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By Stephanie Andre

RISMEDIA, May 17, 2007-By now, you’d be hard pressed to find anyone who isn’t aware of the changes to the real estate business over the past 12-plus months. Lost in the shuffle, however, has been the effect this change has had on the residential real estate relocation business. Here, Kathy Connelly, Prudential Georgia’s senior vice president of corporate services, and the 2007 president of the Relocation Directors Council, and Dan Forsman, Prudential Georgia’s president and CEO, talk candidly about the relocation industry’s problems, possible fixes and how it’s affecting not just relocation, but the real estate industry as a whole.

Real Estate magazine: Kathy, can you briefly describe your work with the Relocation Directors Council (RDC)?
Kathy Connelly: We are a nonprofit organization, made up of 275 of some of the most well-respected real estate companies in the country. Our group is inclusive of all brands and networks involved in residential real estate relocation. We meet twice each year, and the objectives of the organization are:

– Encourage the personal and professional growth of its members
– Foster continuing education in relocation
– Organize a communication network for relocation directors
– Promote high ethical and professional conduct among its members
– Exert a positive and beneficial influence within the relocation industry

We share best practices, discuss issues and solutions as they relate to the industry, the challenges we are facing, and how to train agents on this business. We also have a corporate advisory council that includes members such as UPS, The Home Depot, Intercontinental Hotels, Coca-Cola, and our third-party advisory council has representatives from National Equity, Primacy Relocation, Summit Mobility and Lexicon Relocation. Our advisory members serve a two-year term.

RE: As the 2007 president of the RDC, what are some of your chief responsibilities?
KC: A lot of my job is charting a path for the organization, enhancing the value proposition to our members, and reaching out to people who may not be aware of our member organization and benefits. I really believe in raising awareness and using our group as a vital resource of information and local market data; it helps our corporate clients make informed decisions on properties or transferees in our respective markets. Additionally, my role as president allows me to have a platform to serve as an ambassador for our organization.

Dan Forsman: The RDC has been invaluable to Kathy over the years. It has given her a venue to stay abreast of industry changes, to exchange best practices with her peers, and has contributed to her professional development, all of which has helped to position our company as a relocation leader in our market. As an owner, I need to support my team to be the best they can be, which ultimately benefits our corporate and third-party clients, my agents and my company. Kathy has never been one to shy away from her commitment and dedication to the relocation industry and her role as 2007 president of the Relocation Directors Council is just one of many ways she has given back to her field.

RE: How would you describe the state of the relocation industry today?
KC: It’s in a changing mode. I’ve been in this business since 1989; we’re always talking about change. Over the years, we have seen a change in services offered and in different policies and even tiered policies, but often the programs come full circle. As the real estate markets change, things go back and forth to meet the demands of the market. The pricing structure and the way suppliers are compensated are the biggest changes. In the past, clients paid for service. Now much of the revenue of third-party companies is generated from referral fees and other ancillary revenue funded by the suppliers in an effort to hold down cost for the corporate client and remain competitive.

RE: What problems do you see with the industry right now?
KC: Over the years, we’ve seen a lot of consolidation-a lot of acquisitions and mergers under different brands. That is somewhat concerning because the defining lines are often blurred within the traditional broker networks. Also, there’s a lot of pressure on service providers to provide a higher level of service under reduced revenue models. The risk for service failures exist when our best front line service providers-the agent or the van line driver-opt out of servicing our referrals because they can’t afford to handle our business. Some companies are trying to leverage their volume to secure higher referral fees. This is a huge challenge that faces the industry-rising referral fees are a great topic of conversation.

RE: How do you fix those problems?
KC: That’s the $64,000 question. Everybody has a threshold. Ultimately, many may bow out. They’ll have to ask themselves, “Are we getting enough business from a single source to make it up on volume?” Third-party companies are going to have to manage their business better, keep relocation employees more in compliance and limit options if they are going to commit to volume for the service provider. That’s the only way to deliver on the commitment and make it feasible for the service provider. Ultimately, everyone in the service chain has to recognize a ROI (return on investment). People in real estate care very much about delivering high levels of service, but you do have to balance the right kind of service and the cost to stay at that level.

RE: Where do you see the relocation business going in the near future?
KC: We have to be careful to not get beyond a threshold that compromises service for price. We have to educate all parties to the transaction so that we are all better informed about the effect of cost versus service and the risks associated with exceeding the cost threshold.

However, you’re still going to see change. Companies will re-evaluate the process and their providers. The changing real estate markets are already creating higher costs as corporate clients are faced with more inventory, even though some companies have limited, or removed, the buyout as options for employees. If they need the employee bad enough, they may be faced with a decision to make it an option-as a matter of policy or as a matter of exception. You may see companies revisiting their policies to adapt to the changing real estate markets. On the other side of it, we have this looming war for talent. The Baby Boomers are retiring, so companies are faced with a more limited pool of skilled individuals. It’s a good idea for companies to reassess to make sure they continue meeting the needs of the demographics of their employee population and markets where they operate.

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