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CORPORATE RELOCATION ON THE RISE
by Bob Brooke

An estimated 44 million people moved last year. About 42 percent of the moves were job related. Corporate downsizings and consolidations are uprooting more families each year as employees fear turning down jobs in a weak economy.

Relocation has become the watchword in American business. Weichert Realtors, a nationwide company based in Morris Plains, New Jersey, with sales volume topping $10.5 billion and 225 offices staffed by over 8,000 personnel, and its subsidiary Weichert Relocation Company, Inc. (WRCI) has become a formidable force in the relocation marketplace. As an innovator in the 20-year-old relocation industry, it has designed, developed, and successfully delivered a full range of services to its clients, including a long list of Fortune 500 companies.

Relocation agents have to be sensitive to the needs and concerns of transferring families, but at the same time be responsive to the current economic market and industry trends.

Relocation services assist businesses in transferring their employees from one location to another. They coordinate everything about the move or give the client and transferee options from which to chose. The important point is that the transferee always has options or options with assistance.

Though there has been a nationwide drop in domestic transfers by large corporations, there has been an increase in relocations by smaller companies. Corporations that used to move 1,000 people a year now move only about 200, but the number of companies that move employees has increased tenfold. There's a growth and vitality in younger companies, especially pharmaceuticals.

A move takes approximately four months if it’s a homeowner who’s buying a resale. Buying a home under construction takes a bit longer.

Because family and financial issues have made the relocation process more complex over the last ten years, many companies who offered considerable relocation services inhouse are now outsourcing, farming out to a relocation company, such as WRC, some or all of the required services, such as selling of the home, moving possessions, and pre-marketing and home researching.

Moves are critical and must be successful. Companies have to get their people on board and going immediately.

There are two parts to the relocation process: departure services and destination services. While both are equally important, the departure side is the more costly of the two.

Relocation, a process that takes up to four months and sometimes longer, begins with the departure service. WRCI starts with its Home Marketing Program, designed to sell the transferee's house so it doesn't have to be sold by the corporation. Up to 50 percent of the cost of a relocation–$47,000 per relocation being the national average--comes from selling the house. This amount can be cut in half if the house is sold rather than if the corporation takes it into inventory.

Corporations used to buy back houses. This has been cut back today using the pre-purchase appraisal, though some companies are still doing it. Companies tightly manage this process, using every available marketing technique to intensely market with the average selling time being about 120 days. Agents also show transferees a video on pricing a house properly so that the house has a better chance on the market.

The typical departure service also covers the moving of possessions and a temporary living allowance. Many businesses have contracts with major moving companies, but the transferee is free to use the one Weichert offers.

WRCI's Home Marketing Program has three options: (1)To be eligible for the Home Purchase Program, a transferee who owns his or her home must participate in the Home Marketing Program if the company has contracted with the relocation service; (2) the transferee is given the option of using the Home Marketing Program and, if he does, is given a bonus; (3) the company can suggest that the transferee learn about the Home Marketing Program, with the corporation buying the home directly or through a third party.

Transferees are given options, but they must use the Home Marketing Program if the company mandates it, since it's tied to benefits offered by the corporation. In the pre-marketing program, we suggest that the transferee use two brokers, each doing their own market analysis. It's like getting a second opinion from a doctor. But once the home becomes part of the Home Purchase Program, the relocation company sets everything.

The next stage in the relocation process is the destination service. Weichert uses a Benchmark Program, designed to make sure that there's some value in the home to be purchased, thus making it easier to obtain a mortgage. This program gives the transferee all the questions to ask, such as: Is there an electromagnetic field, a dump, or railroad tracks nearby? Is the transferee paying more for the house than is needed in that market? Are there good schools nearby? Using these and other questions, transferees can make educated decisions for themselves.

In our destination service, we line up and evaluate agents, thus easing the burden on corporations and their employees. We are unique in the relocation industry in our selection of completely independent real estate brokerage services, utilizing only market-dominant brokers nationwide. We also help the family find the community best suited to their needs.

Tax laws due to change in 1994, thus raising the cost for relocation.

Companies with an expertise in consumer products or other areas have become increasingly frustrated with attempting to administer and track employees relocation expense reimbursements for the IRS. Last year, 77.6 percent of all transferees were fully reimbursed for their relocation expenses, according to the American Movers Conference. Over 51 percent needed to make at least two expense-paid trips to find new housing. The problem is further complicated by recent announcements by the IRS that these payments must be reported to the IRS when paid with the required tax withholding. A corporation which waits until the end of the year to do this isn't in compliance with IRS regulations.

While the departure and destination services help transferees, WRCI's Financial Administration Program helps companies, themselves. The corporation need only to provide its policy statement and a written authorization for each employee entering the program. Expense reports are routed directly to WRCI and processed for payment. Any gross-uptax on tax) and tax withholding is calculated and reported to the corporation's payroll department. Each month the corporation receives an itemized report.

Relocation has become a constant in business today. At the same time, it's also become more complex. The stress and problems associated with moving are compounded by intricate tax laws and a drastic change in the home marketplace throughout the country. Therefore, it's imperative that businesses today think seriously about engaging relocation companies such as WRCI, whether for all or part of their services

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