Bringing in executives from other companies or other parts of the country is a common way of improving the leadership of an organization.
But if you are going to handle the relocation, communicate all the details of what the company will do as quickly and clearly as possible. Once the deal has been made, the corporate relocation people or your third-party relocation company should begin the process immediately.
“The key thing is to make early contact with the individual — the sooner the better,” says Reg Kence, who wrote Goodyear’s corporate relocation policies for 25 years before his retirement. “If you don’t get with them soon enough, they’re out talking to their neighbor who sells real estate and calling moving companies and charging off in the wrong direction. It can be difficult to do, because in many cases, these moves are confidential, and you have to catch them in the evening at home.”
Dealing with the home in the old location is usually the most challenging aspect of any relocation.
“In any transfer, the most expensive thing is moving the old home and purchasing the new home,” says Kence, who now serves as a tax and expense counselor for the Mayfield Heights office of SIRVA, a corporate relocation firm. “The risk involved in a home sale is where companies spend the most money. If you have an executive coming in from a company that’s headquartered on the West Coast, where the average home is $600,000 to $800,000, it doesn’t take to long to figure out that it might cost you $100,000 to get the home sold.”
Many companies are turning to corporate relocation firms to assume a lot of the risk of real estate. In the case of larger firms that move executives all the time, it keeps the company from accumulating a portfolio of unsold homes that drag down profits.
“In a standard program from a relocation company, the company will provide for the sale of the home in the old location and provide a guaranteed offer,” says Kence. “The individual, depending on the program, would have 60 to 120 days to market it on their own and try to get a better offer.”
If the home doesn’t sell, the relocation company buys the house for the guaranteed amount.
If you are using a relocation company, make sure you understand the details of what costs will be covered if the home doesn’t sell. In most cases, the company paying for relocation is responsible for all ongoing expenses for the home, which can range from 1.5 percent to 2 percent of the appraised value per month.
A relocation program will also usually include a weeklong house-hunting trip to the new location with professional real estate guidance. Other items sometimes included are return trips to the original location to visit with family while the house is on the market and interim housing. Miscellaneous expenses for transferring license plates and the bulk of the closing costs are also usually picked up by the company.
Fees are typically a function of the value of the home being sold, with all other expenses being added to that, so the higher the level of the executive, the more expensive the move will be. How to reach: SIRVA, www.sirva.com
