From Initial Excitement to Reality
Are you being relocated to Seattle? The prospect of a new job in another city and perhaps another country can be exciting. The immediate reaction is to look for information about the new city on the web. Often, it is the spouse or significant other who does the looking. For that person, it is more than a new job but the prospect of a whole new life in a new place. Naturally, questions about neighborhoods, housing, and home prices top the list. When there are children, education is another priority concern.
A Sense of Anticipation: We are being relocated to Seattle!
The move may be months away, but pictures of distant homes for sale are being forwarded to relatives and friends. “We are being relocated to Seattle! Look where we could be living!” Several real estate agents receive emails from what looks to them like a promising prospect. “We are being relocated 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.
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 hire destination consultant companies 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. I have worked as destination consultant and know all this from first-hand experience. If you are being relocated to Seattle, I provide these services as an integral part of my business.
Reducing the Cost of Relocation by Turning an Expense into Income
If the relocation involves real estate – selling and/or buying – some of the 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 brokerages who assign agents to work with the transferee. For that privilege, the agent pays a referral fee – up to 45% 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 an integral part of the Cartus Asset Recovery Program.”
Expense recovery program may be a more accurate description.
The Internet emboldens the individual and interferes with the corporate relocation 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. As they see it, the choice of neighborhood and schools should not be left to someone chosen by the corporation or the relocation management company. 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.
But why do even that? Working with a real estate agent independently from the corporate relocation package guarantees the best service and is financially advantageous to the person being relocated.
Why not get the best service and save money in the process?
Why work with a prescribed real estate agent who is forced to pay up to 45% of the commission to the employer/relocation management company? Why not work with an agent of your choice? The latter will not only result in better service but can save you money. The money that was meant to flow back into the pockets of the relocation management company can instead be used to lower the cost of the home purchase. In practical terms, that money is now available as a legitimate discount to pay, for example, the closing costs of the home purchase.
Being relocated to Seattle should not be a passive experience. 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. Please, don’t hesitate to contact me if you have any questions.
I wrote and posted this first on July 23rd, 2008.
Some details needed to be updated, but the facts have remained the same.