for bids on key services. The suppliers’ estimates are audited for accuracy and submitted to you for final selection and approval based on the criteria most important to your organization. It should be noted that these are not just random or first-time suppliers who place bids with GMS. Each supplier is trusted and vetted by our network management team to ensure great service and competitive pricing. The process also allows us to develop creative service strategies to address every unique relocation need from each transferee. 

What makes GMS different is our independence and transparency in our supplier selection process. As we are not affiliated with any of our suppliers (van lines, corporate housing, real estate, destination services, immigration, or otherwise) we can subjectively vet our supplier base, ensuring the best possible quality for the best possible price across all of our key services. Some RMCs own or are owned by the suppliers they utilize which prevents the ability for true competition amongst the sub-suppliers servicing your account.

Additionally, GMS benchmarks and reviews our supplier pricing and negotiated rates on a quarterly to annual basis to ensure competitiveness by service in your specific relocating markets. These two features provide GMS clients with an umbrella of cost savings coverage while enhancing the quality of each relocation.

Let GMS Provide Relocation Services for Your Company

Operating a workforce relocation program can be expensive, but in many cases, it’s the best way to ensure your organization remains competitive in the acquisitions of talent to fuel your ongoing success. To have a better shot at cutting down relocation costs during the process, it is important to ensure your RMC utilizes a competitive bid process between suppliers on key services, such as household goods transportation, corporate housing, and more. Competition is always good for the consumer, driving down prices and increasing quality. GMS ensures the best price possible 100% of the time. For more information on corporate relocation services and program management from GMS, reach out today to schedule a call with one of our qualified team members.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Global Mobility Global Relocation Global Relocation Tips Household Goods Relocation Management

The Shipment of Household Goods

moving box with label
Black fragile symbol on cardboard box

Shipment of Household Goods Explained

When planning a family move or relocating for a new job, one of the main points that may come to mind is how to move everything in one’s home. Looking around the house to take stock of your many possessions can cause stress. From clothes to dishes, artwork to vehicles, office equipment to bedroom furniture – decisions must be made on what stays and what goes. Working with a reliable moving company that can promptly and safely pack, and then move your household goods can make that process easier. 

 

What are household goods? While there is no exact definition, household goods (commonly abbreviated as HHG) are most often referred to as a mix of items, utensils, clothing, and furniture that reside in your house. Because there is such a wide range of what fits into the concept of “household goods” it can be difficult (mentally and physically), risky, and time-consuming for an individual or family to move on their own. 

 

If the move is taking place because of a new job or a personnel transfer, many corporate relocation benefit packages include some form of provision for the shipment of the employee’s household goods. In many cases, the relocation management company (RMC) that is managing the employee’s move has access to a reliable HHG transportation company to perform the heavy lifting related to the move. Conversely, some organizations may leave their relocating employees to their own devices to find an appropriate moving company. In these situations, some limited financial support or reimbursement is provided to the employee once the move is complete.

Why You Should Use a Professional Moving Company

Let’s start by pointing out the obvious. If household items are not packed by professionals there is a risk of items being broken or damaged upon delivery. Companies that specialize in household goods shipping can properly pack items to assure reduced risk of the item being broken. Many reliable moving companies will also have insurance for items if something is broken, damaged, or misplaced. In fact, eligibility for shipment coverage may be predicated on the movers performing the complete packing of the household goods.

 

It is also worth stating that if the relocating employee attempts to pack, move, and transport their household goods in a rental truck, there runs a risk of serious injury. The movement of larger items, improper lifting techniques, and repetitive movements can lead to an injury. This may impact the timeline of the relocation, or possibly result in a workers compensation claim if the move is company-sponsored.

 

Another fact that many might overlook is the transfer of these personal goods to the new city or state. Traveling cross country in an unfamiliar truck or pulling a trailer is not easy, and can take more time than many might realize. If the relocation is international, the logistics become increasingly complicated and out of the reach of the majority of transferees.

 

Allowing a professional moving company to pack, handle, and ship the employee’s household goods is more time-efficient. Every relocation consists of many moving parts. Stressing about the packing and moving of the transferee’s household goods doesn’t need to be a complicating factor. Additionally, if moving for a new job or position, there might be a short timeframe in which the relocation has to be completed due to a job start date. Hiring a moving company can help ensure that the household goods are moved quickly and will not hold up the relocation.

The Networks That Support Household Goods Shipping

Unlike the local movers many might think of when discussing moving, relocations generally occur over great distances. The van lines that are contracted to perform these types of moves will use larger trucks and a sophisticated logistics network to move the goods across the nation, or even around the world. Components of this network will include semi-trucks, train/rail cars, airlift vans (special containers for air shipments), and even ocean containers loaded onto vast ocean-based vessels. These networks are used to consolidate shipments and speed the overall transportation process. Commonly, local agents of the transportation company on both sides of the move will be called upon to assist with the loading and unloading process. 

 

Additionally, specialty companies may be called in to perform special crating services, remove and package wall-mounted televisions, prepare sensitive items for transport, or even ship your automobile. Storage solutions are also on tap in the event you need temporary storage at your destination while you find a home, or if you are on an overseas assignment.

 

Lastly, animal shipments are a commonly overlooked necessity for those relocating. Pets are more than just animals, they are beloved members of anyone’s family. As such, specialized animal transport companies help to ensure the transferee’s pets are traveling under safe conditions. Transporting pets can require additional documents, immunizations, quarantines, and specialized kennels/crates. Transportation methods geared towards animals significantly reduce the amount of stress on the pet as well as instill confidence in the employee’s knowledge that their beloved family member is being well-cared for.

Why You Should Use a Corporate Relocation Company

Working with a corporate relocation company like Global Mobility Solutions can help reduce the stress of household goods shipping. We provide access to our vetted, certified, and highly competitive network of household goods specialists. By including HHG services in a thoughtfully designed relocation policy and moving process, you can ensure that your transferees arrive at their destination on time and with as little distraction as possible, ready to focus on their new position. GMS can be contacted as early as today to discuss the shipment of household goods to any location in the world.

We're Here to Help! Request a Courtesy Consultation

Are you ready to talk to a Mobility Pro? Learn how GMS can optimize your mobility program, enhance your policies to meet today’s unique challenges, receive an in-depth industry benchmark, or simply ask us a question. Your Mobility Pro will be in touch within 1 business day for a no-pressure, courtesy consultation.

Categories
Domestic Relocation Challenges Domestic Relocation Trends Global Relocation Trends Relocation Best Practices

Housing Market Headaches Now Hurting Rental Market

Nice apartment complex pictured in sunshine
Exterior view of modern apartment building offering luxury rental units in Silicon Valley; Redwood City, San Francisco bay area, California

The fierce real estate market is now having an impact on renters as well

The past year or so has been a trying time for would-be homeowners. Some of the quickest rising prices in history along with a shrinking number of options made it difficult for many hopeful buyers who didn’t have enough cash in hand to pay on the spot. As prices start to come back to reality and a bit more inventory has hit the markets, home buyers might start to see some relief. 

 

While homebuyers are beginning to benefit from a stabilizing market, renters are dealing with similar challenges their home-owning counterparts have dealt with. Market experts predict that rent prices trends will continue to rise over the next year. 

 

There are three main factors that are likely to contribute to rental prices rising over the next year:

1) The Return to “Normal"

It might not be the “old normal,” but people all over the country seem to be grasping the concept of the “new normal” with work from home being an option for many jobs. Many companies hope to get their office buildings reopened after the latest COVID-19 variant has slowed down, while other companies will remain working from homes permanently. But what these two points have in common, despite being complete opposites, is that they both contribute to the rising number of renters seeking housing in the larger metro areas, which in many states will create competition. Nationally, market data shows rent prices are already 8% higher than they were last year. This has created three interesting renter markets:
  1. Those returning to offices who like to be in the metro area (typically where most major corporate offices are located) to be close to their office and public transportation. 
  2. Renters that are working from home who like to live in metro areas for nightlife and social activities.
  3. People who work remotely permanently can choose to live where they want because there is no need to live within the same region as their corporate offices.

2) Hot Real Estate Market Driving Increased Rental Need

The second factor creating more renting competition is how the hot housing market trends of 2020-2021 have changed the mindset of some buyers. With such sky-high prices to purchase a home, many buyers dropped out of their purchase searches and signed leases to rent. Many are doing to “wait out the market” in the hopes of a cooler market in the future. These prospective “homebuyers turned renters” have placed additional pressure on rental demand. Until these future home buyers stop renting to continue their search, renter numbers will stay higher than usual.

3) Wage Increases & Renewed Confidence

The third factor for predicting a rise in rent prices is wage increases across the country. Additionally, as restrictions end around the world, many younger workers are moving to for job opportunities in growing economies. Many states are raising the minimum wage and large companies like Amazon and Costco are willing to pay more in order to fill positions that were vacated during the pandemic. Landlords see rising wages and increased demand for their properties as a reason to upcharge on rent prices, especially in desirable and high-demand markets.

Trying to Keep Up in Hot Renter’s Market

With rising rent prices and increased competition to get into rental units, what can renters do to secure an apartment? First and foremost it is important to be open, honest, and in clear communication with significant others or roommates. Rental units come and go quickly, so the key here is to be ready when a property becomes available. 

 

It is also equally important to have finances in order. Most rental properties will require some sort of security deposit down to even start the move-in process. Try to have enough cash stored away for deposits in order to move quickly. Landlords will usually always ask for proof of income from potential renters, so try to keep the two most recent pay stubs handy when applying for apartments, single-family homes, and other rental units. When budgeting, it is best practice to have the amount of first month’s rent and any renters insurance coverage ready to go. 

 

Cleaning up credit history, if possible, is another great way to outshine other renters. Applicants with the strongest financial background will oftentimes be considered first when units become available. 

 

One last tip, reference letters can be helpful too. Asking a past or current landlord to write a letter stating the excellence of the family or individuals renting can go a long way in the application process with the owner or manager of the newly desired rental spot.

What This Means for Those Looking to Relocate

It can seem like a no-win situation for individuals or families looking to move as it is currently difficult to buy a home and is becoming more expensive to rent a house or apartment. 

 

If relocating for a job opportunity, it would be a good idea to take advantage of any relocation packages the company may offer. In many cases, relocation benefits offer corporate housing options for short-term stays where the mover and their family can stay for a few months while getting settled. This period of time provides the employee with some breathing room and valuable time to find the right place to live within their budgetary and lifestyle requirements.

 

In the event that the company doesn’t offer relocation benefits, there is a chance that the state the transferee is heading to does. Many states and cities are offering government subsidized relocation incentives to draw talent to improve their workforce. A good number of these incentives have rent benefits that movers can capitalize on. 

 

Global Mobility Solutions has been helping organizations with their relocation programs for over 34 years, even in the toughest real estate markets. There are ways around the tight market and high rent prices. Reach out today for more info on how GMS can provide the tools to develop a competitive relocation program.

What's happening in your industry? Request a Courtesy Benchmark report

At GMS, we make it a priority to know how talent mobility is changing in each major industry. What are the best practices? How are other companies changing their programs to retain a competitive edge? Your Mobility Pro will be in touch within 1 business day to help answer your questions and benchmark your industry.

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

About

About Us

Careers

GMS Client Login

Privacy Policy

 

Contact

Contact Us

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904 

Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Other Services

Our Technology

Global Relocation

Group Moves

U.S. & Canadian Relocation

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

About

Contact Us

About Us

GMS Client Login

Privacy Policy

Address

Global Mobility Solutions
15333 N. Pima Road
Scottsdale AZ, 85260

1.800.617.1904
Available 24/7/365

Accessibility by WAH

Looking for something?