Moving employees across the country for a job position is not a cheap endeavor. It can cost $1000s for a company to offer assistance just in moving fees. Moving employees to a new location can add up into a huge expense for a company, which means that when you are moving an employee you need to really think about the long-term implications and if this employee will be able to fulfill this position long-term for your company to make your dollars and the employee’s time moving truly worth it!
Depending on the market, you have to consider that an employee could sell their house within days or it may take months or even a couple years to sell. It depends on the property that the employee-owned and on the market in that area at that given time. Comparing and contrasting options allow companies to make the wisest decisions when it comes to ensuring that your money is well-spent as possible.
These are the easiest home-sales programs to explain. You explain that the employee is responsible for selling the home that they currently own. They will be reimbursed with the cost of that sale. These benefit programs through Versa relocation sales help the company stay out of the entire process altogether and has no risk of ending up owning the unwanted property if the sale of the employee’s home doesn’t occur. The only issue with this program is that if there is any sort of expenses to be reimbursed, the IRS views that as taxable income, which can spell more taxes for the company.
Buyer-Value Option (BVO):
This program helps to mitigate the tax liability of the direct reimbursement program and it allows the employee to list and market their home till they receive an offer on their property. The Relocation Management Company (RMC) purchases the property from the employee based on the sales contract amount. In the BVO program, there are 2 distinct sales taking place which removes the tax liability from the program and helps cover the cost to pay for the real estate broker’s commission and the closing cost of the property. If the sale falls through, there is a risk of the home being taken into inventory which can prove quite costly.
Amended Value Option (AVO) / Guaranteed Buy-out:
In the AVO program, the employee has a timeframe in which to find a buyer for their home. That timeframe is usually 60 to 120 days, and if the employee is unsuccessful at selling the home, then they can take a guaranteed buyout offer from the company which is based on the appraised value of the property. When the buyout happens, the property will then get taken into inventory, and that can again be quite costly.
What is the Best Option?
Many people wonder what the best option of these options is and the truth is that no one option fits everyone. The option that meets your needs can depend on a variety of things, and it’s hard to determine the move that works best for you until you weigh the financial implications to the company and the employee both as separate entities. Every program will have advantages and disadvantages, but you have to find one that specifically works for you to know which is best in your situation.
Versa relocation sales can vary, and the deal depends on where you live and what type of relocation you need to do. Talking your options over and coming up with one that works for both the company and the employee is the key to making the entire model success from start to finish!