Relocation polices shift to reflect tough sales climate
Charlotte Business Journal - by Julie Bird Contributing writer
Corporate policies for relocating employees are becoming more generous and restrictive at the same time.
Transferring employees are having difficulty selling their homes, so some companies have begun extending the term of temporary housing benefits and offering more marketing assistance.
Washington-based Worldwide ERC, formerly the Employee Relocation Council, says many businesses also are taking a harder line in handling home buyouts, in which they agree to buy a transferring employee’s unsold home.
In a recent survey of corporate-relocation specialists, Worldwide ERC found these policy changes for home buyouts:
•38% of responding companies started requiring employees to list their homes within a certain range of market value as determined by an appraisal.
•21% increased the use of appraisals in their home-buyout programs.
•18% started requiring employees to list with company-approved real estate agents.
•18% added or enhanced incentives for employees who find buyers for their homes.
Overall, employees covered by a relocation-assistance policy are more likely to require increased assistance than in the past, according to Worldwide ERC.
Nancy Currie, senior vice president for relocation operations at Prudential Carolinas Realty, has seen some companies giving transferees more time to report to new jobs in Charlotte. They also have been asking agents to help employees find six-month rentals, longer than in the past, and are providing additional rental assistance.
“We certainly see that corporations may be more willing to offer the (relocation) benefit,” including providing marketing services, she adds. “It’s really a team effort, more so today than ever before, to get a transferee from Point A to Point B.”
Wachovia Corp. has tweaked several elements of its home-buyout program in response to market conditions.
Linda Hunt, the bank’s corporate relocation director, says Wachovia is unusual because all of its relocation specialists are experienced and licensed real estate brokers. Additionally, the bank partners only with local real estate companies that have complete relocation services headed by a full-time director.
Wachovia wants sales handled by such professionals, especially in cases where the bank commits to purchase a home if a buyer isn’t found.
When the housing market started slowing in late 2006, Wachovia found itself buying “more homes than had historically been necessary,” Hunt says. She believes sales were difficult because the appraisals were too high — home values were falling more quickly than even trained appraisers initially realized.
The numbers stabilized after the appraisals and other aspects of the buyout programs were adjusted, Hunt says. The bank also has been “more firm” in requiring sellers to list with agents selected by a local real estate firm’s relocation director.
Wachovia requires the broker to conduct a price analysis using recent comparable sales. Because the first 30 days of a listing are the most critical in a sale, Hunt’s team gets involved if the owner wants a higher asking price than is warranted by the analysis, she says. The bank doesn’t dictate the listing price but wants to increase the likelihood of a quick sale.
The bank also increased the bonuses it pays employees who sell their homes quickly. Those bonuses are tripled if a buyer is found within 30 days and doubled if the sale occurs in 60 days.
In addition, Wachovia started using home-staging services and paying storage fees to reduce clutter.
Homes must be on the market for at least 120 days before the bank will purchase them, and they must be listed at the buyout price for at least 30 days. The buyout price is determined by averaging two local, independent appraisals.
“We want it to be very neutral,” Hunt says. “Wachovia doesn’t want to pay too much for a house, but we don’t want to pay too little and not be fair to the employee.”
Other employers are taking similar steps. Goodrich Corp. is extending the time allowed for temporary housing and storage of household items, says a spokeswoman.
Lowe’s Cos. Inc. expanded its relocation benefits in 2007 to cover more workers, among other enhancements consistent with industry standards, a spokeswoman says.
Julie Bird is a Belmont-based free-lance writer who can be reached at hedline@carolina.rr.com.
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