Employee Mobility: SO IF… Series – Part 4
So, If we wanted to better promote and sell relocation properties, could recognizing the efforts of real estate brokers through better rewards help?
Real estate agents are generally responsible for all expenses on the sale of the properties they have listed, including advertising etc., and are only ‘paid’ if and when a transaction is completed. Although they may seem high, commissions are split between the brokers involved in the transaction, and cover office and operating costs, advertising, professional fees, transportation, as well as other expenses incurred by the agents in the marketing of each property.
In the real estate world, it is customary for brokers/agents to refer clients to each other and to be remunerated for these ‘referrals’ through referral fees. In the relocation business, compensation for supplier referrals is also commonplace. When paid to relocation service providers, these referral fees have many names, including ‘network fees’, ‘management credits’ etc.
Rising network/referral fees (52% over the past 15 years*) coupled with stringent requirements for advertising, open houses, and reporting have made relocation property files undesirable for top agents. They feel that, while the required commitments remain the same, the possible return has been greatly reduced by lower commission rates and higher network fees. In addition, if properties are not priced to sell, an agent can expend much effort and money only to eventually lose the listing, any possible revenue, and incur a loss.
This loss of interest in relocation files by real estate professionals can have a negative impact on the effectiveness and cost efficiency of the relocation program (e.g. slower sales, higher inventory and carrying costs, etc.)
WHAT IF …
1. We change the way we view real estate brokers/agents and treat them as respected partners through a 1% increase in commission for a sale within a prescribed period rather than by squeezing any possible reward to a minimum?
2. We acknowledge that the brunt of the effort (and legal responsibility) on home marketing and property sale is borne by the real estate professionals, and consider managing or capping the referral fees that service providers collect?
By offering a more rewarding proposition to real estate professionals, corporations would convey that they understand the time and financial investments taken on by brokers/agents. It is very possible that these changes would motivate real estate brokers/agents to sell your properties faster and at the same or better prices. After all, the prospect of a higher reward does tend to keep our eye on the ball. The increased commitment on the part of the brokers/agents would, in turn, reduce the need for companies to take properties into inventory, and incur legal fees, hefty transfer taxes and monthly carrying costs.
SO, is a new approach worth exploring?
* Referral fees have increased from 25% of the listing portion of commission to 38% in many cases.