Sign of the times….SIRVA is a global relocation company helping over 300,000 people move each year, has filed Chapter 11 bankruptcy protection. There are approximately 100,000 creditors according to the MSNBC story. SIRVA is the parent company of Allied Van Lines. With transaction volume down anywhere from 35-50% from the peak of the market a couple of years ago, it’s not difficult to imagine the challenge these companies face with their large overhead.
I have been involved in many interesting conversations about companies like SIRVA. We call them 3rd Party companies that get involved in helping executives relocate. They way they generate their money is by charging the real estate brokers anywhere from 25-45% of the commission fee.
In other words, they go in to get this business from large corporations and it’s ultimately the real estate agents who pay for this service. Agents who take these relocation listings generally don’t make much money if they can sell the listing. We take them for the market exposure it gives and the hope that the seller will give a referral or that we might pick up a buyer off of the listing.
These relocation companies remind me of the medical insurance industry. Often times they just drive up the overall cost of the transactions. The big corporations, SIRVA and other 3rd Party companies all benefit at the expense of the individual agent.
It would be nice to see this bankruptcy bring about reform in the relocation business, but I am not optimistic this will happen. It will likely be business as usual.