If this…then that. The scenarios corporations need to explore to protect the employee relocation experience.
Corporate talent mobility professionals should be having serious conversations with their relocation management companies and real estate service partners. They must consider changing policies to ensure a good employee experience and a successful relocation, which will help them achieve their hiring and business goals. The time to act is now.
If there is a transferring seller:
If we put forth a commission for the listing that also pays the buyer’s agent as we have always done, and the buyer cannot pay their own commission, then we will have the same payout structure as we always have had to sell a property.
If we put forth a commission for the listing and buyer’s agent as we have always done, and the buyer ends up paying their own commission, then we don’t have to pay the buy side of the commission, saving us money on that transaction.
If we don’t attach a buy-side commission to our listings, then buyers might pass over our transferee’s listing in favor of a listing with a buyer's agent commission. Therefore, the property may take longer to sell and appeal to a smaller buyer pool.
If there is a transferring buyer:
If we have a transferring buyer, then as of August, they will need to sign a buyer’s representation agreement before looking at homes with the assistance of a real estate agent. No exceptions. There must be compensation outlined in the agreement, and the buyer’s agent may not receive more compensation than what is outlined in the agreement. Many states already have this rule in place and many brokers are already moving to this practice prior to the deadline.
If we offer to pay our transferring buyer’s commission, then we will not prohibit them from seeking out every property of interest to them.
If we pay our transferring buyer’s commission, then we will need to gross up that money to keep them whole unless changes are made around reimbursable income regarding commission or the process changes.
If we don’t pay our transferee’s commission on the buy side, then they will either have to come out of pocket or only seek out properties with a commission attached for their agent’s compensation.
If we don’t pay our transferee’s commission on the buy side, they may pass on the move because they are unsure how they will pay their agent.
If we don’t pay our transferee’s commission on the buy side, then they will need to request an exception to the policy if they find a home without a commission guarantee, causing an uptick in exceptions, out-of-control budgets, and unhappy transferees.
If we don’t pay our transferee’s buying side commission, then the transferee may need to represent themselves or use the listing agent on the property of interest in a dual-agency situation, creating cause for liability issues.
If we don’t pay our transferee’s buying side commission, then there will be no referral fee for the broker to pay to the relocation management company to offset the cost of their services to the corporation.
If there is a transferee who needs to sell in one location and buy in another:
If we pay a full commission to cover the listing and buyer’s agent on the sale of their transferee’s property and they are a buyer in their new location, then the corporation may need to pay three commissions. But we may not need to. We may only end up paying the listing agent’s commission on the sale of the property and the buyer’s agent's commission on the new property. Or we may end up paying the listing and buyer’s agent commission on the sale of the property and nothing on the buying side of the property in the new location since it may be covered by the listing side. Commissions may compress, so the differential may not be that great. It may be the new cost of getting the talent we want and need.
If our transferees elect to work with an agent outside of the relocation-trained preferred broker network to save money, then they may end up with a subpar agent who is inexperienced or untrained in the nuances of the settlement and how it might affect a buyer and seller.
If we wait to adjust our policy:
If we wait to see the local consumer trend for who pays what commissions in each market, then we will have to review each situation on a case-by-case basis, slowing down the transaction process and possibly losing the home for the transferee.
If we don’t run these scenarios and have a plan for them by August, then we can expect our transferring buyers to question why there is no policy in place to assist them with their commission for a corporate-sponsored move like there is for sellers.
Finally:
If all stakeholders in talent mobility work together, then we can use our collective brainpower to explore all options and opportunities while ensuring budgets are controlled, everyone is paid fairly, and transferees are happy. We need to face the cost of talent mobility may be going up.
If the courts approve the proposed NAR settlement, then the buyer experience is about to change. Let me know how I can help. To read more about the settlement, click here: nar-settlement-faq-2024-04-04.pdf
“We, as an industry, and perhaps as a nation, need to figure out how to provide financial stability to those who help families with the biggest purchase of their lives. Most agents go into the business to help people. The great ones stay in it because they love the feeling of handing first-time homebuyers keys to their own home. For those agents, it’s not about the money; it’s about helping people achieve their dreams.” ~ Rob Hahn, aka Notorious R.O.B., real estate consultant.
