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How Does the Relocation Industry Work?

Written by on Sunday, 18 June 2000 7:00 pm

The unemployment rate is lower than it has been in a quarter of a century, with more than two-thirds of American adults working, the highest participation rate ever, according to the Employee Relocation Council, Analysts expect the labor market to continue to tighten due to the emerging retirement of the baby boomer (78 million people) with only 45 million Generation Xers to take their places. In addition, turnover rates for high-tech employees was more than 20 percent during the 1990s, and is expected to continue through the oughts. It couldn't be a better time to specialize in relocation.

The specialty of relocation encompasses much more than being able to sell the home of a transferee in a short amount of time, or squire a relocating employee around town for the weekend. A relocation specialist must be made of bionic parts - faster, smoother, more capable, more tireless, and more Internet-enabled than the average agent.

When an employee is being transferred by a company, the company has to take on the burden of making the transition as smooth as possible so the transferee arrives relaxed and ready to work. Depending on the size of the organization, and how many employees they move around the country or the world, an internal relocation services department will shepherd the employee through the sale is his/her home to the purchase of a home in the destination city. This department is generally overseen by the Human Resources (HR) manager and/or ancillary staff.

What these managers will do is develop relationships with relocation specialists depending on the size of their organization and the rank of the people whom they are transferring. (Relocation packages are designed and offered according to employee rankings.) For example, one employee of higher rank may get a package that includes the purchase of their home if it fails to sell in a timely fashion plus an equity advance on a new home, while a lower-ranking employee may be reimbursed only for the Realtors' sales commissions when their home is sold.

Large companies with lots of higher-ranking relocations might choose a third-party relocation company like Cendant Mobility or Prudential Relocation , to arrange the transfers of their employees. At the same time, the client may hire a pre-sale relocation company to handle the sale before it is turned over to the large corporate property buyer. The two companies will help the client company design and price the relocation packages for each transferee.

The pre-sale, or pre-marketing companies as they are sometimes known, goes into action first, dispatching two or three Realtors to interview with the seller, or to contact the buyer, and the transferee makes a selection from among them. The Realtor then goes into warp speed to market the home as fast and as accurately as possible, working in conjunction with two or more appraisers who help the Realtor determine the asking price of the home.

Pricing is critical - the home must be priced reasonably to attract an immediate buyer, but not priced so low that the transferee's equity is compromised. The goal for the pre-sale company and the Realtor is to keep from turning the home over to the third-party relocation company for either management or purchase. If that happens, the costs of relocation rises considerably for the client company.

Follow-through is equally critical. Most HR managers, pre-sale companies, and third-party relocation companies are all going to be out of the area. They want assurances on a steady basis that everything is being done to sell the home and make the transferee's relocation as smooth as possible.

Is relocation a good specialty for a Realtor? Not necessarily. Any Realtor might like to have a steady stream of referrals from a pre-sale or third-party company calling to say "I have a buyer coming in next weekend and here is all their information," or "I have a seller who needs to be moved by X date." But for some Realtors, the large referral fees, from 25% to 35%, are prohibitive, particularly when coupled with the aggressive advertising costs that must be employed to sell a transferee's home quickly. Some agents don't like the added pressure of a deadline, nor do they like the detailed reports required to keep the HR manager at the home office, the third-party company, and the pre-sale company informed of their every move.

But for others, who can take the pressure, relocation can be a lucrative specialty. If you can provide relocation information and services in a way that reduces anxiety for the transferee, their company, and their third-party relocation company, you will have a business plan for success. And that's where the virtual relocation specialist has an advantage - the virtual relocation agent can use the Internet and all its communication tools to supreme advantage.

So how does the relocation specialist fit in? HR managers and third-party companies want to place the transferee into the hands of someone they can trust, a known professional who can do the job and handle the small details, including keeping them in the loop. That's the perfect opportunity for the Internet-empowered Realtor to show his/her stuff.

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  About the author, Blanche Evans

Individual news stories are based upon the opinions of the writer and does not reflect the opinion of Realty Times.