Financial Realities with Corporate Relocations

Jonathan Dalton, Phoenix Real Estate AgentWhen an employer offers a relocation package where does the money come from? There are multiple sources but it may surprise you to learn that one of those sources is the real estate agent assisting you with your sale or purchase.

Most relocation companies will set up clients with a specific company (or allow the client to choose from between two) in the area in which or from which they’re moving. There are some criteria in place for the agents utilized; for example, only agents who have completed a certain number of transactions and additional training are eligible to work with relocation buyers or sellers.

Nearly as important, however, is the necessity of the agent being willing to hand over a chunk of their eventual commission (generally one-third, sometimes more and sometimes left) to the relocation company to offset a small portion of the moving costs.

There are some exceptions, however, and they depend largely on the agent with which you are working. Some buyers, for example, elect to begin their home search in advance of the formal relocation process and select their agent before they undergo relo orientation.

This doesn’t necessarily stop the relocation companies from attempting to solicit a referral fee from the agent. Two years ago I was in just such a situation. After nearly a month of working with a couple from New York the relocation company came calling for a referral.

Truthfully I would have worked with this couple even if I had known up front that I would be paying a referral fee. But there was no way I was going to pay an after-the-fact referral to an entity that didn’t refer the client. So I said no. As per the norm, the relo company said the clients’ benefits would be in jeopardy. They weren’t.

Before your agent runs off willy-nilly, keep in mind that this was a specific situation in which no referral fee was due and none needed to be paid. Most are not so cut and dried.

In fact, one of the first signs that you’re working with an agent experienced with corporate relocations is when they ask if there’s a relocation company involved. Some will walk away at that point, as one agent did for a listing I eventually took in Goodyear. Others like me will not. The key is for everyone to know up front what’s involved.

For the last few years I’ve enjoyed working with corporate relocation clients, whether they come to me directly or through a referral network. One other thing for buyers and sellers to keep in mind when working with a relocation agent is their agent stands to make very little on the transaction, depending on broker splits.

Sometimes it’s two-thirds of the offered co-operative compensation. Other times it is less than one third of the offered compensation – an amount that seems large on the surface but quickly is reduced by operating expenses and taxes.

The point is these typically are dedicated agents willing to work for less than they usually would to help clients either get settled or move on to a new locale. That’s something you ought to know.

You also ought to know that you’re not necessarily locked into the agent you’re assigned, at least not until you’ve started working with them. If you have another agent who is willing to pay the referral fee, in 99 percent of cases you have the freedom to work for them on either a purchase or a sale.

There are some other things to consider from an agent’s standpoint. I’ll get to those down the line over on Agent Genius.

[tags]Phoenix real estate, corporate relocation[/tags]

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at