WHAT DO YOU KNOW ABOUT YOUR EMPLOYER’S RELOCATION BENEFITS, POLICIES AND PRACTICES?

In an ideal world and work place you would expect that any manager or company relocation staff would do their best to look after your needs when you have the challenge of moving to a new community.

Career employees realize that the ideal world and work place does not exist. Most transferring employees will never know what the real motive is behind the selection of the agent who has been referred to assist them in making one of the major purchases of their lifetime. What you can be assured of is that there is an incentive to the referring party and this incentive is kept as a secret because it is unethical.

A common finding is that the relocation director or hiring manager has a spouse, other relative or friend that is a real estate agent and this agent is referred without the association made known to the transferring employee. As an example a director of relocation for a large national corporation has published articles about the merits of using a buyers agent and how much money the transferring employees using these agents have saved. However in his own city, he refers traditional agents to the transferring employee when he knows there is an exclusive buyer broker available who’s national franchise has saved buyers over $50,000,000. You should know that it is illegal for any agent or broker to pay anyone other than a licensed broker a fee for a referral. The practice goes on however, and it varies from the giving of gifts, golfing privileges, and free vacation trips and cash payments made “under the table.”

Exclusive buyer agents, who can provide the best service to transferring employees, often are told by the transferring employee that they can’t use their service because the company has a policy which requires the use of the referred agent. In most cases these policies don’t exist, the employee is told of the nonexisting policy to coerce them into using the referred agent. Often these agents that are referred will be representing the seller instead of the buyer and you most definitely should not work with an agent that is not representing your needs.

The following story is one of many undesirable situations that happen when working with an agent that represents the seller.

A family moving to a mid-western city came to the city, over a weekend, to search for homes with a buyer agent. The available resale homes did not offer what the buyers desired. The next week the buyers come back to the city to look for available lots and build their own home. While they only had a three-day agreement with the buyer agent, they felt it was not necessary to have the agent with them to look for a lot. After the third trip to a development, they decided to place a deposit on a lot to reserve it while trying to find a suitable builder. As they sat down to complete the paper work, the agent on duty told them that he represented the seller.

The buyers replied “That’s okay we plan to bring in our buyer agent for the development of the contract on the new home.”

Upon which the seller’s agent replied. “You can’t do that unless you are willing to pay your agent directly, as I have the procuring cause to collect all the commission.”

The buyers wanted the lot and felt they could protect themselves so they signed the agreement and made the deposit. The seller’s agent recommended a builder who misled them on the cost of building the type of home they wanted. The builder did not have a plan that was suitable so he had them meet with his architect to draw the plans for the home. The buyers paid the architect $3,200 for the plans and than learned that the builder could not build the home for the price he had estimated. The exclusive buyer agent was retained and provided assistance in interviewing eleven other builders. All the builders gave bids on the home that was far in excess of the estimate given by the first builder. The family eventually purchased a home that was under construction. The unethical agent and builder’s behavior cost them $3,200 for a plan that they could not build.

Many companies contract with a relocation firm to manage the selling of the transferring employee’s home. These relocation companies will also attempt to refer the transferring employee through their own system to collect additional revenue. In doing so the Relocation Company charges the agent who accepts the referral a commission fee which will range from 20 to 35%. If the transferring employee want’s to use an agent they have selected through their own search, they may be told that they can’t use the agent or that the agent will need to sign an agreement to pay the relocation company the 20 to 35% fee. To enforce this practice the Relocation Company will threaten to with hold all the relocation benefits the employee was to receive.

To overcome these problems, before accepting any new job or a transfer to a new community the employee should ascertain whether the company practices the following management principles.

1. The company and all employees associated with the relocation process shall not accept any payment or gift for referring agents to a transferring employee.

2. The employees shall have a right to select their own agent and receive all relocation benefits.

3. If a relocation company is contracted for any major company move, the employees shall have a right to a copy of all written policy regarding benefits and referrals. No policy shall be enforced unless it is in writing.

4. A hiring manager or a relocation manager or staff member shall not refer any of their family members as agents to transferring employees.

5. The relocation staff shall seek out exclusive buyer brokers and provide information on their services to all relocating employees.

Benefits of Using an Exclusive Buyer Broker

An exclusive buyer broker is a real estate broker that does not list property for sale and therefore has no responsibility to the seller and no conflicts of interest in any transaction. These brokers are members of their local multiple listing service and have all the MLS inventory of homes to show as other traditional brokers do.

Benefits:

1. The agent will work as a consultant to the buyer, rather than as a sales person who is trained to sell.

2. The agent will keep all financial information and motivation of the buyers confidential in order to negotiate the best possible deal for the buyers.

3. The agent’s broker will not allow any of his/her agents to submit competing offers on the same property.

4. The agent must communicate all information they know about the specific property the buyer is considering and any information about the seller's motivation to seller to the buyers.

5. The agent will provide a comparative market analysis for the property the buyer is considering.

6. The agent will draft the contract to protect the buyers.

7. Exclusive buyer agents provide 100% loyalty 100% of the time.

What to Expect When Working with a Buyer Agent Associated With a Traditional Brokerage

Most traditional brokerages will allow their agents to work as buyer agents. When these agents work as buyer agents there will be many occasions in which there is a conflict of interest. The first conflict will be the temptation to show the homes that the agent has listed. The next conflict comes when the agent shows property listed by other agents in his/her company. In both of these cases the agent’s agency status will change, depending on specific state law, to that as a dual agent, a designated agent or a transaction broker. In the status as a designated buyer agent, the agent is more responsible to you than to the seller. However, if you expected the full service of a buyer agent, you will be getting less protection because of the potential for conflict within the brokerage. When the agent or broker is classified as a transaction broker, the broker has no agency relationship or responsibility to you. Their major function is to attempt to be fair to both the seller and buyer. The fact of the matter is that if they were really attempting to be fair, they should have given an informative disclosure which would allow the buyer to really understand what is given up with their service when agency status changes.

The agency agreement which many of the brokers use allow the buyer agent to change to these various agency statuses. In addition their agreements allow the agents to submit competing offers on a specific property, thus driving up the price the buyer will eventually pay for the home. This practice is a conflict of buyer brokerage. Also the agreement will allow the agent to collect selling bonuses. Most exclusive buyer brokers have policies that require the agent to give the selling bonus to the buyer.

As a final warning, never look on your own and buy a home through the listing agent or any other agent that represents the seller. Secure a buyer agent. If you can’t find an exclusive buyer broker, demand that the buyer agency agreement allow you to terminate the agreement if any of the company’s listings are shown.

KNOW WHAT YOUR RIGHTS ARE! ACT ON THEM TO PROTECT YOURSELF!

About the Author, Donald J. Welsh, Ed.D.

Dr. Welsh, a training consultant, National Lecturer for Nova University, and a former college administrator, has devoted his career to the development of people in diverse stages of their lives. His leadership has been instrumental in the development of many nontraditional programs that have served unique community needs. He has always been motivated by the challenge of a change agent role.

In his early development as a craftsman in residential home building and a vocational woodworking instruction, Dr. Welsh was a student of design and technology changes in the housing industry. Later in a mid-career change, he expanded that interest into the real estate industry as a real estate salesman and investor. Dr. Welsh has been a licensed real estate salesman and broker since the late 70's. In 1991, after extensive research on changes in the industry, Dr. Welsh established a buyer agency real estate brokerage.