Referral fee update

By
Real Estate Agent with RE/MAX Shoreline New Hampshire & Maine

Apparently our recent blogging about referral fees and relocation companies have sparked some interest in the press; Inman News is doing a 3 part feature titled "Inside look at change in relocation industry", Unfortunately it's tucked away behind the members only screen so I believe you have to be a subscriber to read it.

Since I wrote and was interviewed for this part I feel fairly secure in quoting myself from the article. ;-)

"After-the-fact fees

Rising relocation fees are not the only concern to real estate agents and brokers -- there is also an ongoing problem with so-called "after-the-fact" requests for relocation-related fees.

"One of my huge gripes, (shared by) lots of my fellow Realtors as well, is a relocation company that sort of 'parachutes' into a transaction after you already have a buyer or seller under contract, often just before (and sometimes even after) a closing and demands a referral fee for the privilege of working with 'their' client," said Jim Lee, a real estate agent for Realty Executives Associates in Knoxville, Tenn."

HEY! HEY! HO! HO! Relo Co.s have got to go! made it into the article and may have even been the impetus that got the whole series started.

I feel very strongly that this following statement is a direct result of several of our state REALTOR® organizations attacking this problem legislatively and sponsoring "after the fact referral fee" laws prohibiting this practice.

"Cris Collie, executive vice president at Worldwide ERC, said, "We've been very successful in minimizing that (after-the-fact referral fee) practice. We have pledges from all of the relocation companies that are a part of the organization that that the practice won't be followed. A contract is a contract.""

Tennessee was one of the first to enact this type of legislation and still has one of the strongest laws prohibiting the practice.

part 2 of the article talks about the softening real estate markets in some areas and the negative impact they are having on some corporate relocations.

And part 3 is an inside look at changes within the relocation industry.

Looks like it's still pretty expensive to move an employee from Point A to point B: "The average cost to move an employee is $70,000, he noted, which "is still a lot less expensive than it is to hire and train someone.""

And a moving company corporate migration survey; interesting stuff here.

 

Posted by

Jim Lee , REALTOR®, Certified Residential Specialist (CRS)

http://JimLee.com  RE/MAX Shoreline

100 Market St., Suite #200, , Portsmouth, NH 03801 Phone: (603) 431-1111 x3801

Visit New Hampshire Maine Real Estate.com to search homes, get Seacoast area information, and find out how great living on the New Hampshire and southern Maine Seacoast really is.

 

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Rainmaker
1,142,325
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time
Jim, Congrats on the Inman exposure. I've never been approached by a relo company but can imagine I wouldn't take it to well being asked for a referal after I had already negotiated a deal. But I guess if it was going to cost my customer $$$ if I didn't agree I would have to do so.
Feb 08, 2007 10:14 AM #1
Rainmaker
613,238
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS
The more that the transferrees and their companies understand about the relo companies, the more (hopefully) the companies will demand the best agents - who are often the ones who turn down "opportunities" to pay a 35% or 40% referral fee.
Feb 08, 2007 02:55 PM #2
Rainer
188,704
Laurie Manny
Long Beach CA Real Estate - Long Beach, CA

Jim,

Congratulations, what a wonderful opportunity.

I have a bad attitude towards relocation companies.

I recently dumped an out of state relo buyer.  After working with her for months and her assurance that the company relocating them was not going to be involved in her choice of an agent or a fee a 25% referral fee agreement showed up on my fax from a local agent in her area, unannounced.  No response to phone calls.  Several days later I received an email stating that the relo company wanted 45%.  So lets see 25% to the agent and 45% to the relo company, that leaves me with 30%.  I wished her the best of luck and ended up with the weekend I had reserved for her off.  First weekend I had off in months. It was divine. 

Feb 08, 2007 06:08 PM #3
Rainer
71,971
Elaine Reese, REALTOR® in central Ohio
Real Living HER, Powell Ohio - Powell, OH

A couple weeks ago I decided to drop out of a "select list of agents" to work for a particular relo company. In order to stay on their "approved list", I had to watch a 220 page PowerPoint program they had sent to me via email. Supposedly the topic was understanding the current buyer's market and how it affects accurately pricing the property. DUH!!! This particular company caps the commission and doesn't allow dual agency.

So I decided that 38% was too much to pay in this buyer's market where homes are averaging 120-130 DOM. I don't need or want that kind of business - not now. It's just not worth the hassle they put you through! As I told another agent, 'no money' is better than 'losing money'.

Feb 10, 2007 12:42 PM #4
Rainer
71,971
Elaine Reese, REALTOR® in central Ohio
Real Living HER, Powell Ohio - Powell, OH
Oops I forgot to add that it will be interesting to see how this issue plays out this year. Glad they picked you to interview, because your 'Ho-Ho' post was very good!
Feb 10, 2007 12:44 PM #5
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Jim Lee

Portsmouth NH Realtor, Portsmouth, NH
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