One of the things I love about writing for this blog is that I get to answer relocation questions that people have, in real time. A few months ago, in response to one of our posts about loss on sale policies, a transferee stopped by to ask us a great question about the relationship between capital improvements and loss on sale. Interestingly enough, his timing was impeccable. His question, which I will share after the jump, is one that many transferees are facing today. Relocation managers should be aware of this issue moving forward, as I anticipate most managers with a home sale program will realize similar circumstances among their own transferee base.
If you are relocation manager, you are probably bombarded with the question: Why is my buyout amount so low? And, of course, you’ve handled accusations that the appraisers are “in your service provider’s back pocket.” While there are many factors that influence the appraised value, the biggest culprit for lower than expected valuations is the forecasting adjustment tool.
Companies offering guaranteed buyouts in their relocation policy are finding that their transferees are not too happy. Is it for good reason? Yes…and no. The economy has stabilized, but the housing market still has a long way to go before there is a sustainable rebound. This can be confusing – and incredibly frustrating for employees who approach their relocation with optimism, only to learn through the appraisal process that the price of their home has sunk way below their expectations. While the appraiser, the relocation company and/or HR is not responsible for macro-economic influences, all groups should be prepared to answer tough questions about appraisals without becoming defensive. Here are the top four appraisal issues that HR should understand as we continue to manage the housing slump: