Throughout the past 10 years, approximately 15% of my incoming referral business has been generated from 3rd party company referrals. When looking at my 2010 business plan I questioned that business. Is the time and money spent to manage this business worth it? Should those efforts be redirected to securing other more profitable business?

Real estate brokerages are comprised of independent contractors who affiliate themselves with a company because they feel they will be provided with the best business platform to be successful. The company’s success is determined by the professionalism of those contractors.

Corporate clients want their relocating employees to be provided with a comprehensive relocation program. The core of this program is to assist their employees with either the purchase or sale of their home in order to facilitate their relocation, and they typically outsource this task to relocation management (3rd party) companies. As long as these corporations believe that their programs are being administered in their best interest and at a reasonable cost, they will continue to work within those 3rd party relationships.

Real estate companies have long sought 3rd party corporate business because it was repetitive, profitable, and generated market exposure/buyers through listing inventory. However, due to creeping referral fees, that decision is being revaluated. With referral fees continuing to increase for many 3rd party companies, along with other administrative or training fees, some of our best relocation-trained agents are saying no to this business.

To retain these third-party accounts for the company, we are asking agents with less experience to handle these referrals, and in order to maintain high service expectations, the relocation department often has to invest more time to manage these referrals, further eroding our margins.

I am reluctant to give up one referral, so I can only imagine the reluctance other Directors face when making the decision to accept or reject multiple referrals from one relocation management company.

Balancing the profitability of corporate relocation business in such an environment without compromising our service levels is a challenge, and unfortunately, there are always companies and agents who will accept high-cost referral business. The real losers are the corporate transferee and the employee footing the bill, since sub-standard service often translates to higher relocation costs for homes that aren’t sold in a timely manner. Unfortunately, that message is not reaching the ears of corporate employers.

While we can hope that corporations will at some point realize the impact of the policies and pricing practiced by their relocation companies, the short-term solution for our departments is to pro-actively pursue other types of business to provide to our agents…broker-to-broker referrals, REO leads, Internet leads, and even local business that can be generated through company portals. Accepting or rejecting corporate referrals is an individual company business decision, of course. If we each treat our relocation business as a business and have the courage to reject referral assignment that do not meet our corporate objectives for profitability, recruiting and retention, brand strength, etc., we should also make a point to explain why in order to effect future positive change for the clients we serve.


Posted by: Larry Zapf, Director of Relocation and Business Development,
Beverly-Hanks & Associates