- Helping relocate corporate executives can be a lucrative new stream of business for real estate firms.
- To offer a comprehensive service, real estate brokerages should work with a specialist relocation company; some also form departments or entire companies to assist with relocating clients.
- The referral business from mobile corporate clients is full of potential.
Steven John, president and CEO of Berkshire Hathaway affiliate HomeServices Relocation, recently closed a client file where a corporate executive’s move involved two property transactions totaling $2.5 million.
This is an extreme example of an executive move, John takes pains to say — it’s above average — but it shows how lucrative it can be for the real estate industry when a company decides it wants to move an employee from point A to point B. These employees tend to be high quality, he said.
“Companies move their most valuable resources, and the result is they are higher-paid,” said the corporate mobility expert.
“The average selling price tends to be much higher than the market average, ” he added.
John supplies some interesting statistics from the U.S. Census Bureau: One in nine people changed residences between 2013 and 2014, and a new job or job transfer was the highest job-related reason for those moving at 9.7 percent.
The advantage of serving relocating corporate employees
Ask John what makes a relocating client particularly appealing to a real estate agent, and he has a list of attributes:
- They are ready to buy, usually within a certain window of time
- They are well-financed because their move usually represents a promotion
- They may well have their closing and moving costs taken care of by the company, so they feel well off.
Also, the chances are high they will move again in a few years — perhaps not to upgrade, but to relocate again — and they will need an agent to help.
John notices names that crop up time and time again as these executives scale the corporate ladder. Companies are often moving staff because they are opening up a new region, and “talent management mobility” is crucial.
HomeServices Relocation, a division of HomeServices of America, offers clients a range of relocation services, including brokerage, mortgage origination, title, insurance, closing and other home-purchase-related services.
When it comes to helping clients find a home, the HomeServices Relocation CEO works with relocation directors from his network of Berkshire Hathaway HomeServices offices — but he will work with any agent who brings him a lead, he stresses.
Where to find corporate relocation leads
Agents who are interested in finding leads in the relocation space should be alert for opportunities by networking at the local chamber of commerce or economic council — both good places to hear news of a company opening a new office in town.
Berkshire Hathaway HomeServices is filling the need of corporate relocation at an organized level. Certain offices will have a relocation director, a head of business development and a trained-and-certified “cadre of agents,” said John.
You don’t need to have a large brokerage to do things properly, he said. “Some of our best companies have small offices.”
What the agents say
For Nashville-based Tonya Hamilton, businessowner and vice president of relocation and business development at Berkshire Hathaway HomeServices Woodmont Realty, the corporate relocation area has become an increasingly important part of her business.
The sales volume currently coming from her company’s relocation and business development division is 30 percent of the company’s total, she said.
Hamilton works with HomeServices Relocation and with a number of other similar companies that are moving people to Nashville.
Her market is a hub for corporations. With its affordable standard of living, the city is known for its big healthcare market; Bridgestone is building a big headquarters downtown, while Vanderbuilt University is a large employer.
Nashville also has a thriving reputation for startups — as well as the music industry, of course.
“And there’s Nissan. We worked on that move,” added Hamilton.
The corporate relocation market leads to both buying and selling tied to the employee move, said the VP.
“We see repeat business — a new transfer within three years can sell again,” she said.
Building a client for life
“What we really find most, is that once our agents start working with the individual, they can build a client for life,” said Hamilton.
Client who transfer to work at Nissan, for example, will often get promoted within two years and will then want to buy a bigger house.
“If they sell one and purchase another, you’ve got three transactions that have been made from one person,” said Hamilton.
She said there’s also opportunity to make contact with relocation clients’ friends and family, as well as other staff they may know coming to live and work in Nashville.
“That’s why we want that opportunity to get our foot in the door.”
How the fees work between agent and relocation company
How do the fees work between her and relocation companies? Hamilton spells it out.
“If the relocation management company brings a real estate company a client to assist in their real estate needs, typically a referral fee is due,” she said.
“If the real estate company brings a client to the relocation management company, it really varies on what they are willing to offer based on the services they will be providing that client. There may be a referral fee, or there may be a discounted referral fee, or there may not be a referral fee at all.”
Hamilton said she gets approaches from relocation companies early on in the process — the corporate executive might be choosing between a position in Nashville and Chicago, so it’s Hamilton’s job is to “sell the city” for them. She said her corporate clients like this service: “It helps them recruit great talent.”
Like others at Berkshire Hathaway HomeServices, Hamilton has a training program for her relocation agents, and there are minimum requirements — the length of time they have been in the business, for instance.
Finding your relocation company partner
“We absolutely would look at working with any other broker, even those not in our network,” John said.
“We will both win a lot more business together than on our own.”
How can brokers and their agents play in the relocation space?
John’s advice: “Brokers should be partnering with a relocation company, such as ourselves. Then let’s go and pitch to companies together.”
“When brokers bring us in on deals, they will be a lot more successful,” he added.
“When partnering with a broker on a corporate client, we will enter into a special referral fee arrangement for the related population of moves. Brokers do not have to give up commission dollars to work with HomeServices Relocation on a corporate win.”
Creating your own relocation company
You could argue that it makes sense for the larger brokers to have their own relocation company — and some of the big ones do.
Realogy has Cartus, Leading Real Estate Companies of the World (LeadingRE) has RELO Direct, Weichert Realtors has Weichert Workforce Mobility and Windermere Real Estate has Windermere Relocation Resources.
“There are two ways to play in this space — you have a relocation department, which partners with relocation companies, or you do the full play and have a relocation company,” said John.
“The challenge in today’s environment for someone who wants to start up a relocation business from scratch is the demands for tech, security, privacy, compliance, customer service and overall capital requirements, are more daunting today than they would have been 10 or 15 years ago.”
Corporate transferees can be stronger buyers
Hamilton said she has found her corporate buyers can have an advantage over other buyers.
“Often a corporate client is perceived as a stronger buyer to the seller — they have pre-approval from a bank through the relocation company,” she explained. “The seller may be more likely to take their offer.”
And the transferee is keen to lay down roots as soon as they can, as opposed to the local buyer — who is in a home and in less of a hurry.
“They have to find housing; it’s not like they are going to wait a year,” said Hamilton.
Don’t make relocation all your business as an agent
Another relocation director, Kathy Connelly, senior vice president of corporate services at Berkshire Hathaway HomeServices Georgia Properties, warns that agents shouldn’t put all their eggs in one basket.
“Relocation work should not be all of your business — part of it needs to come from your sphere of influence,” she advised.
Connelly, who came from corporate relocation before joining the Berkshire Hathaway, educates her agents on what is important to companies when looking in a new town for a new headquarters.
Atlanta is a popular base for corporations — home to Coca-Cola, State Farm, Home Depot, Porsche and Mercedes-Benz North America.
In the Berkshire Hathaway Home Services Georgia region of 22 offices, up to 20 percent of agents are trained to do relocation — but not all do it.
“We allow people to opt in and opt out. We have a core group of probably 150 people,” she said.
“You have to be full-time in the business and have certain production levels in order to qualify.”
Only top agents need apply
“With their corporate executives a very important asset to the company, the client wants to make sure that we are putting forward our most professional, highest performing folks,” she said.
Her agents also need to be members of relevant industry associations, said Connelly.
In her training, agents learn how to do a lot of work before a relocating client arrives so they are equipped with some good buying information.
With Atlanta’s reputation for traffic, the company provides clients with a mobile app before they get there, which draws a map showing where they can live within a 45-minute commute, for instance, using real time data. It also lists the homes for sale in that commute area.
“This is useful when corporate employees might be looking at three locations to come to,” said Connelly. They are often choosing between Atlanta, Charlotte and Dallas, she said.
Connelly is clear about the true value of a corporate relocation client.
“It’s not just one transaction, it’s an opportunity to tap into the person’s sphere of influence. That’s where the real advantage is — all the other business that is likely to be referred.
“In real estate, that’s what we really work for. The real reward is these referrals — there’s nothing like the strength of a personal recommendation.”