Guaranteed Buyout Offer

I have been a Home Sale Relocation Counselor for ten years, providing over three hundred transferees with a Guaranteed Buyout Offer (GBO). While I have no control over real estate values, I do have control over how a GBO is delivered to a transferee. The below outlines the industry best practices that both clients and transferees should consider and why.

What is a Guaranteed Buyout Offer?

A GBO is the safety net provided by an employer in the event the relocating employee is unable to sell their home over a fixed period of time but is needed at their new location. A GBO is typically accepted after the transferee has marketed their home for sixty or ninety days (depending on the company relocation policy). The reason employers embrace a mandatory marketing time in their company relocation policy is to encourage the transferee to sell their home on the open market to a buyer. The GBO is only reserved in events where the transferee has marketed the home but cannot attract a buyer in time to relocate to their new location.

What does the Relocation Counselor Do?

My job, as the Relocation Counselor, is to administer a client’s relocation policy for the transferring employee and educate them on relocation benefits such as the home sale process. It is important not to rush the employee counseling process. Once the employee reviews their GBO benefits and feels comfortable with the details, I arrange a phone call to personally speak with them. I dedicate up to an hour of my time educating, addressing questions, and easing any concerns. There are many misconceptions and concerns about buyouts, so this allows me the opportunity to separate fact from fiction before beginning the process and put the transferee at ease about the program and process.

How is the Guaranteed Buyout Offer Price Calculated?

Depending on company policy, two relocation appraisals are typically ordered, and if they are within 5% of each other, their average establishes the guaranteed buyout offer price. Some clients may allow a 7% or 10% spread, but 5% is standard in the relocation industry. If the first two appraisals are out of spread, a third appraisal is required (per the ERC guidelines). Then, the two closest usually determine the transferee’s GBO. This is the most common way that the GBO offer amount is determined. This is known as “fair market value” in the relocation industry.

How are the Appraisers Selected?

I always inform the transferee that they can provide names of appraisers for consideration. If their appraisers are qualified to complete a relocation appraisal, I have no problem suggesting they use these resources. Although it’s rare for a transferee to provide appraisers for consideration, when this perk is taken advantage of, I have experienced occasions when their appraiser’s bid is lower than those supplied on our list. When this happens, it often makes providing the GBO a much smoother process.

Guaranteed Buyout Offer Appraisal

The Importance of the List Price

Providing an employee with their guaranteed buyout offer should always be handled delicately by the relocation counselor, especially if the transferee’s home is priced significantly above their GBO. In real estate “over listing” a home is the largest mistake in home marketing. This often renders extended days on market and a lower ultimate sales price. A relocation counselor should know if the GBO will put the transferee in a deficit situation by asking about their mortgage balance during the initial call or seeing the balance noted on their title report. A deficit would require the transferee to send money to the relocation company prior to the acquisition of their home if they were to accept the GBO. This factor can make-or-break a phone call, so the presentation of the GBO to the transferee is vitally important.

Before delivering their GBO, I find it important to reiterate the purpose of a relocation appraisal.  Most commonly the appraisers appoint a listing price for the home with an expectation to sell within a 120-day marketing period. It would be ideal for a transferee to sell their home on the open market to a buyer for a price higher than their GBO. However, in the event the transferee is unable to sell their home within 60 days (or 90 days, depending on the client), the GBO is their “fallback”. I also review what is done if an offer arrives that is greater than their GBO. (This ensures that the transferee is aware of all options to attract the highest offer on their home.)

The Goal of the Guaranteed Buyout Offer Program

The program’s ultimate objective is to allow the transferee to relocate whether or not an outside offer from the open market is received. The GBO price should be fair, and should reflect what the Relocation Company will ultimately resell the home for after carrying the home in their “inventory”. This is most successful when the client has established GBO requirements. If two Broker Market Analysis (BMA) are completed, many clients mandate that the list price does not exceed 105%. If these requirements exist, then a client can reduce the need to take a home into inventory.

Experience, Expertise and Trust

Administering a guaranteed buyout offer requires a Home Sales Counselor’s expertise built on a foundation of trust with the transferee. ARC Relocation is an industry leader for Guaranteed Buyout Offers. We are here to assist and work with the goals for both the transferee and the company, ensuring a smooth and fair relocation process.

ARC Relocation administers hundreds of GBOs each year in all US States and Territories. Each situation is unique, but ARC is able to bring the experience and expertise to be an advocate for every transferee and client. For more information on GBO please contact ARC Today!

Andrew Sumner

Andrew Sumner
Relocation Counselor
ARC Relocation