A word to the wise real estate agent who has been relying upon relocation packages as a “spoke in their lead generation wheel”…it’s time to replace that spoke. Why? There are fewer employers offering mortgage assistance as part of their relocation packages today than there were last year. In fact, according to the Society of Human Resources Management, a human resources trade association in Alexandria, VA, only 4% of employers are offering mortgage assistance as part of their relocation packages as of January, 2016. Only 3% of employers offer down payment assistance and only 8% offer reimbursement of fees paid to real estate agents.
Obviously, relocation packages vary based upon several variables…size of the company, level of position, seniority of employee, strong demand for a specific job/field but “…because mortgage rates are so relatively low, companies are not including a mortgage interest differential allowance to subsidize the difference in interest rates between the old and new locations right now but…companies will cover the normal and customary closing costs in the new location…” said Crystal Abbey, Director of Strategic Business Solutions for the relocation management company, Cartus.
Atlas Van Lines reports that in 2017, one third of the large companies (defined by +5,000 employees) reimburse employees for losses incurred when they sell their current home but only 10% of small companies (defined by -500 employees) reimburse their employees at all. Tom Dempsey, Vice resident of Relocation Lending at Quicken Loans in Detroit, says that Quicken is now paying a lump sum to employees who relocate. “This allows the team member the opportunity to allocate those funds to what will be most efficient for them.”
On the flip side, when working with a seller that will be relocating out, offer them these tips regarding relocation packages…
- Employees ought to negotiate their packages. Even if the company doesn’t offer benefits, the mortgage assistance benefit in particular, ask for that assistance. Negotiate for a better deal. If/when you have that deal, get it in writing.
- Employees who are offered relocation packages that include a lump sum payment ought to consult with a tax adviser to determine whether or not that lump sum payment is taxable. If it is, negotiate with the employer to “gross up” that lump sum to ensure that you get the full amount of that benefit. Also check with your tax advisor to determine whether or not the costs of moving your household goods and personal effects plus traveling to the new home may be tax deductible.
- Employers need to regularly evaluate their relocation benefits to ensure relevancy and competitiveness.
- Employers can tailor relocation benefits to a specific job position. “If,” says Cartus’s Abbey,” the company has executives or people with specific expertise who are constantly moving, the company needs to gear their policies towards those employees.”
Real estate agents who have been relying upon leads from relocation packages, pay attention. When benefits are slim, misinformed buyers will look for a way to save money on their expensive move and purchasing FBSO’s without representation is one of those ways. It’s time to be proactive…create leads from new avenues because relocation packages are slimming down to the point of becoming almost non-existent.