Buyer’s Agents Are Key for Successful Relocations

WERC and RDC - May 13 2024
Published in: Mobility
| Updated May 14 2024
With the National Association of Realtors proposed settlement and the changes to how buyer’s agents can be compensated, understanding the role and value that buyer agents provide in mobility programs is more critical than ever.  

As we move through the second quarter of 2024, it’s safe to say this year has been anything but predictable. The National Association of Realtors (NAR) lawsuit and proposed settlement has consumed recent headlines. Housing affordability, rising costs, lack of inventory, continued higher interest rates, and supply chain issues, heightened by global tensions and natural disasters, all create uncertainty in the mobility industry. It is becoming increasingly challenging and more expensive to relocate employees. The goal of attracting and retaining skilled talent conflicts with the corporate clients’ needs to minimize costs. It has truly become the Year of the Conundrum.

Corporate mobility managers and relocation management companies (RMCs) servicing corporate clients are looking for ways to manage costs while preserving value and service to the relocating employee. With the anticipated NAR settlement approval and the changes to how buyer’s agents can be compensated, the impact on mobility is imminent and cannot be ignored. Managing buyer brokerage engagement and compensation will need to be established upfront. 

Reimbursing buyer broker compensation has not been a typical benefit in relocation programs. If a corporation elects to support a relocating employee by reimbursing buyer broker compensation, that benefit would be taxable, which would further increase costs. Before making any decisions, it would be prudent to understand the impact a relocation-trained buyer’s agent has on the relocating employee and their family’s experience.
WERC gathered six industry leaders comprised of members of WERC’s buyer broker compensation ad hoc group and the Relocation Directors Council (RDC) and asked their thoughts on the most significant advantages to using a relocation-trained buyer’s agent for their relocating employees. 

Relocation directors manage the relocation department at the brokerage and liaise between the RMC, the buyer’s agent, and other stakeholders. Relocation directors are gatekeepers who manage the process and start preparation well before receiving the referral for a relocating employee by educating and training qualified buyer’s agents on best practices, industry standards, service expectations, and policy. When given the referral opportunity, they select the buyer’s agent who will best meet the needs of that relocating employee and their family.

The role of a buyer’s agent in a relocation transaction extends far beyond the home purchase. Often, it is the buyer’s agent who has the most face-to-face contact
with the relocating employee and their family, representing both the corporate client and the RMC. By providing guidance, advocacy, and negotiation expertise, buyer’s agents are one of the most important resources for a buyer in the relocation process.  This level of support is particularly vital for buyers who are relocating to unfamiliar areas, as it helps alleviate the stress and uncertainty associated with such a significant life transition. 

Here are a few of the biggest reasons why it is important for a relocating employee to utilize a buyer’s agent:

First Connection to the New Location

A buyer’s agent not only assists with identifying suitable properties and negotiating favorable terms but also facilitates a deeper connection to the community. By leveraging their local expertise and network, they can provide valuable insights into different neighborhoods, schools, amenities, personal services, and cultural aspects of the area. By providing crucial insights tailored to the buyer’s specific preferences and lifestyle needs, the relocating employee and their family can fully immerse themselves in their new surroundings, fostering a sense of belonging and integration from the outset.

Local Expertise

A buyer’s agent brings invaluable local expertise to the table, serving as a guide for out-of-town buyers navigating unfamiliar real estate markets. They can prepare a pre-purchase comparative market analysis (CMA) to ensure the buyer is offering a reasonable purchase price for the property, minimizing or avoiding the risk of loss on sale when the home is sold in the future.  

The buyer’s agent has insight as to what it takes to get an offer accepted in the local market. Especially in this time of low inventory and multiple offers, it is essential to have that local connection that understands what offer terms are appealing to local sellers and, more importantly, what causes them to reject an offer. While offer price is important, there is more to an offer than just the price. There is earnest money, contract contingencies, seller incentives or concessions, quality of the pre-approval letter from the buyer’s lender, close date, and date of possession, just to name a few. These can vary greatly between departure and destination market locations. Therefore, what has traditionally worked for a buyer may not be an advantage in their new location.

Time Constraints

The relocating employee is often starting a new position or accepting increased responsibilities with the move. The time commitment and stress of moving from the familiar to the unfamiliar can be alleviated by working with a relocation-trained buyer’s agent. 
Buyers generally have tight deadlines with limited time to find a home. A buyer’s agent can expedite the home-buying process by identifying suitable properties (including off-market properties), scheduling appointments, and creating a timeline that ensures the best use of their client’s home-finding visit. Once an offer is accepted, the buyer’s agent will manage the timeline for deposits, inspections, negotiating repairs, mortgage application of the buyer, walkthroughs prior to closing, as well as scheduling the closing appointment.

Representation and Protection

A buyer’s agent works in the buyer’s best interest, providing fiduciary representation throughout the home-buying process. They offer advice, guidance, and handle paperwork and contracts. They have access to state standardized forms for buyer brokerage, purchase contract, other necessary state forms, amendments, and termination documents. The buyer’s agent helps protect the buyer’s rights and ensures they have a dedicated advocate looking out for their interests, especially when they are unfamiliar with local customs and regulations. Not having a skilled buyer’s agent negotiating against a listing agent skilled at negotiating will likely not generate a desired outcome or protection for the buyer.

Real estate agents carry errors and omissions insurance, which offers additional protection. This protection is only available when the agent has an agency relationship with a buyer. The buyer’s agent works to safeguard the client’s earnest money and provides guidelines for protection against cyber fraud by keeping them informed of the latest scams. Finally, a relocation-trained agent helps a buyer select a home with resale in mind to best prepare for a potential future relocation while minimizing risk of loss on sale and policy noncompliance.

Advisor/Advocate

As the buyer’s representative, the buyer’s agent acts as their advocate. This means prioritizing the buyer’s needs and preferences, advocating for their rights throughout the transaction, and ensuring that their voice is heard in negotiations with sellers and other parties involved. As an adviser, the agent can explain and prepare the contract documents so the buyer knows what they are agreeing to and signing. They can explain the homeowner’s disclosures and the inspection findings to ensure the buyer understands the details of the home. This will help the buyer make an informed decision whether to continue with the purchase or not. The buyer’s agent can also explain the customary closing costs and expenses for home purchase and review the closing statement prior to closing.

The buyer’s agent is committed to protecting the buyer’s interests and ensuring they receive fair treatment and favorable terms in the home purchase. Whether it is negotiating the purchase price, contingencies, or repairs, the buyer’s agent is there to advocate for the buyer and ensure they achieve their goals with minimal stress and hassle. When policy allows, they can make recommendations for any pre- or post-closing needs such as lenders, closing attorneys, insurance, home warranties, inspectors, roofers, plumbers, surveyors, engineers, termite companies, contractors, and home services including lawn care, snow, or trash removal services.

Beyond the relocating employee’s experience, there are tangible benefits to investing in buyer compensation. Efficient home-finding minimizes the days necessary to secure their new home and can minimize the need for temporary housing and short-term storage, thus maintaining the employee’s job productivity. 

The question remains: Do corporate clients see the value of supporting the relocating employee by reimbursing buyer’s agents? We invite you to read the comments directly from relocating employees at this link and decide for yourselves.