Companies can save money with the Buyer Value Option program. However, many companies are not aware of what this program is, and how it actually works. Global Mobility Solutions (GMS) has many clients who use this program. As a result, our clients have much success and higher satisfaction levels for new hires and transferees.
What is the Buyer Value Option Program?
Most corporations use a form of tax assistance, known as tax gross-up, to help offset the tax impact felt by the transferee receiving reimbursement. The gross-up expense can add substantial costs.
The GMS Buyer Value Option program lowers costs from income tax gross-ups associated with the reimbursement of transferee real estate closing costs.
The GMS Buyer Value Option program avoids the costly process of “grossing up” dollars used to pay for the commissions and closing costs on the sale of a transferee’s home. Typically, commissions and closing costs are associated with the sale of a transferee’s home. These two expenses represent the majority of the total costs incurred during a relocation. Reimbursement to a transferee of these expenses is considered taxable compensation by federal and state authorities.
How Does the Buyer Value Option Program Work?
Once a transferee receives a valid offer to purchase from a 3rd party buyer, and after GMS has been able to verify that all contractual terms are customary, the transferee turns the sale of the home over to GMS. GMS purchases the home from the transferee and subsequently transfers the home to the 3rd party purchaser. All closing costs and realtor commissions are paid by GMS and billed directly to the employer. Since the transferee does not incur any home sale expense, regular reimbursement of these expenses is not required.
The Buyer Value Option program allows the transferee to move quickly, and maintain their focus on the new job and community rather than on the sale of their home. Once their home is turned over to GMS, the transferee relinquishes all obligations including attending the actual closing. GMS manages the entire sale and closing process on behalf of the transferee. Transferees gain peace of mind with the knowledge that GMS is handling the sale of their home. They can also focus on their new home and enjoy their new surroundings.
What is the Buyer Value Option Process?
- Employee lists home with the help of GMS
- Similar to a traditional sale in the transferee’s eyes
- Once a buyer is found, GMS transfers the title from seller to GMS
- GMS sells to the outside buyer at closing
- The client is billed 10% for commission and closing costs prior to closing, eliminating the transferee’s out-of-pocket costs
- Home sale is closed by GMS
- Equity is wired in full to the transferee’s account of choice after closing
- GMS refunds the difference back to the client
- To complete the transaction there are strict IRS guidelines that must be followed
How Does the Buyer Value Option Program Reduce Risks for Clients?
The Internal Revenue Service requires putting the client at risk of owning the home in order to receive the tax benefit. If the buyer falls through prior to closing, the client will be financially responsible until a new buyer is found.
- On average, 1.5% of properties fall through within the industry
- However, less than 0.5% have fallen through in the last 3 years at GMS
How Do Employees Save Time?
The GMS Buyer Value Option program does not require the transferee to appear at closing. This lets the employee focus on their position and objectives, while settling in to life in their new community.
How Does a Company Save Money With the Buyer Value Option Program?
Since tax gross-ups are not required, companies can achieve significant savings. In order for an employee receiving a $24,000 home sale reimbursement to net the actual amount of the reimbursement and not feel an impact on their take home pay, it will cost a company $43,800. This cost can escalate even further if a company elects to take an individual’s actual tax bracket into consideration.
By utilizing the GMS Buyer Value Option program there is no tax gross up, and a company saves $19,800. Since the transferee does not have to appear at closing, companies also save on return trip costs.
What Should Companies With a Home Sale Program Do?
Companies that are currently reimbursing employees for the commission and closing costs on their home sale should look into the GMS Buyer Value Option program. Home sale expenses are the only remaining tax-protected relocation benefit when a company utilizes the GMS Buyer Value Option program. Companies can save the tax gross up on the reimbursement, and gain additional benefits including:
- No need for the employee to be at the closing of their home sale
- No return trips necessary to attend the closing if your employee is already at the new destination
- The employee can more quickly adapt to their new role and become an effective member of the team
GMS’ team of corporate relocation experts has helped thousands of our clients develop their home sale and Buyer Value Option program. Our team can help your company understand how it can save the tax gross up on home sale reimbursements.
GMS was the first relocation company to register as a .com. The company also created the first online interactive tools and calculators, and revolutionized the entire relocation industry. GMS continues to set the industry pace as the pioneer in innovation and technology solutions with its proprietary MyRelocation® technology platform.
Global Mobility Solutions is proud to be named and ranked #1 Overall, and #1 in Quality of Service by HRO Today’s 2019 Baker’s Dozen Customer Satisfaction Survey.
Contact our experts online to discuss your interest in the GMS Buyer Value Option program, or give us a call at 800.617.1904 or 480.922.0700 today.
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