Unfortunately, this phrase has become all too familiar. Employees and companies alike are struggling with how to find a win/win solution. We can all appreciate the transferring employee who bought their home two to three years ago. They bought at a time when prices were adjusting downward, they probably did not find themselves in a bidding war, yet no one ever anticipated that those values would continue to plummet. Now they are being asked to move again and it is difficult not to assist them. But what about those employees who bought their home five years ago? They were most likely out-bidding others and justifying an inflated price only to assume that they would continue to see gains in the coming years.
Both scenarios present unique challenges and require creative solutions. The idea of covering someone’s entire financial loss (the difference between the original purchase price and the current sales price) is becoming something of the past. Instead, companies are deciding to create benefits that have participation from both parties. This could include:
- Having the employee cover a percentage of the loss. This could be tiered by the amount of years they have lived in the house.
- Applying a cap to the amount paid to the employee. Perhaps a certain percentage of the original purchase price or just a flat amount.
- Spreading the loss over the amount of years lived in the home. Consider putting a maximum to how many years you are willing to cover i.e. employee has lived in house for six years, you may elect to only pay for 50% of that time, or three years
Be on alert for exceptions. You will inevitably hear from the employee who undertook a sizable remodeling project. If you stick to the original sales price, you should be in the clear. My suggestion, take the time to do some analytics on the cost/value proposition. It’s never easy, but that’s why we have to be creative.
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