The prospect of a new job in another coun­try or city can be excit­ing. The first move is to look for infor­ma­tion about the new city on the web. Often, that first move is made by the spouse or “sig­nif­i­cant other” who is not start­ing a new job but a whole new life in a new place. Nat­u­rally, ques­tions about hous­ing, neigh­bor­hoods, and home prices top the list. When there are chil­dren, edu­ca­tion is another pri­or­ity concern.

A Sense of Antic­i­pa­tion: We are mov­ing to Seattle!

The move may be months away but pic­tures of dis­tant homes for sale are being for­warded to rel­a­tives and friends. “Look where we could be liv­ing in Seat­tle!” Sev­eral real estate agents receive emails from what looks to them like a promis­ing prospect. “We are relo­cat­ing to Seat­tle; can you send us some more infor­ma­tion on this home?”

The Real­ity: the Transferee’s Relo­ca­tion is Being Outsourced.

Else­where, in the other world — the real world of cor­po­rate relo­ca­tion — com­pany poli­cies and pro­ce­dures on relo­ca­tion deter­mine what hap­pens next. The relo­ca­tion of an employee is an out­sourced activ­ity del­e­gated to a relo­ca­tion man­age­ment com­pany which han­dles every aspect of the relo­ca­tion and, most impor­tantly, the cost of the relocation.

The Real­ity: Relo­ca­tion is Expen­sive and Costs Need to be Managed.

Accord­ing to World­wide ERC (for­merly Employee Relo­ca­tion Coun­cil), the cur­rent, aver­age cost of a domes­tic relo­ca­tion was for:

• Cur­rent Employee Home­owner $62,185
• New Hire Home Owner $55,165
• Cur­rent Employee Renter $18,365
• New Hire Renter $16,177

Accord­ing to ERC, of the nearly 400,000 trans­fers gen­er­ated by ERC mem­ber com­pa­nies, 1/3 are new hires and 2/3 are cur­rent employ­ees and 54% are home own­ers while 46% are renters. (ERC pro­vides no data for inter­na­tional relo­ca­tions but we can safely assume that the costs are higher.)

Man­ag­ing the Cost Means Man­ag­ing the Transferee

It’s under­stand­able that relo­ca­tion man­age­ment com­pa­nies are charged by their cor­po­rate clients to man­age these costs. The sooner the trans­feree can become a pro­duc­tive employee the bet­ter. The less the trans­feree has to worry about logis­tics and life out­side work the more likely the trans­feree will be productive.

Thus, many relo­ca­tion man­age­ment com­pa­nies like Car­tus (for­merly known as Cen­dant) hire des­ti­na­tion con­sul­tant com­pa­nies like Full Cir­cle that ensure the smoothest pos­si­ble “set­tling in” of the trans­feree. When deal­ing with inter­na­tional relo­ca­tions the des­ti­na­tion con­sul­tants are deal­ing with visa issues, open­ing bank accounts and obtain­ing social secu­rity cards — activ­i­ties that require con­sid­er­able knowl­edge and exper­tise. In the end, this exper­tise ben­e­fits the trans­feree and saves the employer money.

Reduc­ing the Cost of Relo­ca­tion by Turn­ing an Expense into Income

If the relo­ca­tion involves real estate — sell­ing and/or buy­ing — relo­ca­tion costs are “shifted” from Car­tus and the cor­po­rate client, such as Microsoft, to com­pa­nies and indi­vid­u­als involved in the real estate transaction.

Here’s how it works. The relo­ca­tion man­age­ment com­pany works with select real estate bro­kers who assign agents to work with the trans­feree. For that priv­i­lege, the agent pays a refer­ral fee — up to 40% of the real estate com­mis­sion — to the relo­ca­tion man­age­ment com­pany. If the trans­feree sells and buys, this hap­pens twice.

Con­trol­ling the Process

In the case of Car­tus, the pre­ferred bro­kers are the ones that are owned by Real­ogy, the par­ent com­pany of Car­tus. The Real­ogy Fran­chise Group con­sists of well-known real estate com­pa­nies, includ­ing CENTURY 21® and Cold­well Banker®.

A link on the Realogy’s web­site leads to the Title Resource Group (TRG) which “…is a full-service title and set­tle­ment ser­vices com­pany” that …“serves real estate com­pa­nies, cor­po­ra­tions and finan­cial insti­tu­tions in sup­port of res­i­den­tial and com­mer­cial real estate transactions”…“TRG is a nation­ally man­aged fam­ily of com­pa­nies oper­at­ing under well-known, local brands.” On the fact sheet it says that “TRG is as an inte­gral part of the Car­tus Asset Recov­ery Pro­gram.” Expense recov­ery may be more accurate.

The Inter­net Inter­feres with the Process

Back to the begin­ning: the trans­feree and any “sig­nif­i­cant other” are intel­li­gent, internet-savvy indi­vid­u­als. They would like to have a say in the selec­tion of the real estate agent. To them the choice of neigh­bor­hood and schools should not be left to some­one cho­sen by cor­po­rate rela­tion­ships. The trans­feree may have found an agent who speaks her lan­guage and knows the dif­fer­ence between liv­ing in Munich and Seat­tle because the agent has lived there him­self. The trans­feree may also want to be the one to choose the mort­gage lender since this is a major finan­cial deci­sion which requires a great degree of trust which can only be found in a per­sonal rela­tion­ship. Nei­ther the pur­chase of a home nor the financ­ing should be treated as a commodity.

The Trans­feree Has a Choice

Many trans­fer­ees don’t know that they have a choice because the relo­ca­tion process is not as trans­par­ent as it should be. In most cases, all a trans­feree has to do is to make her/his desires known to the employer and/or the relo­ca­tion man­age­ment com­pany who then will have the transferee’s choice of broker/agent sign a refer­ral agree­ment. This agree­ment allows for part of the com­mis­sion to be paid back as a refer­ral fee at the clos­ing of the real estate transaction.

Pos­si­ble Conflicts

What if the broker/agent refuses to sign the agree­ment and the trans­feree insists on choos­ing the agent? What if the agent is a long-time friend of a trans­feree who is mov­ing to another city? Can the relo­ca­tion man­age­ment com­pany insist on the refer­ral fee “after the fact?”

Tor­tu­ous Inter­fer­ence and RESPA Issues

After-the-fact-referral-fees are not a recent issue. An arti­cle in Realty Times, pub­lished first in 2000, stated: “Tor­tu­ous inter­fer­ence is the inter­fer­ing by one real estate licensee [broker/agent] with a con­trac­tual rela­tion­ship between another real estate licensee [broker/agent] and their client. This is a vio­la­tion of license law in every state. This law is bro­ken every time a relo­ca­tion com­pany speaks with a trans­feree or the transferee’s agent about a refer­ral fee after a con­trac­tual rela­tion­ship has begun.”

The same arti­cle also raises con­cerns with RESPA — the Real Estate Set­tle­ment Pro­ce­dures Act: “…unjust enrich­ment is a RESPA law vio­la­tion and is reportable to the Depart­ment of HUD [Hous­ing and Urban Devel­op­ment). RESPA reg­u­la­tions are such that no fee can be charged, received or paid in a real estate trans­ac­tion with­out due cause. In other words, any fee charged must be earned and deserv­ing in order to be paid or received.”

Cen­tral­ized Man­age­ment vs Trans­feree Choice

The best relo­ca­tion prac­tice takes advan­tage of the valu­able ser­vices of relo­ca­tion com­pa­nies and experts while respect­ing the transferee’s right and desire for per­sonal ser­vice. If YOU have been trans­ferred, what has been YOUR experience?

Share it with oth­ers on SERENE where you will be heard and seen.