The Added Edge of Relo Companies

When Weikum first starts working with a relocation client, she completes a number of interrelated tasks. She researches market trends; she chats with the client about their residential interests; and she assembles a comparative market analysis that she sends the client’s way. But before she’s finished with her allotted tasks, she has another analysis to conduct – the broker’s market analysis, or BMA, which is the documentation that relocation companies require at the start of the buying and selling process.

In a nutshell, relo companies are the corporation’s eyes and ears during the buying and selling process – representatives that ensure that everything is in working order. So in Weikum’s case, relo companies will often contact her for updates on a client’s listing, and they will also verify that she is maintaining communication with said client, and providing them with adequate feedback after showings.

Relo companies handle all the logistical elements of the move, providing transferees with extensive packets of information that detail what moving company they will use, title company, even the closing attorney. So any of the tertiary details of a relocation that could fall on the agent shoulders – say, the delivery of furniture or the coordination of contractor schedules – are handled by the relocation company. Should a client’s move be time-sensitive, and should they be required to move before the technical closing date, the relocation company allows the client to move to their new residence. Then, whether it be 10 days or 60 days after the fact, the company oversees the final steps toward the closing date.

Relo companies have marked financial effects on relocation agents’ business that are both positive and, according to some, negative. On the positive side, relo companies are often responsible for many of the referrals that relocation agents receive, especially if the agent is part of a relocation team at a larger brokerage (for much more insight into that process works, read our sidebar, “8 Critical Details About Relocation Companies”). On the negative side, though, are referral fees, which involve relo companies taking a portion of the agents’ commission as compensation for their relocation services.

The amount of relocation fees differ by company, but based on the agents we’ve spoken with, they can range anywhere from 25 percent of the commission all the way up to 40 percent – and of course, the agents’ commissions are not increasing in the face of those fees, and with rare exceptions, neither are their splits with the brokerages (@properties, for instance, will re-negotiate its splits with an agent for relocation sales of $200,000 or less, according to Barbara K. Springer, the brokerage’s executive vice president of relocation and referral services).

Not all agents, though, see referral fees as something to complain about. For Laricy, referral fees are, in his words, a “drop in the bucket” compared to the overall business that relocation clients ultimately yield, and it’s all but absurd for agents to complain about them given the additional business that relocation generates.

“I’d rather take relocation business than take none at all. Too many people worry about the small dollar amounts,” he says. “A 25 percent referral fee is a drop in the bucket if that client refers me to five other people; and then, when I close with those five people, each one recommends me to another five people – that’s a lifetime of sales. So many people only look at the short gain. They only look at the money when it comes to real estate. They don’t look at the whole game in front of you.”

Cleal has an identical outlook on her business, as well.

“What I always say is, ‘This is business that I wouldn’t have had,’” Cleal says. “It’s rare that I don’t get at least one transaction from a previous transaction, so if I have to pay a referral fee, and I get one deal where I don’t have to pay a fee, it’s always worth it.”