Establish a Relocation Niche in Any Market
Relocation clients are a wonderful niche for REALTORS® in all markets. And although many markets have demonstrably more relocation activity, every market has buyers and sellers moving in and out for job related reasons. This niche runs the gamut from the small employer who may not work with a formal relocation company, or even have a relocation department, to the large employer who has a formal relocation contract with many agents and other vendors, spanning many markets.
Relocating employees need quality real estate agents to assist them in either selling their old home, buying a replacement home, or both. Sophisticated transferees generally see the advantage of working with an ABR® (Accredited Buyer Representative). There is no doubt that when looking for a home in a new community, a buyer is best served by an agent who is representing the buyer’s interests, not the seller’s.
Additionally, buyers coming to a new community have special needs. They may, on the one hand, be sophisticated buyers in terms of how many transactions they have had; yet they know very little about their new community or its real estate market. One of the ABR® Elective Courses is A Relocation Course. Agents interested in expanding their markets into relocation, even if they already have the ABR® designation, should consider picking up this course as an additional credential.
At the upper levels of relocation, an entire industry is built around the needs of the transferring employee. This industry encompasses international markets, and touches all phases of an employee’s move, from appraisal services to moving the family zoo. (Typically just the dog and cat!).
The best known organization which encompasses the real estate needs is Employee Relocation Council, or ERC, as it is known. The ERC web site for this organization is a great place to begin for any agent interested in this market. ERC offers its own designations, as well as a number of courses which can be taken on line to hone your skills as a relocation specialist. Members of ERC use its membership database for referrals for both agents and appraisers, so although the dues are not inexpensive, it is a good investment to join the council.
Relocation Packages for Transferees
At this point, we should discuss how the entire relocation package works for a transferred employee. Contracts are made at the corporate level with REALTORS®, movers, rental car companies, airlines, hotels, and virtually anyone else involved in a corporate move.
The transferee gets the benefit of her relocation package by carefully following the guidelines set out by the company. For this reason, even if Agent A sold Jane Doe her home two years ago, and Jane Doe loves Agent A, Agent B at another company may well get the listing, because at a corporate level, Jane Doe’s company has agreed to give all their incoming and outgoing referrals to Agent B’s company.
Although it has mostly subsided, in the past there have been cases of agents being charged "after the fact" referral fees, meaning that after the transferee listed their home, the relocation company came in and asked for a referral fee. The referral fees range from 20% to 35%, in my experience. In some markets, it has not been unusual for the employee coming in (a referral) to buy the home of the employee going out (also a referral) and thus severely impact the broker’s bottom line. On the other hand, transferees in many markets are upper-end clients, so the commissions are substantial.
Single Agency Preference in Relocation
As the market changes, agents can expect more requests from relocation companies. One of the major concerns a relocation company has is that the transferee "buy right." This means that the transferee not only does not overpay for a home, but will have an easily saleable property when he or she is transferred again, usually within a fairly short time frame.
There are many examples of transferees overpaying for a house because of being unfamiliar with the market. In my personal experience, the worst I ever saw was as an appraiser. I was called in to appraise a property that the homeowner, a transferee, had acquired just about a year before. He had moved from Southern California to Central Pennsylvania, and paid about $100,000 more than the house was worth — at the time of sale, and a year later, when I did the appraisal. That buyer was not represented by a buyer’s agent. Had he been, his agent would have undoubtedly pointed out that the property had been on the market for over five years and no one local would pay the asking price. Instead, he was not represented, and the seller’s agent simply wrote up the contract for full price.
Agency is such a huge part of this picture that some corporate clients do not want agents who practice single person disclosed dual agency — they want assurance that the agent is working for their client, and their client alone. Being a well trained agent who understands an agency role, and being familiar with your local market, is a big part of what a relocation company wants.
Relocation agents are also expected to have above average information about markets, values, schools, shopping, and anything else that can impact the buyer’s decision. The typical transferee is given only a few short days to locate a house; agents should be prepared to clear their schedules and work with the buyer until she has found the house she wants.
On the selling side, relocation companies create, in my mind, a wonderfully saleable package for the listing agent. When a formal relocation package is involved, almost all of the time there will be two, separate, independent appraisals made of the property. These two appraisals must be within 5% of each other, or a third appraisal is ordered. The industry standard for variance in appraisals is 10%, so you can see that the relocation industry is serious about pricing the property correctly.
The relocation company will also have the listing agent complete a BPO, or CMA. Most relocation companies get a whole home inspection done and address flaws such as radon and insect infestation by fixing them. Finally, if needed, after the transferee moves, they will "neutralize" the house, or as one transferee put it: “Make it plain vanilla.” Vanilla may be plain, but fresh paint and carpet in neutral colors, as well as a properly priced listing with an inspection already done, make for a very saleable listing.
In some markets, the relocation company will inquire about prevailing commission rates and splits, and then instruct the listing agent to list at a higher than normal rate, and to split the commission on a fifty/fifty basis. Again, these companies know how our industry works and they want active, motivated agents showing their listings. If you have a listing languishing on the market that is owned by a relocation company, they will expect timely updates about the market, including what new competition is on the market, whether or not some of the original competing listings have sold, and any other pertinent information. For a relocation company, an unsold house is a liability. They want it sold as quickly as possible. However, they can be inflexible on price because they have done their homework.
Appraisers who work for relocation companies are carefully screened, and receive a ‘"eport card." In addition to grading the appraiser on turn-around time, the report card tells her how close her appraised value was to final selling price. Agents are also carefully scrutinized, and those who do not provide the expected level of service may be taken off the list. In some companies, agents must either have obtained certain designations (from the National Assn. of REALTORS, ERC, or in-house) and/or must have attained a certain dollar volume of business. Typically, the broker/manager is not going to send a "newbie" out with a transferee.
However, a new agent should not conclude that she can’t get relocation business. Like anything else in real estate, we all start somewhere. A new agent interested in this work should first of all, obtain the ABR® Designation and take the elective relocation course from REBAC. Although ERC® has its own certifications, there are many markets where there are no agents holding those designations to be found. In that case, a NAR designation is always attractive.
Join the ERC, and begin taking courses on line. In the meantime, scout around your community for small companies which may transfer very few employees, and as a consequence, may not utilize the services of a relocation company. Begin by preparing a brochure outlining your professional qualifications, your knowledge of the local community, and the qualifications of your company. Then, market your services. The small companies and institutions that typically do not use a relocation company will be happy to offer a ‘perk’ to their incoming employees. Think about entities like the small local manufacturers, the local college, the local hospital, the public school system, and even state and national offices located in your community.
Personally visit human resources offices and introduce yourself to the staff. Develop a relocation guide, either on paper, CD, or both, which can be sent to prospective transferees. Your relocation guide should help "sell" your area, as well as real estate. Include many photos, maps, brochures, information about local cultural, business and recreational opportunities. With each successful transaction, the agent should ask for, and get, a recommendation specific to the sale being part of an employee’s relocation.
Finally, in my experience, like many other opportunities in real estate, even in this cyber age, word of mouth continues to work. A good job done for one client will result in a referral to another, and so forth. As your resume builds, update your contact information in the ERC and other directories.
(Melanie J. McLane, ABR, GRI, CRS, CRB, RAA, SRES, OA, ePRO, has been serving North Central Pennsylvania's real estate needs since 1975, as an agent, appraiser and educator. Fish/GMAC Real Estate 570-398-2865, or 570-398-1201 (direct). Evelyn Jackson Appraisal Services, 570-398-1201. Certified Residential Appraiser in Pennsylvania. For real estate education, 570-398-1201 or 570-660-9671)