Relocation affinity program brokers are more than willing to pay for "qualified, motivated leads," but competition among brokers for referral business is presenting new challenges to brokers and their agents. Relocating consumers, enticed by rebate programs, are surprised to learn they can't cut commissions twice, and agents are often surprised at the closing table that they owe referral fees they weren't aware of.

Industry leaders are committed to bring attention and solutions to the growing problem of relocation referral misunderstandings.

Why do brokers use affinity partners? Affinity programs provide benefits to consumers, making the participating real estate broker more consumer-friendly.

"If it's your affinity partner, you love them, if it isn't yours, you hate them," says Petey Parker, head of relocation at Ebby Halliday Realtors, one of the largest independent brokerage firms in the country.

"They are still very good for consumer, they are here to stay, and they are growing," says Parker. "Brokers are subsidizing their relocation business and bottom line with affinities. We are taking a new option, that rebate money that comes to the corporation can go to charity, for example. We have corporations that are saying 'Send our portion on to 'Communities in School,'' and other programs. Many are looking for benefits programs for employees."

But all that altruism doesn't mean they are risk-free for either consumers or brokers or agents. Increased competition in the referral industry has caused some misunderstandings.

"Some affinity programs are Web-based," explains Parker, "and the consumer goes into the Web and they aren't knowledgeable enough to know if they are contracting with them through buyer representation. The concern for third-party corporations is that their employee may have obligated themselves by contract to receive a rebate and that contract may interfere with the contract that the employer may have with a broker. There is a conflict with benefits."

As an example, Parker tells the story of a relocating employee of one of Ebby Halliday's affinity partners. "This gentleman knew we were part of the affinity group and he contracted with an affinity company offering an online rebate," recalls Parker. "He wanted a rebate on the commission, and at the same time he is expecting to get relocation benefits from his company too. We told him that we can't pay two referrals, in essence. We as a broker can't do that, and it places the onus on the employee to pick one."

Sandy Taraszki, executive director of Employee Relocation Council's Real Estate Coalition, says transferring employees like to get information on areas where they are going in advance, and they may think that these rebate sites are the best way to go, but you can't split commissions until there is nothing left."

She says that the employers, aware that this is a problem, are taking steps.

"Employers are doing a lot more up-front disclosure to let them know that in order to be eligible for benefits they have to work within the company's relocation guidelines and that includes being placed with a broker through their relocation company. The employers started to understand it was more of their responsibility to do this."

ERC also has a downloadable handout to be used by employers where they can put them on their worksites or in employee manuals that explains the importance of the broker relationship with the company. Until recently, employers may have been reluctant to tell employees that the broker's commission, through rebates or referral fee payments, helps defray the costs of relocating employees. The handout makes the explanation simple and easy for employers to use.

Taraszki says that concerns with referrals don't end with the consumer; there are problems cropping up for brokers and their agents, too.

Some brokers are entering into multiple referral fee arrangements and passing the fees onto their agents. But not all are disclosing to their agents that they are working with certain companies.

"Brokers that enter into these arrangements," says Taraszki, "and pass the on to agents need to tell agents up front, that when they are working with these referrals that they should be prepared to pay a referral fee and how much it is going to be. Then the agent should have the option of working with these clients, but they shouldn't have to find out at the closing table that they owe a referral fee and that is happening a lot.

"What happens is the brokers have entered into a contractual 'blanket agreement' to pay referrals on relocation business," explains Taraszki, "and then they don't disclose these agreements to their agents, and then the agent finds out later that a referral fee is due and payable."

According to the Coalition, a 'blanket agreement' is one between a move management organization and a broker, outlining a referral fee arrangement in exchange for volume of business. Brokers opt to sign them at their own discretion, and accept responsibility for paying referral fees on any transactions for that client/employer. Regardless of how the employee/agent contact was made, a referral fee is owed to the referring party if such an agreement exists.

"If a broker has entered into a contract and agreed to pay it, they have the obligation to disclose that to the agents because the fees go to the broker," says Taraszki, "so the broker needs to share the information with agents so they can decide where they want to participate. If you read our policy on our Website, there is information on 'blanket agreements' that brokers can use to put into their independent contractor agreements."

Taraszki and Parker agree that the relocation business is changing and they have to stay ahead of situations that might result in poor public relations with consumers or hard feelings with agents.

Points out Taraszki, many online affinity programs aren't as up front as they should be that brokers are paying a referral fee to the affinity partner. She would like to see stricter industry disclosures regarding referral fees.

"If it's not on the front page, that is where it (disclosure) needs to be," says Taraszki. "My concerns with virtual office Websites (VOWs,) etc. is that the consumer may not realize that if they become involved in a transaction where a referral fee is being paid, and they aren't aware of it, it could impact their ability to negotiate, or get their relocation package. Proper disclosure is up front. What we have tried to do is set industry standards for proper referrals. We want to eliminate abuses, not fees."

"In the past, the relocation industry was controlled, relocation was a business within a business," says Parker, "but with VOWs and affinity, it opens it up to the public. We have been in a consumer-driven business and it will continue to be, and it won't be as controlled by brokers. It is healthy to think we are responding to the wants and needs of consumers and what makes it easy for them. What can I do for you to make this a better transaction for you? I don't know what else can be done. This is larger than we are."

Published: March 14, 2003

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