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Legal Authority For Home Marketing Incentive

Legal Authority For Home Marketing Incentive

Updated April 10, 2009

This relocation incentive award program is new to the Government. Previous efforts to establish such a program centered on changing or adapting the Federal Travel regulations to this purpose. Instead, this program adapts Title 5, U.S.C., Chapter 45 to this purpose.

The relocation home marketing incentive will take the form of a Special Act or Service (SAS) award, structured in keeping with Title 5, U.S.C., Chapter 45, which authorizes agencies to grant awards to employees. The Office of Personnel has generally encouraged agencies to make maximum use of their authorities under Title 5.

Part 451 of the Code of Federal Regulations, which discusses agency authority, describes an SAS award as a contribution or accomplishment in the public interest which is a non recurring contribution either within or outside of job responsibilities which benefit the Government. This definition is consistent with the activity of a transferee�s sale of their home, by allowing for the fact that the transferee�s sale of a home returns tangible benefits to the Government, but is not directly a part of the employee�s job responsibilities.

While Federal Travel Regulations (FTR) limit reimbursable expenses related to residence transactions to certain maximum amounts, these limitations would not apply to this incentive program, because:

  1. The FTRs exempt flat-fee contracts such as GSA�s relocation serves contract, and
  2. The incentive envisioned would not be payment reimbursing an expense, but rather an award for an accomplishment. Regulations against subsidies on buy outs also do not apply, as they are meant to preclude reimbursements for market loss, not awards.

Determination of Eligibility

To be eligible for the home marketing incentive award, an employee must satisfy the basic requirement of the SAS award which is the vehicle for the incentive program�namely, to achieve savings for the government.
Employee must:

  • Successfully market their homes in connection with an authorized permanent change of station, including a sale and closing on the property resulting in an amended sale fee transaction.
  • List properties at a price no more than 5 percent above either the Broker Price Opinion or the Marketing Strategy�s suggested list price (whichever is higher).
  • Employees must list their property for sale with a qualified broker; and
  • Employees must have their properties listed for at least 30 days of which at least 21 days must be after receipt of the guaranteed offer from the contractor. (Unless an amended from zero sale is obtained before the guaranteed offer from the contractor.)

These provisions ensure that every property in the program receives adequate market visibility at a reasonable price.

Home Marketing Incentive Program

The Home Marketing Incentive Program (HMIP) is classified as an optional benefit, not an entitlement. Participation in the HMIP is at the discretion of USDA agencies. Therefore, not all agencies will offer a HMIP. The goal of HMIP is to reduce the Government�s relocation costs by encouraging transferred employees to sell their home as an �amended value sale� through the RSC. A home sold under �amended value� significantly reduces the fees/expenses agencies pay to the Relocation Services Companies. Agencies pay a significantly higher fee for homes sold under the �appraised value� or the �guaranteed buy-out sale.�

  1. Requirements:
    • The policy for participation in the HMIP requires:
      • Employee�s residence must be sold through the Relocation Services Company.
      • Employees must list their residence with a qualified broker and independently and aggressively market their residences.
      • Employees must find a bona fide buyer for their residence as a result of the independent-marketing efforts.
      • Employees must meet any additional conditions established by their agencies, including, but not limited to, mandatory marketing periods, list-price guidelines, closing requirements and residence-value caps.
  2. Limitations:
    • In accordance with Section 5) Policy and General Rules of this policy, HMIP offers eligible employees an award of 2 percent of the selling price of an employee�s home, but not to exceed $5,000. The payment of HMIP will be generated by NHQ and processed through Human Resources as a special act award payment to employees.
  3. Tax Consequences:
    • HMIP is considered income and agencies will withhold income taxes and employment taxes. Employees will not receive a withholding tax allowance (WTA) or a relocation income tax (RIT) allowance to offset the tax consequences of participation in the HMIP.