I’ve been spending quite some time traveling recently. Between the growth of our current clients and the response we’ve been getting to The Low Stress Process, the time I’m spending out of the office with clients and potential clients has increased dramatically. I like traveling for two reasons. First, there is no other place where I can learn more than from actually sitting with companies and dealing with their relocation issues. Second, I get to catch up on some reading.

On a recent flight I re-read an article from USA Today, Housing slump makes it hard for workers to relocate. The article confirms what we started talking with clients about more than a year ago – that as the real estate market softens, employee relocation will grow more problematic. When employees start realizing that a relocation may involve a ‘loss’ of almost a year’s pay, the decision whether or not to relocate becomes even more complex.

The article tells the story of a family that accepted a relocation and found that the price they received for their house was $90,000 less than they paid for it. While that may be an extreme example (the family probably bought at the high and sold at a low), the issues are still clear.

As I read the article, it reminded me of a conversation I had with a member of the Realtors Association a while back. He told me some statistics that were very eye opening. Here’s what he told me:
• There are approximately one million real estate agents
• Only about 20% make a decent living as a full-time real estate agent
• Approximately 4% of agents account for approximately 80% of those real estate commissions

These statistics may be a bit dated, but I bet they’re still pretty accurate. What does this have to do with managing a relocation program? Quite a bit, actually.

A good agent ‘earns’ his/her commission in poor markets. They are the ones that get homes sold quickly and at a reasonable price. The selection of a real estate agent to manage a transferee’s home sale is critical to the overall experience. It may even impact whether the transferee stays with their company. In spite of this, many companies still leave the choice of a real estate agent to the transferee. This is a mistake because the transferee is often the one person who does not have the time or expertise to manage the selection effectively. Additionally, many relocation management companies do not have strict realtor selection criteria when managing home sales.

It is in the area of managing home sales that many relocation management companies are cutting prices in an effort to get a competitive advantage in the market. Unsuspecting companies are looking at this price cut as a good thing. Managing both sides of a real estate transaction (the buy and the sell) is a critical area. If it is managed properly relocation management companies can cut the total costs of the relocation and reduce the costs of lost transferee productivity during relocations as well. This is an area where companies need to look beyond the ‘price’ they are paying for a service, and ensure that their costs are controlled.

The real estate market is most likely going to be quite bumpy for several more years (economists are predicting a bottoming no earlier than mid-2008). As companies look to manage and deploy their talent, it is critical that they ask tough questions about how their third-party relocation company plans to manage the real estate portion of this complex process in a tough housing market.