Domestic Relocation Policy

Best Practices

At TRC, we believe relocation policies should be living documents,

updated and refined regularly to reflect current trends and evolving

best practices. As the U.S. economy and real estate market continue

to improve, the best practices that served us well during the

recession may no longer be “best” in today’s environment.

If you are not monitoring industry trends and taking measures to

strengthen the overall relocation experience for your employees,

beware, because your competitors surely are. You could find yourself

at a disadvantage in sourcing and retaining the talent your company

needs to grow. While cost control remains a critical consideration,

more companies are taking a fresh look at the competitiveness and

effectiveness of their policies overall.

Introduction

Trends Influencing Mobility

We will detail some policy specifics below, but here are several other overarching trends and best practices that relocation policies do not always address but are important considerations nonetheless:

• A more flexible definition of family, to include same-sex couples,single-parent households and multigenerational families, andthe extension of mobility benefits to meet their needs.

• The inherent ties between the talent and mobilitydepartments within organizations and the strategicpartnership between the two.

• Dramatically fewer exceptions due to greater policy flexibility.

• The rise of Millennials. According to Richard Fry of the PewResearch Center, “Millennials have surpassed Baby Boomers asthe nation’s largest living generation, according to populationestimates released by the U.S. Census Bureau.” The Millennialshave a different view of workplace norms, including the placeof technology and the ability to work remotely. Going forward,some Millennials will see some potential relocations asremote work opportunities.

A tiered policy structure is still the most common model, with

the tiers defined by job levels and homeowner/renter status.

Companies today are striving to create policies that allow

increased flexibility and decision making for the employee. The

Managed Lump Sum and Core/Flex policies have emerged from

the traditional Lump Sum approach. These programs allow the

transferee to use benefits in a way that is most important to him

or her, but typically also include caps to support the employer’s

cost containment objectives.

PolicyStructure

In assessing a company’s home disposition strategy and programs, it is in the best interest of corporate mobility managers to study their worst performing departure markets and to strategize accordingly.

During the real estate crisis, many companies distanced themselves from traditional homesale programs. Some companies transitioned from a Guaranteed Buyout (GBO) to a Buyer Value Option (BVO) program, greatly reducing potential inventory risk; others removed any type of homesale assistance from their policies altogether. Today, most companies do offer homesale assistance, with best practice being either a BVO program or Direct Reimbursement up to a capped amount.

Most companies reserve GBOs for senior level executives or use them by exception only. Similarly, homesale bonuses are no longer common. If they are offered, it is usually as part of a GBO program to potentially avoid an inventory property.

Strict marketing guidelines are standard with any type of homesale policy, including agent pre-approval, two Broker Market Analyses (BMAs), and a listing price capped at 105% of the average of the BMAs.

HomeDisposition

With a largely recovered, and in some places, booming real

estate market, the Loss on Sale benefit is no longer a best

practice. Most companies have removed Loss on Sale from

their policies entirely; some review it as an option on a

case-by-case basis.

Most relocation packages include destination home finding

assistance. The main differentiator is the number of days

and trips allowed. Best practice for renters is normally

3 days / 2 nights, while for a homeowner, the norm is

7 days / 6 nights. Occasionally, employees will allow

homeowner transferees to split the homefinding trip into

two, in the hope that the transferee will append the

homefinding days to weekends and will not have to miss

an extended amount of time in the office.

Loss on Sale

Destination Home Finding

Home purchase and mortgage benefits are normally

limited to those transferees who were homeowners

in their departure location. Reimbursement or direct

billing of reasonable and customary closing costs up

to a capped amount of either 1% or 2% of the new

mortgage amount is standard.

Mortgage Assistance is usually offered as well.

Companies or their relocation management company

typically have relationships with lenders who are

experienced in working with relocating employees.

As an added benefit, these mortgage lenders can

usually direct bill closing costs, which helps to reduce

the transferee’s out-of-pocket expenses. With

today’s historically low mortgage rates, it is no longer

necessary to cover the 1% loan origination fee.

New Home Purchase/Mortgage Assistance

TemporaryLiving

DuplicateHousing

Duplicate housing, when offered, is extended to the

transferee as a benefit to be used in lieu of temporary living.

It is normally capped at the same number of days that are

offered for the temporary living.

Furnished accommodations with a full kitchen are typical, with

30 days for renters and 60 days for homeowners being the best

practice. Whenever possible, it is best to present several options

to the transferee, to allow him or her to pick one that best

meets his or her needs (i.e. proximity to the office, a gym,

nearby amenities, etc.). Most companies no longer offer per

diems for days spent in temporary living apartments. With a full

kitchen available, the assumption is that the majority of meals

will be cooked at home.

RentalAssistance

RepaymentAgreement

selling their departure home but for any number of reasons, cannot purchase or do not

want to purchase in the new location. According to The State of the Nation’s Housing 2016,

a report from Harvard University’s Joint Center for Housing Studies (JCHS), since 2010 there

have been virtually no mortgages given to applicants with credit ratings below 620. Further,

homeownership correlates directly with income, and JCHS notes that from 2000 – 2014

there was an 18% drop in income for the 25-34 age group and a 9% drop for the 35 – 44 age

group. So it is not surprising that a significant number of transferees have a difficult time

purchasing a home.

Financial considerations aside, some current homeowners simply do not want to want to

take on new home ownership burdens once they sell their current home. It is in the

employer’s interest to be flexible to make the transition from homeowner to renter easier;

for example, offering Rental Assistance benefits in lieu of Home Finding.

Once associated primarily with new college graduates, the renter

population continues to grow rapidly. According to Runzheimer,

61% of current domestic transferees are renters and only 39%

are homeowners. Most companies provide some Rental

Assistance benefit along with Lease Cancellation penalties up to

two months’ rent.

Beyond college graduates, a growing number of transferees are

Household GoodsTransportation

Discard and Donate Programs are an emerging best practice.

Professional organizers work directly with the transferees in the

departure location to discard, sell or donate items before the

move. This is a win for all involved as the shipment size is

reduced, the donated items go to worthy organizations and the

transferee gets a tax deduction for the charitable donation.

There is a 5-15% average moving cost savings, which offsets the

cost of the service.

Best practices in the household goods industry have remained

relatively stable. Contracting with a professional, national van

line, and full packing, partial unpacking and third-party appliance

servicing are all standard. Storage has remained the same at 30

days for renters and 60 days for homeowners. Car shipments

remain the norm, but with mileage limits. For example, one car

can be shipped if the move is less than 500 miles. Two cars may

be shipped for a move greater than 500 miles.

Final Move

Relocation (Misc.) Allowance

Relocation Allowances are included in most packages and

are to be used specifically for miscellaneous expenses

that arise over the course of a move. Best practice is to

provide a flat amount dependent upon policy tier, with no

tax assistance. Companies usually provide the allowance

to the transferee outright, without any receipt

requirement. Most companies distribute the allowance as

soon as they receive the signed Repayment Agreement so

that the transferee has access to the funds as needed

during the relocation. A few companies do not release the

allowance until the transferee’s relocation is complete.

For those not covering the final move as part of a lump sum,

the best practice is to cover coach airfare or mileage at the

current IRS rate (if driving). Best practice also provides for one

night’s hotel stay in the departure location and one night’s hotel

stay in the destination location, meals (often with a daily per

diem) and one rental car for up to 10 days, if the transferee has

shipped both cars.

Tax Assistance

Repayment Agreement

A two-year repayment agreement is best practice, with the

repayment being the full amount of the relocation during

the first year and a pro-rated amount during the second

Some form of tax protection (gross-up) is best practice for any

corporation that relocates employees. Employees receive a

year-end gross-up summary to assist with their tax preparation.

TRC Global Mobility is a U.S.-based, 100% employee-owned

employee relocation company focused exclusively on US,

international and government relocation services. A nimble

talent mobility specialist, we bring creative, yet pragmatic

thinking to every client relationship. We help our clients to use

talent mobility to achieve their strategic business objectives.

By ensuring our clients have the right talent in the right place

at the right time, TRC empowers them to realize their full,

global potential.

TRC’s eclectic client base represents a wide variety of industries,

products and services, and ranges from smaller, start-up �rms to

Global 1000 companies. That gives us a broad and deep

perspective on the shape of global business today, and equips

us with the practical experience to help our clients to succeed.

About TRCGlobal Mobility

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