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Are HR Professionals Ready To Fight Property Market Turmoil Before Relocation Budgets Suffer!
Copyright Sean Eastman, The Relocation Company, 2008
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HR Professionals managing relocation on behalf of their business units may soon be faced with an uncertain housing market, according to Sean Eastman of London based, The Relocation Company .
A lack of liquidity in the global credit markets, the rush on funds at UK Bank, Northern Rock, UK Home Information Packs tightening up the market and yet more banks to report on how they are affected, means market uncertainty and property turmoil will dent market confidence.
Many HR Professionals know from past experience that managing cases in uncertain markets means their own management will demand more of their time reporting to them on budgets, cases, issues and exceptions. Against an exisitng background of increased focus on HR to meet business targets, improve efficiency, performance and reduce costs, relocation will continue to be a challenge.
Companies know people will continue to be central to business success - that’s why companies move them - and with the right tools HR can add real value to their businesses by focusing on not only the wider business and outcomes but on the narrower specialisms – like relocation.
But potential market uncertainty also increases personal uncertainty for employees:
• Worries of falling house values
• Increased times to sell and
• Longer family separations
Can the market provide HR relocation professionals tools to combat property turmoil?
No matter what a market is doing there are definite benefits to have the right skil, in the right place at the right time, but what can effect its ROI?
Property uncertainty is one – more specifically issues around property marketing and selling and the time it takes to achieve. When deciding to relocate key skills in bad markets, relocation cost is a concern. At the outset the costs are unknown. HR will have no (or little) knowledge of the employees property, nor the market it is being sold in, how long it will take.
Some costs are variable and driven, for better or for worse, by property value. If incorrectly assessed it extends rental costs in the new area and if an employer offers Home Sale Guarantee, that drives loan costs, capital risk, insurance, maintenance and more in the old area.
Market uncertainty means variations:
• in valuation accuracy
• longer case life management
• the desire for improved risk profiling
• in policy approaches to cost reduction/mitigation
• and it’s more important than ever to avoid policy exception and cost overrun.
A requirement for a valuation of one form or another is often an integral part of a relocation case. Whether it is an “agent’s opinion”, a general idea of a “marketing” value, or a surveyors opinion for Market Assistance Programmes, Home Sale Guarantee or even for Outright Purchase, some form of market overview, valuation and comparable evidence is needed.
Traditional approaches using surveyors can take time to achieve and sometimes delay the first crucial step in a relocation – getting the Employee’s acceptance of the package.
Instant valuation (less than a second!), using on line automated valuation models means real-time property valuation is now achievable – either as a standalone function or one capable of being incorporated into case management systems – and drives acceptance time down from days and weeks to just a few minutes in some cases.
Delays cost. They cost HR budgets, or a cost centre's budget money and cost organisations time. Delays are an inconvenience for employees and disrupt the work life balance too; it affects HR budgets and ultimately a businesses profit yet new approaches can help overcome them.
Whilst a new adaptation for the relocation market Automated Valuation Models (AVMs) are now an established and indispensable force within the UK (and others) mortgage industry and are already used by lenders, surveyors and many others in a wide variety of applications.
The advantage for those managing relocation is that an AVM provides sophisticated, comprehensive asset and risk indicator models for relocation properties. Far quicker than a surveyor and with equal [even better in many cases], tested accuracy and much lower cost.
Innovative employers who relocate staff may want to consider rapidly adopting them for their own use or using organisations who have them to provide rapid reports on difficult cases -sale or rental.
Whether you have a complex relocation policy or a simple one, AVM’s can be useful both in the initial assessment stage and throughout the life of the case.
Data from an AVM can be used for an impact analysis on each case and the effect it may have on relocation budgets – hotel or rental costs, expenses, interest, capital risk, insurance and maintenance – and enables a case cost generator to assess the case budget expected.
The data available in an AVM can also help reviews of 3rd party offers on relocation related properties on the market. Whilst no guaranteed “crystal ball”, in the right hands, AVM data can help sift and sort the offers worth taking or rejecting against a background of detailed market trends data. They can reduce additional risk exposure in poor markets or selling “short” in good ones.
Valuation is a variable cost with traditional methods and difficult to budget, being dependent on the actual value of the property.
In comparison, AVM’s typically have a uniform cost - regardless of value – and can be delivered in the same consistent time scale and usually with more information than many surveyors can get their hands on. And they can be done 24/7/365!
When used in HR, professionals can delight their senior management with their new speed and efficiency. Line managers will be happier because it all costs less. Relocatees will be happy as its all so much easier and quicker and they can secure their ideal home after all.
Think how good that would make everyone feel!
Web accessed AVM’s mean they can be utilised to support any one of the 3 “Ulrich” legs of HR – shared services, business partners and internal centres of excellence
There are a range of new solutions that let HR professionals or their advisers do full valuation, market pricing, trends and case assessments, even before the relocation starts and makes property valuing, buying, selling and renting issues far easier to manage than ever before, and are capable of reducing move costs too.
They can help everyone know the move is affordable right from the get go - as well as helping tighter budgeting and finer, proactive, control.
Author: Sean Eastman, a 25 year veteran of the UK and international relocation industry. He can be reached at The Relocation Company, 6th Floor, The Chambers, Cheslea Harbour, London, SW10 0XF
0845 013 2659 or 07739174499
www.therelocationco.com
