I have worked with many relocation companies over the years.  Cendant, Paragon, Prudential, Sirva, etc.  Pretty much they’re all the same.  They all offer the same service to the transferring employee; making the phone calls, setting up interviews with potential moving companies, finding the employee a real estate broker to help sell and buy a home(s), etc.  So how do they make their money?  What keeps them in business?  The answers may surprise you.

Relo companies are paid in three ways (mostly).  First, they are contracted by the employer to provide services to the transferring employee and the employer agrees to pay the relo company a negotiated percentage of the purchase or the sale (or both) of the employee’s property.  Then, the relo company also requires that the buying and/or selling broker pay them a “referral fee” of up to 37.5% of the total commission earned by said broker.  So, let’s do some math.  Suppose your employer contracts Sirva to provide relo services for you.  Your employer agrees to pay them 1% of the sales price as a fee for these services.  You are the employee.  You are selling your 500K house in Colorado and moving to Dallas where you buy a similar 500K house.  How much does Sirva make?  About $20,000 (minimum).  Okay, so why should you care?

You, as the employee are often told that you “must” work with a certain broker (or one of three) you are assigned by the relo company in order to receive your relo benefits.  You have no choice or say in the matter.  What you’re being told is not actually the case.  True, you must work with the relo company.  But that’s where it can end.

What is often missed by the relo company and by your employer as well (or perhaps misunderstood) is that by this mandatory assigning of a broker, you are the one who actually can suffer.  Picture this.  If a broker knows he/she has to give up 37.5% of his/her commission, then further split that with the company they work for, do you think the top agents, the ones with the experience and knowledge you deserve, are excited to work with you?  Probably not.  So you get an agent assigned to you who is perhaps young, inexperienced, ineffectual, unable to find their own clients or a combination of some or all of these.  Regardless, who suffers?  You because this is the person you are “required” to work with.

The truth is that if your broker (or ANY broker from ANY brokerage of your choice) agrees to the “referral fee” the relo company wants, then you can normally choose to work with whomever you wish.  The point is this: which broker you choose to work with is YOUR decision, not anyone else’s.  Make sure you MAKE IT your decision by arming yourself with the facts.