Preserving the Employee Experience
‘Home is where the heart is,’ as they say. While a corporate relocation is ultimately about a career opportunity, if the family cannot find a place to live that suits them and a community they can thrive in, they will be unlikely to accept a move. Even worse, they might take it and then be miserable. This can lead to failed relocations, employee attrition, resentment towards their employer, family issues, or even divorce.
I have been hearing a lot of talk about the employee experience. Not all of it addresses the monumental experiential change that is about to happen to relocating buyers. We need heightened awareness around the employee experience before, during, and after the move. In the past, RMCs or employers would survey a transferee after the relocation. At that point, nothing could be done to save what may have been a bad experience. More entities have wised up and are doing what I like to call ‘temperature checks’ throughout the process. Just a quick check-in to see how the relocation journey is going.
So what?
Come mid-August, the relocating employee buyer experience will be pretty fragile unless preventative safeguards are implemented. And to be honest, I am worried about it. As I have heard quite frequently, corporations will wait to see how the commission issue shakes out before making policy changes. However, that plan has several fundamental flaws, and it all points back to the employee experience. Those companies had better look inward to see what damage might be done by not making decisions now. They are basically saying they are willing to forfeit the satisfaction of the relocating talent with upcoming moves to preserve their budget.
Before viewing properties after mid-August, a buyer must sign a buyer agency compensation agreement before getting in the car to tour a property with an agent. That agreement must reflect some sort of compensation and cannot be open-ended. Well, actually, it could say zero dollars, but it is doubtful any ethical and experienced agent will take on a client without some guaranteed compensation.
Let me ask my readers honestly: Would you work for free? That’s what I thought. Most of us aren’t in a position to be able to work in a full-time volunteer role.
Now, let’s delve into some real-life hypothetical situations and the possible results:
1. Situation: The corporation is unwilling to guarantee compensation, so the transferee has five choices.
Try to get an exception to their policy.
Represent themselves without an agent.
Enter into a dual agency situation by exploring whether the listing agent of a property they are interested in will represent them without pay (the agent will basically act as a transaction coordinator). Btw, dual agency is not even legal in nine states.
Pay the commission out of their pocket.
Refuse the transfer.
2. Situation: The corporation is unwilling to guarantee compensation, so it says 0 in the buyer’s agency compensation agreement.
The good companies and agents won’t take the referral.
Agents desperate for business may convince the buyer to put a commission amount in the agreement and falsely assure the buyer they can negotiate it from the seller if it isn’t offered.
The non-relocation agent may offer up some convoluted payment structure that may cost the transferee more than a percentage of the sales price.
3. Situation: The transferee does not have permission from their employer to offer commission in their buyer’s agency agreement. Their employer tells them to return to them if they find a listing they like that does not provide a commission.
The problem here is that the agent may not legally accept more than is listed in the agency agreement, so if it says zero, that is what it must be.
Transferees must research homes on their own and find out which homes offer a buyer’s agent commission before they engage an agent to show them properties. This requires a lot of legwork, and the properties will likely be gone by the time they do this.
4. Situation: The transferee signs a buyer’s agency agreement without corporate approval, ensuring X% compensation to the agent.
They find a house they love that does not offer buyer agent compensation, and the seller will not negotiate it or offer a concession. Buyers now must decide whether to pay it themselves or pass on the house.
The buyer moves forward with purchasing the property but does not have the funds to cover the commission. They will likely be sued or taken to mediation by the agent for their compensation.
5. Situation: The transferee signs a buyer’s agency agreement with a specified commission amount. They find a house that does offer a commission amount to the buyer’s agent, but it is less than what is outlined in the buyer’s agency agreement.
The buyer’s agent must try to negotiate the difference with the seller, or the transferee must pay the differential out of pocket or get it as a policy exception.
The seller may pass on the offer if other buyers come with compensation listed in the agreement that matches their offer and the transferee loses out.
6. Situation: The corporation is unwilling to guarantee compensation, so it says 0 in the buyer’s agency compensation agreement, and the transferee asks the agent to limit their search to listings that offer a commission to the buyer’s agent.
Even though the transferee has directed it, this could be perceived as steering since the agent is passing over homes without commission offered, which violates the NAR code of ethics and the requirements outlined in the settlement.
The above scenarios may lead to a poor employee experience that would include but not be limited to:
Employee stress and frustration
Policy exceptions that put budgets out of whack
Additional out-of-pocket expenses for the transferee
An elongated home search process
Legal liability for the transferee (and possibly the corporation and RMC) if they are unrepresented in a transaction
Employee resentment towards the company
Job offer rejections
Cancelled moves
Do you not think transferees will get wise to the challenges they will face as buyers and inquire why the company pays the transferring seller’s commission but not them as buyers also moving for the company? By not changing policy, corporations may inadvertently discriminate against first-time homebuyers, veterans, low-end buyers, and marginalized groups who cannot afford to pay their own commission and, therefore, lose out on that talent. Paying the buyer’s agent commission is the new cost of doing business to capture the best and most diverse talent to ensure growth and innovation for the organization.
I know relocation companies are revisiting various concepts regarding their fee structures, including per-file charges to corporations that existed years ago. They are doing this because they expect commission compression, which may dramatically affect the referral fees they collect. They should look at every option to preserve their revenue, but this should also include advocacy to protect the relocation department and its agents and how they are compensated.
Corporations and relocation management companies should be running scenarios based on historical data to project how much their budgets might be affected if they want to protect the employee experience. We must explore if this…then that but also ‘so what?’ So, what does waiting mean for the transferee and the organization? It’s the ‘so what’ that matters if you want to protect the employee experience. Let’s face it, they are the reason for everything we do.
For more information on the settlement, click here: NAR Settlement FAQs
