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Corporate Relocation Packages: The Hidden CostsIf you are being provided a relocation package by your current or future employer, congratulations. A relocation package can save you a lot of anxiety and be worth many thousands of dollars.Getting the maximum benefit from your relo package does require, however, that you maintain control over which real estate agents assist you. Deciding who will list your home for sale is important, but selecting the buyers' agent who will help you find and buy a new home is even more critical. The price of a poor home buying decision ... Using an inexperienced or otherwise poorly qualified agent can be quite costly. The absence of an effective negotiation strategy or not having the market information needed to make the strategy work can easily result in unsuspecting buyers paying one to two percent more to purchase a home than if their agent is properly prepared and motivated. Buying a home in an area with poor prospects for market average or better appreciation, over the period of only a few years, can have an even much greater cost. For example, let's say that based on the advice of your real estate agent you pay one percent over fair market value for a $500,000 home located in a neighborhood where homes generally appreciate at a rate one percent annually less than homes in more desirable neighborhoods. In two years, you will be about $15,000 worse off than if your agent had provided you better advice. In five years, it will have cost you more than $30,000. Additionally, you and your family may discover during this time that the neighborhood where you are living is, shall we say, not quite what you were hoping it would be. So how is the relocation company compensating you for taking such risks? Typically the reimbursement of closing costs of about 0.5 percent of your new mortgage is the only benefit you give up when you do not work with the the buyers agent the relocation company recommends. If your new mortgage finances 80 percent of the cost of a $500,000 home, the "benefit" you forego would be $2,000. Something else you should know ... The referral fees paid to the relocation companies by participating real estate agents typically amount to 30 to 35 percent of the agent's commission on the transaction. Many of these agents also pay a franchise fee, which usually amounts to an additional 20 percent of their commission, to the brokerage with which they are affiliated that allows them to participate in their brokers' relocation program as a designated "relocation specialist". These fees are in addition to both the 10 to 20 percent, and sometimes more, cut of their commissions they already pay the brokerage with which they work and all of the other out-of-pocket operating expenses they incur. The obvious questions, of course, are how motivated and how skilled is an agent who prices his or her services so cheaply likely to be. What I recommend ... Before meeting with the buyers' agent selected by the relocation company to assist you, you should ask the relocation company counselor the following questions ...
To prepare for your meeting with the buyers' agent assigned by the relocation, you may want to review the questions provided on the finding right buyers' agent page on this web site. In addition to the questions listed there, you may want to ask the agent ...
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If you are not convinced the buyers' agent you have been assigned has the expertise to help you find and purchase the home that best fits the needs of you and your family, call 972 355-3511 or send me an e-mail. You'll be glad you did. |
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