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IS A FIXED FEE HOME SALE PROGRAM RIGHT FOR YOUR ORGANISATION?
Traditional Cost Plus relocation home sale programmes (BVO and AVO) may offer the attraction of tax benefits, but burden employers with high levels of risk related to owning homes purchased from relocating employees. But have you considered a Fixed Fee Programme?
Fixed Fee Programmes managed by a Relocation Management Company (RMC) are uniquely designed to minimise the potential risks of companies’ home ownership by buying and owning homes outright and removing you from chain-of-ownership risk. A Fixed Fee Programme also alleviates managerial burden by providing you with predictable costs and streamlined billing.
Companies should consider the advantages and disadvantages of each type of home sale programme to determine the level of risk involved. In addition to offering companies predictable relocation costs, Fixed Fee programmes eliminate many of the financial risks associated with taking a home into inventory.
Please read our full paper to learn more about Traditional Cost Plus home sale programmes compared to a Fixed Fee home sale programme, some of the reasons homes go into inventory, elements of Fixed Fee pricing, and more.
Side-by-Side Home Sale Comparisons
Traditional AVO |
Traditional BVO |
Fixed Fee |
|
| Fixed Fee | No. Cost is unpredictable. | No. Cost is unpredictable. |
Yes. Fee is predictable and known up front. |
| HomeSale Programme Billing | Multiple bills from multiple vendors. | Multiple bills from multiple vendors. | Single bill from relocation service provider. |
| Chain-of-Title Risk | High. Employer is exposed to chain-of-title risk. | High. Employer is exposed to chain-of-title risk. | None. RMC assumes all chain- of-title risk. |
| Employer Exposure Risk | High. Employer assumes all risk of home ownership. |
High. Employer assumes all risk of home ownership. | None. RMC assumes all risk of home ownership. |
| Treatment of Home Sale Expenses | Most expenses must be treated as capital losses by employer. | Most expenses must be treated as capital losses by employer. | Most expenses can be treated as ordinary business expenses by employer. |
| Customisation | Limited. Due to standardization of most programmes. | Limited. Due to standardization of most programmes. |
Easy. Fixed Fee Programmes can be designed around employer’s risk tolerance. |
Three Additional Fixed Fee Benefits
For more information on the ways a Fixed Fee Home Sale Programme can help your organization, please contact us at concierge@sirva.com or reach out to your Sirva representative.