FAM 1997-14
Attachment 2
Examples of Employee Home Marketing Incentive Calculations
These examples are provided on the assumption that the employee has
enrolled an eligible property in the program and all other conditions of
the contractor provided relocation service program are met.
The relocation service contractor fees for these examples are:
Appraised value sale 39%
Amended value sale 14%
Flat rate for homes appraised < $40,000 $20,000
Example 1.
Employee requests and is approved for the home sale program. Prior to
the contractor completing the appraisals and making an offer, the
employee finds a buyer for this home. The relocation service contractor
determines it is a bonafide offer and a qualified buyer at a purchase
price of $200,000.
The government cost for an appraised value sale would have been $78,000
(.39 X $200,000). The government's cost based on the amended value sale
is only $28,000 (.14 X $200,000), resulting in a savings of $50,000
($78,000 - $28,000). Five percent of the amount the contractor paid the
employee for the property is $10,000 (.05 X $200,000). Thus the
employee is entitled to a $10,000 allowance, which is the lesser of the
government savings ($50,000) and five percent of the sale price received
from the contractor.
Example 2.
Using the data provided above, assume the residence is owned jointly by
the employee and a divorced spouse. The calculation would have to be
adjusted to reflect a savings to the government of only $25,000 since
the government would be responsible for only one half of the contractor's fee.
Since the employee would be receiving only half the proceeds of the sale, the
home marketing incentive allowance would be reduced to $5,000 (.05 X $100,000).
Example 3.
The employee receives an appraised value offer from the contractor for
$30,000. The employee also receives a $30,000 offer from a prospective
buyer. The relocation service company determines the offer to be bonafide
and the buyer to be qualified. Since the house is appraised at
less than $40,000 a flat fee of $20,000 would apply to an appraised
value sale. The savings to the government is $15,800 [$20,000 flat fee
- the amended value fee of $4,200 (.14 X $30,000)]. The employee would
be entitled to a $1,500 (.05 X $30,000) home marketing incentive
allowance since this is the lesser of five percent of the amount
received from the contractor and the government's savings.
