CRPA CRPA Cost Analysis & Housing Differentials 2 — Questions and Answers
Question 1: What is 'equity' in the context of a corporate home sale relocation program?
- The appraiser's fee for completing the valuation report
- The net proceeds the transferee receives after the mortgage payoff and selling costs (Correct answer)
- The difference between the list price and the final sale price
- The amount an employer contributes toward moving expenses
Correct answer: The net proceeds the transferee receives after the mortgage payoff and selling costs
Equity in relocation is the net cash a transferee receives from their home sale after paying off the mortgage balance and all transaction costs.
Question 2: In a Buyer Value Option (BVO) program, who technically purchases the transferee's home first?
- The relocation management company on behalf of the employer (Correct answer)
- The outside buyer identified by the transferee
- The transferee's new employer directly
- A third-party title company acting as escrow
Correct answer: The relocation management company on behalf of the employer
In a BVO program, the relocation management company (RMC) acquires the home from the transferee after an outside buyer is identified, allowing the employer to avoid carrying inventory.
Question 3: Which of the following best describes a 'Loss on Sale' benefit in corporate relocation?
- A reimbursement to the employee when the home sells for less than the original purchase price (Correct answer)
- A penalty imposed on the employee for declining a relocation assignment
- An adjustment to the appraised value when the market declines after the appraisal date
- A tax deduction available to employers for funding employee relocations
Correct answer: A reimbursement to the employee when the home sells for less than the original purchase price
A Loss on Sale benefit reimburses the transferee for the difference when their home sells below what they originally paid, protecting them from market downturns.
Question 4: Why is it important for the CRPA appraiser to estimate 'anticipated marketing time' as part of cost analysis?
- It determines how long the appraisal report remains valid
- Longer marketing times increase carrying costs such as mortgage payments, taxes, and insurance borne by the program (Correct answer)
- It establishes the appraiser's turnaround deadline for delivering the report
- It affects the transferee's eligibility for a housing differential payment
Correct answer: Longer marketing times increase carrying costs such as mortgage payments, taxes, and insurance borne by the program
Anticipated marketing time directly affects program carrying costs because the employer or RMC must cover ongoing expenses while the home remains unsold.
Question 5: When calculating net home sale proceeds for equity purposes, which of the following is typically DEDUCTED?
- The home's assessed value for property tax purposes
- Real estate commission, transfer taxes, and closing costs (Correct answer)
- The original down payment made by the transferee
- Depreciation of appliances and fixtures since purchase
Correct answer: Real estate commission, transfer taxes, and closing costs
Net proceeds are calculated by subtracting transaction costs—commissions, transfer taxes, and closing costs—from the gross sale price.
Question 6: A relocation appraiser notes the destination city has significantly higher property taxes than the origin city. How does this factor into a housing cost analysis?
- It is ignored because property taxes are not part of the appraised value
- It is included as part of the ongoing housing cost comparison, potentially increasing the differential amount (Correct answer)
- It reduces the appraised value of destination properties proportionally
- It only applies if the transferee's employer is headquartered in that state
Correct answer: It is included as part of the ongoing housing cost comparison, potentially increasing the differential amount
Higher ongoing property taxes in the destination increase total housing costs and should be factored into the differential or COLA analysis to ensure accurate comparability.
CRPA CRPA Cost Analysis & Housing Differentials 2
What is 'equity' in the context of a corporate home sale relocation program?