Relocation Costs

Jon Gilbertson, GMS, of SIRVA, Inc. and Susan Dawson of Genworth Financial discussed principles and techniques to apply to any RFP, contract or service relationship.

When developing an RF, there are many things that need to be considered during the process. Gilbertson and Dawson highlighted that for each program in your relocation policy you should have at least three questions related to the most critical service delivery process steps.

Specifications

The specifications in an RFP for commodities convey the style, appearance and quality of the product. The goal for specification of a service is to solicit information for you to understand how the specific service’s delivery steps will be satisfied. Be sure you are clear whether defining more specifications and expectation does not result in higher costs and higher management fees.

Evaluating

When evaluating RFPs, it is important to identify the importance of each service criteria by weighting or rating them on a scorecard. This can be done by your evaluation team scoring the comments and evidence that the supplier has provided. Gilbertson and Dawson give two ways to evaluate the RFP – the Business Process Review (BRP) or the Conference Room Pilot.

Business Process Review

The BRP is a walkthrough of the process to gain a better understanding of the clarifying comments by reviewing the process from beginning to end, clarifying gaps or questions in the process, asses any changes required and validating the potential supplier process.

Conference Room Pilot

The CRP approach is a more robust validation technique that validates real life scenarios by conducting an exercise with a team that would support your business. This can be done by role playing to assess answers and questions. This will help the team identify the gaps, review the process and make changes to the procedures.

However, the supplier assessment process doesn’t end at the RFP! Gilbertson and Dawson outlined 4 key categories to ensure the success of your service provider – Quality, performance, cost and continuous improvement. The process is continuous and clients should consistently change their policies and expectations. Equally important to keeping your expectations consistent, it is important to be aware and track the total cost when managing and assessing a supplier. Hidden fees can easily be lost and should be critical to consider in all relocation-related expenses.

To learn more about the RFP process, check out our other sessions at www.sirvauniversity.com.

Procurement is more than just buying goods and services. When used correctly, it can be a tool that challenges current services and determines new models for service delivery. It is essential in improving services since third parties play an increasing role in service delivery.

At SIRVA University, Jon Gilbertson, GMS and Lauren Richards, CRP, GMS of Dell lent their expertise in procurement to educate the audience on the basics and best practices. According to Gilbertson and Richards, there are three steps for successful procurement – Plan, source/purchase and deliver.

Plan for Success

It is important to establish clear expectations, involve the correct people and ensure access to the right skills. The key function of the business must be aligned and in agreement with service expectations to reach the desired quality, while staying within your cost objectives. According to Gilbertson and Richards, building an RFP is also essential in the planning process. They put emphasis on two areas – creating a specific list of services and expectations and scoring a matrix with services and expectations based on your goals and objectives.

Source and Purchase

In the second step, sourcing and purchasing, Gilbertson and Richards put emphasis on moving to the external marketing by doing an RFI, a quick survey of providers to provide initial insight. This will give you an understanding of the market and will better able you to align expectations with qualified and proven market providers. After gaining initial insight, don’t rush into an RFP. Take time to update and reassess your requirements to all potential providers. In an initial RFP, potential providers should identify ways in which they will meet your expectations and needs. It is important when evaluating an RFP that you review the information in detail, evaluate the quotes against pre-determined criteria and narrow the list down to 2-3 that score the highest on your selection matrix. To purchase, select the supplier with lowest total cost and that will meet your expectations the highest. This can be done by reviewing the process from beginning to end using either a Business Process Review or a Conference Room Pilot.

Delivery and beyond

In the third step, delivery, it is imperative that we maintain involvement and improvement from the provider. The process doesn’t stop when the good or service is provided. It should continue to evolve and improve as time and technology increases. A scorecard should be kept based on these key areas – performance, quality, financial and improvements. Keep track of your expectations and any business needs that change.

Want to learn more about procurement? Check out our other procurement sessions at www.sirvauniversity.com.

Home sales are complicated right now. Sellers must find a way for their home to stand out in the crowded listing space that exists today. One tool SIRVA Mortgage utilizes, to make their SIRVA Relocation listings stand out, are mortgage financing incentives. A listing with “SPECIAL FINANCING OPTIONS” in the MLS jumps out to prospective buyers. However, it must be the right incentive to work.  And that is why…

Finding the right financing incentives to sell a house is in many ways just like courting a lady. It is more art than science and several things must take place in the right combination to be successful.

You must:

• Show interest
• Attract attention and curiosity
• Fit in with their interests
• Invite her friends
• Impress the parents

First, showing interest is critical whether getting a women’s attention or selling a house. Just as important is the speed at which you do it. Incentives should be put on as soon as the house is listed. The longer it takes to put an incentive on the more likely you have missed a buyer—the sooner the better.

Second, you will need to do something significant to attract attention. Cheap out and lose out. Significant does not mean expensive, it means quality attention getter. Being creative will add value and impress more than something commonplace.

Incentives should fit the interests of those you are seeking. Each home has a unique market that will attract buyers with certain needs. For example, maybe consider offering reduced closing costs for lower priced homes, lower interest rates for middle priced homes, temporary interest rate buydowns for higher-end homes or home improvement gift cards for the fixer-upper. Finding the right incentive can do wonders when trying to drive traffic into the home.Next, you should invite friends and all interested parties. Along with the transferee, the relocation counselor and realtor play a key role in making sure the home is listed correctly and with the right incentives. When everyone is involved, good things happen.Finally, you should impress the parents. The corporate client and the client contact are like the parents. By selling the home quickly, the costs of temporary housing, travel, duplicate housing and the possibility of going to a costly buyout are reduced. Additionally, the opportunity to earn a home sale bonus, if one is offered, increases along with the likelihood of a successful relocation. With the parents on board, success follows.

If you have questions on financing incentives please e-mail us at MortgageFacilitators@sirva.com , we would be happy to help. 

It’s a new lending world from the last time you obtained a mortgage loan. Here are some challenges the refinance market has in store for you.

Home Value
With the decrease in market values in just about every market, your home may not be worth what you think or what you need it to appraise for. Depending on your particular situation, you may not qualify or your loan terms may be different due to a lower appraised value that can cause a higher loan-to-value ratio. 

Loan Requirements
Qualifying for a loan is tougher than ever. Guidelines around higher cash reserves, higher credit scores and lower debt-to-income ratios have become standard. In addition, documentation around income is being required.  
 
Cash Out Refinances
Qualifying for taking cash or equity from your home is considerably more difficult and more costly with rates up to .75% higher on these loans. Expect less available cash due to lower home values and tighter lending restrictions.

Tangible Net Benefit
Regulations in many states require a clear tangible net benefit to be provided to the consumer when refinancing. Tangible net benefits are documented proof by your lender that your situation will improve under this new loan. For instance your interest rate going from 7 percent to 5 percent without excessive closing costs would be a tangible net benefit. 

Choosing the Right Provider
There are significant differences in rates, closing costs, up-front fees, programs and on-time closing by provider. You should shop providers carefully to find the best combination to fit your needs.

The refinance market space can still help many home owners save thousands of dollars. Know what you are getting into, do your homework and be realistic about what you can achieve.

SIRVA Mortgage also provides a free consultation to any transferee to compare Good Faith Estimates (GFE). The consultation will ensure the transferee has “apples to apples” comparison on refinance options. 

For more information visit http://www.sirva.com/CorpRelo_Mortgage_Landing.aspx
 

Some companies have very sophisticated well-thought-through global mobility programs that have been tried and tested for many years. Others are stepping into the global arena for the first time. Either way it doesn’t hurt to check the health of your global mobility program and consider what I would believe to be the 10 best practices to ensure your global relocation program is a successful one.

10 Best Practices to Ensure a Successful Global Relocation

1. Policy
   1. Make sure you have a formal global policy in place that has been reviewed by your global relocation provider for competitiveness and efficiency and bench-marked against industry standards.Candidate Selection 
2. Candidate Selection
   1. Utilize pre-decision surveys or interviews to ensure that your candidate is flexible, adaptable and ready to take on the challenge of an international assignment.
3. Benchmark
   1. Keep up-to-date as situations change, trends develop, and new products come to market.
4. Cost Estimates
   1. In today’s economic environment it’s prudent to have a cost estimate completed before sending someone on an assignment so you have an idea how much it is going to cost.
5. Cost Analysis
   1. Know what you’re spending and what policy changes or exceptions are costing or saving money. There are many examples of companies focusing on elements that are inexpensive and denying them, while allowing exceptions for other elements that are very expensive.
6. Track Exceptions
   1. Be sure to always track any policy exception that was made or declined and the cost of that exception. This will help you be consistent in how you treat other exception requests in the future.
7. Use Proven Providers
   1. Proven providers can give you good advice on all elements of a global relocation and can make the process easier for you.
8. Don’t Cut Corners to Reduce Costs
   1. There is usually a good reason to do something well.
9. Create a Repatriation and Reintegration Plan Well Before the Assignment Ends!
   1. If you don’t, you may risk losing a valuable employee. Statistics show that up to 70 percent of repatriated assignees leave their employer within two years, usually to join a competitor.

For more information on the above global mobility program components and services, please contact SIRVA Relocation for a consultation.

 

Now may be a good time to reflect on the fact that the “bursting of the housing bubble,"which impacted many parts of the United States, was preceded by record setting increases in home prices. While most of the country has seen two year price decreases, some areas like Las Vegas (down 37%), Phoenix (down 39%) and Miami (down 38%) stand out as being especially hard hit. Some experts are now saying that it may take decades for home prices to recover and that we should expect price growth to revert to more post World War II “historical norms." By historical norms we mean that housing prices are much more likely to rise consistent with income levels and inflation. This reality has not been lost on the real estate speculator (now driven out of the market) but what does this mean for corporate relocation transferees? Transferees need to be counseled through the home sale process to ensure that they are basing their decision-making process on current market conditions. For example:

1. The new home is less likely to appreciate during their years of occupancy
2. They should not only buy a home they can afford, but one that they will live in until their next transfer
3. Transferees should choose a home that will suit their long-term needs, as the ability to leverage home appreciation to “buy up” is far more difficult

For more information about counseling your transferees through the the corporate relocation home sale process, please contact SIRVA. 

 The current real estate market continues to drive home values down significantly, frequently resulting in sellers being unable to sell their homes for more than the original purchase price. This situation adds financial strain on transferees and leads to loss-on-sale, namely the difference between what a home sells for in relation to the price at which it was purchased.

Today, companies are taking measures to assist transferees by modifying their loss-on-sale programs to reflect the continuing deterioration in the housing markets. If companies currently do not have a loss-on-sale program in place, they are working to add these elements into their policies in order to help protect transferees from significant home value loss.

In this month's Policy Matters, SIRVA provides an inside look at the following aspects of designing and implementing a successful loss-on-sale program:  

Evaluate New Programs: Before implementing a loss-on-sale program, companies should always perform necessary due diligence on which program benefits should be offered, keeping consistent with a company's financial situation and industry best practices.

Re-evaluate Existing Programs: For companies that already have a loss-on-sale program in place, now is a good time to re-evaluate current program benefits to ensure overall effectiveness in today's real estate market.

Identify Other Contributing Factors: In this down real estate market, transferees could potentially be not only in a loss-on-sale situation but also subject to negative equity, which would need to be addressed before the home sale can proceed.

Read the complete article now.

Accurate and timely accounting of relocation expenses has a far-reaching impact on the overall performance and success of a corporate relocation program, to both the company and the individual transferee. An expense management process should support users without being burdensome, so they can concentrate on the other aspects of their jobs. Corporate relocation managers and/ or payroll managers should consider several key issues when evaluating the effectiveness of the expense management process in their companies.

Once a company has reviewed its current process and determined that improvements are needed, the next step is to decide how to make enhancements. In today’s business environment there are not many functions within an organization that are not a target for outsourcing, including expense management. And for a relocation manager, the decision to outsource this particular function will come with new questions that need to be addressed.

Questions to determine outsourcing readiness:

Is there an overall culture of familiarity with outsourcing transactional functions (e.g. benefits processing) that already exists within the company?

If the company has previously outsourced other functions, then formulating a plan to outsource the management of relocation expenses can be evaluated not only on its own merit, but can also rely on precedent and draw on successful processes that have been followed in the past. If this is not the case, then a transition project plan needs to be developed and approved.

Is this a core competency that the company has or wishes to retain?

Expense management is a very detailed process that requires an in-depth knowledge of the ever-changing tax laws and regulations at the federal and state levels. Part of the evaluation process is to assess the current depth of knowledge of the team and determine if it is adequate and can be sustained if team members change. In the end, the evaluation process may lead to questioning whether or not this is a function that should remain in-house.

To learn more about determining outsourcing readiness click here
 

1. Is there a customized, seamless integration with payroll?
    
2. Is there a documented exception management process with the ability to track and report exceptions by type, division, cost center, etc.?
    
3. Does the provider just “rubber stamp” exceptions, or is there a clear audit approach to policy compliance and approved exceptions?
    
4. Does it provide cost-of-living allowances (COLA) and lump sum calculations?
    
5. Is there a process in place for making timely and accurate payments on the employee’s behalf for recurring costs (temporary living, rent, etc.)?
    

We all know that real estate is local. However-in our current real estate situation-we are seeing more markets continue to see a slip in home sales with only a few who are reporting an increase. The National Association of Realtors (NAR) reports areas such as Colorado Springs, Colo., Sacramento, Calif. and Spartanburg, S.C. are experiencing double-digit pending sales gains compared to a year ago with a significant percentage of these sales attributed to investors who are buying foreclosed properties. So while some markets have seen tremendous growth in home sales compared to last year, others have seen contract signings slashed by as much as 50 percent.

The current real estate market for the typical residential home is still very much a buyer's market. Attractive interest rates, large inventories of homes for sale and lower-than-average sale prices make it a great time to buy. Sellers aren't so fortunate. In fact, some areas have seen home values drop so low that typically willing transferees are hesitant to take a corporate relocation because of loss-on-sale concerns or owing more on their properties than the current market value sales price.

According to a recent survey conducted by the Worldwide ERC®, the number one reason employees are reluctant to relocate is a direct effect of the troubled real estate market. The survey indicated that more than 95 percent of respondents reported "slowed real estate appreciation at the old location," as the reason their employees are averse to moving. This is a stark contrast from last year when only 16 percent cited the real estate market as the reason for their reluctance. Instead, high housing costs, high cost-of-living and family resistance to move, were top concerns.

"Today, it's an unfortunate fact that those true soldiers that have faithfully relocated every two to three years are cooling to the idea because of the economy and the fear that they will take a considerable home loss-on-sale," says David Barlow, SIRVA's senior consultant. 

Barlow advises companies that have not done so to consider implementing a loss-on-sale policy to remain competitive and to help their transferees with the reality of falling home values and sale prices. He also advises companies that already have a loss-on-sale policy to re-evaluate the loss-on-sale limit or cap to ensure it is sufficient in today's difficult real estate market.

It's no secret that the current real estate market has had a significant impact on the relocation industry. Companies have had to reevaluate and update their corporate relocation policies to overcome the challenges of the current market.

Barlow doesn't wager a guess on when the market will turn, but he expects companies will be working through the challenges of the current real estate market for some time to come.
 

In case you haven’t noticed there have been some significant exchange rate movements in the past few months due to the global financial crisis that is churning. International HR professionals are well aware of this and so are expatriates whose compensation packages appear to be impacted by such movements.

For example, the U.S. dollar has declined significantly since late 2006; it then rebounded abruptly in the Fall of 2008. Five currencies have experienced noticeable changes in the last two months, the Australian Dollar (AUD), the Brazilian Real (BRL), the Canadian Dollar (CAD), the British Pound (GBP) and the South-Korean Won (KRW).

So what should companies do about this? First, they should use specialist third party organizations such as ORC and Air Inc. to provide advice on cost-of-living data and other related information to help provide accurate solutions. These companies use complex formulas to track cost-of-living and related exchange rates to minimize the negative financial impact that currency fluctuations can have on expatriates living under one currency but being remunerated in another currency. 

Such currency volatility is not unprecedented, and urgent action is not normally required as long as allowances and payments are reviewed frequently; for example moving to a quarterly review may be worth considering. Only where inflation is running out of control should exchange rates be considered more frequently (e.g. Zimbabwe), but in these extreme cases, a local currency should be avoided if possible.

Below are some solutions that should be considered:

• Quarterly reviews of allowances and payments made in an affected currency
• Consider a split pay approach that would deliver a combined goods and services amount normally spent at home, plus a goods and services differential in the host currency
• Communicate with expatriates, to show how their purchasing power is being protected

For assistance in reviewing your company’s global mobility policies and process related to expatriate compensation, please contact SIRVA.

The U.S. housing market is continuing to slow, and most economists and housing professionals predict the housing slump will linger longer than previously forecasted.

A downturn in real estate markets creates several challenges for employers' relocating transferees, the most significant of which is the growing number of homes that end up in inventory. This rise in home inventory leads to higher overall relocation costs and increased property management duties for employers.

Total home sale costs also become less predictable in sluggish real estate markets, and unpredictable home sale costs translate into unpredictable total relocation costs.

Relocation service providers (RSPs) offer several home sale programs, each with varying levels of risk, to help corporate relocation transferees. Employers should consider the advantages and disadvantages of each program to determine the level of risk involved, and those employers who want a predictable and low-risk home sale program should consider a fixed-fee program.

Learn more about the fixed-fee program.

With today’s business focus on managing costs, there may be an opportunity for you to do a review of your corporate relocation spend. 

Closing costs on the purchase of a home by the transferee in the new location are nine percent of the total relocation cost, averaging over $8,000. Your results may differ depending on your move patterns, demographics and relocation reimbursement policy.

Home purchase reimbursement policies can be categorized into four styles:

1. Full reimbursement
2. Capped reimbursement
3. Lump sum
4. No reimbursement

The first thing to consider, when reviewing home purchase costs, is the company’s philosophy toward corporate relocation benefits. Are you part of a company that desires to reimburse all expenses or is the idea to assist with the costs associated with the move? The answer will certainly impact the relocation policy language and the expense associated with each move.

Preferred relocation lenders that are partnered with you will assist in controlling your costs. Preferred lenders will have negotiated lender fees and will not engage in fee add-ons. Higher fees from outside lenders can cost the company or the transferee hundreds or even thousands of dollars more.

One of the most costly line items in home purchase is points, also known as origination or discount points (fees). These can vary depending on the loan amount. Each point is one percent of the loan amount and typically can reduce the interest rate by a quarter of one percent (.25). Many companies that had reimbursed two points have dropped down to reimbursing one point, while others have reduced one point to zero points. In today’s low interest rate environment, a reduction may be an opportunity to reduce costs without disturbing reasonable benefit levels.

With FHA loans becoming more prevalent, reimbursement of the Mortgage Insurance Premium (MIP) should be avoided. Like the VA funding fee or Private Mortgage Insurance (PMI) these are buyer paid costs that should not be company paid.

Construction loans can also be a costly expense. Many construction loans have two closings, one for the construction and one for the end or permanent loan. Best practice is to pay for only one of the closings, not both.

A general inspection can be a good way to improve the quality of a home purchase and increase home eligibility in the event of another move. These inspections should be capped at $500 to limit the company’s exposure to unnecessary inspections.

Many policies include the reimbursement of home purchase closing costs for current renters. Elimination of this benefit can produce cost savings—however this should be aligned with your company’s philosophy concerning the level of financial support offered during the relocation process. 

Also be aware that sellers, and many builders, can try to push their closing costs onto the buyer, especially when relocating buyers are not familiar with local customs. To reduce the company’s exposure, your policy should indicate reimbursement of normal and customary buyer closing costs. SIRVA is available to review your relocation policy to ensure you are using best practices to safeguard your costs. David Barlow, SIRVA’s senior consultant and author of Navigating Today’s Real Estate Market, has done extensive benchmarking on relocation policy components. He is a great resource to call upon as you examine your policy,

SIRVA Mortgage also provides a free consultation with any transferee to compare Good Faith Estimates (GFE). The consultation will ensure the transferee has “apples to apples” comparison and that the fees are in line with the relocation policy. Oftentimes, we see an estimate that has a lower interest rate that is offset by increased fees. These situations are discussed and reviewed to determine the best option for the transferee.

For more information visit http://www.sirva.com/CorpRelo_Mortgage_Landing.aspx

When a borrower owes more on their mortgage loan than a property is worth, the borrower is in what is commonly called “negative equity.”

When a seller is in a negative equity position, they are obligated to come up with the negative balance to pay of their loan. The seller is required to do this for two reasons:

1. The lien holder (the lender) will not remove the mortgage lien unless it receives full satisfaction of the amount due on the mortgage loan.
2. The prospective purchaser of their property will not purchase the property with the mortgage lien still on the property.

What is a Short Sale?
A short sale is a means by which a seller can satisfy the negative equity. Instead of the seller paying the negative equity, the seller’s lender reduces the mortgage loan value and accepts a lesser amount from the sale of the property—hence, eliminating the negative equity.

History of Short Sales

Historically, in situations where the seller was unable to come up with the negative equity, lenders have not allowed a short sale. Lenders were willing to allow a property to proceed to foreclosure because property values were always increasing and could support a resale sufficient to recover the loan balance. Even when a short sale was denied, it was not generally the case that the seller would default on their loan—they would decide not sell their home. Short sales were only permitted in extraordinary situations when default was imminent and the resale value would not support the loan value.

Short Sales Today

Due to across the board extraordinary losses in property values, and increases in mortgage loan defaults and foreclosures, lenders are now more inclined, as a matter of policy, to consider a short sale transaction.

The lender will still require evidence that the sale price cannot support the current loan value and will look for evidence of potential default. However, lenders are more inclined to entertain a short sale based upon current real estate market conditions and the likelihood that the property value will not support the loan value in the foreseeable future.

Lenders have historically required anywhere from 30-60 days to complete a short sale transaction. Although many larger lenders are establishing departments to address short sale transactions, the time frames are not expected to be reduced due to the increase in negative equity situations. 

If a borrower waits until an offer is received to ask their lender to consider a short sale transaction, then there is a strong possibility that they will lose the transaction while awaiting their lender’s decision. Although a lender will not approve a short sale until they know the terms of the sales transaction, they can begin to investigate the borrower’s request, set the proper parameters for approval and be prepared to make a quicker decision when an actual offer to purchase is presented. Borrowers should contact their lender as soon as possible if they are in a negative equity or limited estimated equity position on the property. Because there is a significant amount of data and several factors for a lender to consider, the sooner the lender is able to begin evaluating the situation, the more opportunity there is for smooth and successful short sale transaction. 

Lender Requirements

Lenders still require ample support indicating that the short sale is the last viable option for the borrower. Therefore, the borrower must be able to demonstrate that they have looked at other alternatives such as credit card advances, family gifts and relocation employer benefits before requesting a short sale. Depending on the borrower’s particular and unique circumstances, the lender may require that the borrower enter into an unsecured consumer loan for the short sale balance.

Many lenders also require evidence that all reasonable steps have been taken to minimize the transaction costs. Many lenders will look to reduce broker commissions and other closing charges to maximize the amount of funds available for the loan payoff. It is important to explain to a lender that in a corporate relocation transaction the employee/borrower has no transaction costs and thus a reduction will not provide more funds to the lender (and, in fact, may reduce incentives to sell the property at the best possible price).

Lenders vary as to transactional involvement—some will only review the data presented and others will actively engage in the home sale process. SIRVA has experienced lenders that want regular marketing updates and even require that they control the listing process, listing price and any listing price reductions. In order to increase sales opportunities, some lenders have even required special incentives and concessions are included as a party of the marketing strategy, including special financing offers to prospective buyers. All of these possibilities are lender specific and vary significantly based upon the borrower’s position, the facts surrounding the transaction and the transaction terms themselves. This provides an additional reason to contact the lender as soon as possible if there is the possibility of a short sale situation.

Despite the complications and time involved, short sales must be considered as a viable alternative in dealing with negative equity situations in relocation transactions until the real estate market recovers and values become stable again. 

According to the Trippel Survey&Research LLC Seventh Annual Relocation Managers Survey: Relocation Management Company Industry©, SIRVA Relocation ranked second in overall performance and satisfaction among the industry’s top six largest relocation companies. The company achieved the highest scores among the six largest relocation providers in eight of the 24 areas surveyed, and it also placed as one of the top three providers in 22 out of 24 areas surveyed among the largest relocation providers. SIRVA Relocation LLC is a subsidiary of SIRVA Inc., a leading global relocation services provider.

“These results are a direct reflection of our steadfast commitment to providing our customers with unparalleled service and value every day,” said SIRVA Inc. CEO Wes Lucas. “Our goal is to be the most trusted and sought-after relocation services provider in the industry based on the work we do and solutions we offer. I am elated to see that customers are recognizing the value we bring to the table.”

Trippel Survey&Research conducted this survey—which launched September 12 and concluded October 1—with the goal of obtaining evaluations from corporate relocation managers regarding levels of satisfaction with firms in the relocation industry. More than 300 survey evaluations—representing 298 different relocation management companies—were received. The six largest relocation management companies in the survey accounted for nearly 75 percent of all evaluations returned.

Categories in which SIRVA Relocation achieved the top score included: Responsiveness and flexibility to your needs; Service recovery; Year-end tax reporting; Management reporting; Identifying trends and responding to them; Suggesting policy recommendations; Suggesting ways to reduce your costs; and Taking actions that control or lower direct real estate costs.

Selling homes in the current real estate market, with so many sellers chasing so few qualified buyers, has been hard on corporate relocation transferees and their employers. Last year SIRVA reevaluated the way it markets and sells homes in an attempt to lower real estate carrying and operating costs and reduce the financial risks of home ownership to clients. The results were impressive.  

After nine months, SIRVA reduced its number of homes in inventory by 86 percent--from 843 to 118 homes. SIRVA has also reduced its client's AVO home inventory by 60 percent year-to-date. SIRVA now has its lowest inventory level in almost five years. Jon Gilbertson, vice president of risk and quality for SIRVA, attributes the success to a new approach that emphasizes local market expertise and home marketing.

As part of SIRVA's new approach, the company reorganized its risk management team to focus on key components of the risk management process and break down each property individually to ensure it is marketed correctly. The group also enhanced its property performance tracking and improved the appraisal review process to ensure homes were priced accurately, thus minimizing loss-on-sale.

For more information about SIRVA's risk management program, please contact Jon Gilbertson at 763.525.3710.

On November 6, 2008, SIRVA announced the appointment of Sean Fernandez as the company’s new senior vice president, operational excellence, people and infrastructure. Fernandez brings 19 years of leadership, operations and consulting experience to SIRVA. He will report to SIRVA President and Chief Executive Officer Wes Lucas, and work from SIRVA’s office in Fort Wayne, Ind.

Fernandez is a proven global executive with an excellent track record in improving business performance and growing companies. Specifically, he has driven improvements in operations, quality and customer satisfaction. In his new role, Fernandez is responsible for overseeing SIRVA’s global operational excellence initiative, building strong teams and a high-performance organization and enhancing information technology capability. This position includes the development and implementation of key process improvements designed to drive customer satisfaction, cost efficiencies and improved quality.

“We are delighted to welcome Sean to the SIRVA team,” said Wes Lucas. “He is an outstanding leader and brings valuable operational capabilities, process improvement skills, product management and a proven ability to grow companies. I am confident that he will play an integral role in helping our company to serve our global customer base.”

See full press release

Accurate and timely accounting of relocation expenses has a far-reaching impact on the overall performance and success of a corporate relocation program, to both the company and the individual transferee.

The company benefits in several ways when a “best in class” expense management process exists, including:

Last month we learned about the options Mr. Johnson had when purchasing a home before selling his house in the origin location. His next concern is his down payment, specifically, how much does he need to put down and where can it come from.

Down payment requirements vary depending on the loan product, an individual’s credit situation and home location. Because each situation is different, it is important that transferees are counseled to ensure they understand the options that are available. Even though each situation is different, there is one recent trend that has immerged across all lending options—the requirement of a larger down payment. Today, most true “no” or “low” down payment loans have disappeared.

Down payment funds can come from many sources. Proceeds from a closed home sale are the most common down payment method used by transferring employees. Equity advances and secured bridge loans continue to be popular ways to connect equity from an in-process home sale to a home purchase.
*Liquidating cash or investments from bank accounts, mutual funds, 401k or stock has increased in popularity as home sales days-on-market have increased and available equity has decreased. Proper documentation showing ownership and liquidation may be required with this option.

Gift funds are still acceptable with a clear and direct paper trail from a relative. A promise of repayment of the “gift” will turn these funds into a loan and is not an acceptable source for closing.

Borrowed funds and unsecured debt continue to be unacceptable down payment sources and will not be considered as allowable funds to close. Borrowers can use a secured loan for a down payment, but only if the loan is secured against a tangible assets (car, boat or other such collateral). Signatures or cash advances on credit cards are not permitted.

Now that Mr. Johnson understands his down payment options and how he can qualify without selling his house, he decides that holding off until his home sells is his best option. 

Next time we will begin to look at corporate relocation costs and savings opportunities associated with the purchase of a new home.