But Sawicki-Ritchie thinks the loan program is a great idea. People don't realize how expensive closing costs are. When a company relocates an employee, not only does it typically pick up closing costs on the purchase of the new home, but it also will pay realtor fees and extra closing costs on the sale of the old home. That comes to about 7 percent of the home sale price. To eliminate this tax burden to the employee, most companies will make additional payments to the IRS out of their own pockets through withholdings in the employee's name.
Companies waste a tremendous amount of money on relocation.
The solution, he says, is to sell the house to a relocation firm. Most relocation companies provide home-sale programs to people who are relocating so that the employee doesn't realize any additional income, and the company isn't stuck with the tax costs. In this case, instead of selling the home directly to a buyer, the employee sells it to the relocation firm. This allows the seller to avoid the realtor fee and extra closing costs. The firm then sells the house to the buyer and pays the real estate agent and additional costs, which it bills back to the employee's company.