Business/Economy

When oil companies move employees out of state, who sells the houses left behind?

In the past year, departing oil company executives and employees have bumped up housing inventory in Anchorage, creating a state of stiffer competition among sellers.

But in many cases, those who have left or are leaving Alaska at the behest of Shell, ExxonMobil and other large corporations have been relieved of the inconvenience and risk of selling their homes themselves.

Like other large, globalized corporations, the giants of the Alaska oil patch use third-party relocation companies to assume ownership of employee homes and sell them, and provide other services to ease the stress of moving.

Relocation companies were busy this year handling the departure of oil industry employees from Alaska, many of whom worked for Royal Dutch Shell. The company announced in September 2015 that it would give up high-profile plans to drill in the Chukchi Sea.

Shell had built its Anchorage workforce from an office of two people in 2005 to about 300 in 2014, not including thousands of contractors, said spokesman Curtis Smith, who was moved from Anchorage to the Washington, D.C., area for a promotion three years agoHe declined to discuss the details of his own relocation.

And with oil entering a third year of depressed prices, other companies have also made use of relocation services for employees being transferred out of state.

An ExxonMobil relocation handbook details terms by which the company may compensate workers for losses on home sales through a relocation company. The handbook does not specify a geographic area and applies to employees with Ph.D.s and new employees with previous work experience.

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"Since your home often represents one of the largest investments you make, this relocation policy was developed to encourage and assist you in the sale of your primary residence for the best possible price in the shortest amount of time," the handbook says.

ExxonMobil reimburses closing costs and absorbs the broker's commission, according to the handbook. These particular employees also receive a general moving expense account, a relocation consultant, coaching in how to market a home and a vetted network of experienced brokers trained in corporate relocation.

Moving assistance is part of benefits packages across many sectors, including retail, health care, finance and government. In Alaska's oil industry, middle managers and above tend to qualify for home-sale assistance, selling bonuses and compensation for losses, according to several professionals who handle corporate moves. A larger pool of employees may receive reimbursement or a fixed amount of money to help cover moving costs.

Relocation companies are necessarily global in scope, shadowing the sprawling corporate clients they serve. The largest is Cartus. Its parent company, Realogy, is the largest franchiser of real estate brokerages in the world and owns brands including Coldwell Banker, Century 21 and Sotheby's. Others include Sirva, Weichert and Brookfield.

More work for less pay

The housing market in Anchorage was visibly affected as Shell's workforce left Alaska for redeployment to Houston, New Orleans, The Hague and elsewhere.

Housing inventory in Anchorage through October 2016 was 3,469, compared to 3,221 through the first 10 months of 2015, according to data from the Multiple Listing Service in Anchorage. The average home price for the same period dropped by less than half a percent.

"Shell was the biggest player and had the biggest impact with the number of people that they moved out because they shut down their office here completely," said Bethany Stamper, a realtor at Coldwell Banker. "We went from very low inventory last year until that announcement was made. Then we saw prices going down and days on the market going up. That was because the amount of inventory available was up."

Stamper and others said the properties sold by relocation companies range from modest condos to mansions in gated communities. There is no way to keep track from moment to moment how many such properties are in the market. Real estate brokers and others in the moving industry who handle them on a regular basis say they can make up anywhere between 5 to 15 percent of their business.

From a broker's standpoint, there is more paperwork and corporate protocol involved in such transactions, according to Michael Droege, co-owner and general manager of realty company Century 21 in Anchorage.

Brokers pay referral fees to the corporations and are subject to strict performance reviews, meaning they do more work while making less money on each sale. Droege said his firm is graded by the companies on a range of criteria: how well brokers manage the expenses of selling a home, how long the home sits on the market and how well they serve the employee.

"There is a much higher degree of scrutiny we have to handle in a relocation sale," Droege said during an interview at his Anchorage office.

The upside is a steady stream of business from influential and deep-pocketed corporations, not to mention the possibility of referrals from within that network.

When pricing homes, relocation companies must strike a balance. Their corporate clients are eager to get the properties and the costs of maintenance, insurance and taxes off their books, but also want to avoid large losses in a sale.

If the difference in sales price and market valuation by the relocation company exceeds 5 percent, "we get a demerit," Droege said. Demerits are part of a grading system that impacts how much business his brokerage receives.

"We have a lot of other corporate eyes looking at us in a transaction," Droege said. "We work hard for all our clients anyway, but the bottom line is those guys are getting served big time."

For each of its corporate listings, Century 21 provides the seller with a detailed market update report every two weeks. The report includes all new listings, what properties are pending, which have closed and commentary on any other market conditions that would affect the sale of that property. Droege's brokers set up automatic emails to clients with analytics on how much interest a listing is receiving from other brokers through the Multiple Listing Service and from prospective buyers browsing real estate websites such as Zillow and Trulia.

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Fair-priced homes for buyers

Trying to sell too quickly and aggressively can incur a loss on the property, according to Paige Hodson, who has appraised homes in Anchorage for more than three decades. Relocation companies use forward-looking appraisals to determine how long they can sit on a property before having to lower the price on behalf of corporate clients.

Buyers may find the sale process takes longer than normal because corporate sellers require more paperwork and due diligence and the relocation companies and the corporations they work for are making decisions outside the state.

But buyers can expect to find such homes in good shape because the corporations hold their employees accountable for getting them into market-ready condition, Droege said. And while a bargain isn't a guarantee, the house likely will not be overpriced.

Benefits for employees, corporations

Relocation sales are not generally the first choice of a company or an employee. They are pricey and risky for corporations, which is why many moving contracts give employees a bonus if they can sell the home themselves. In a healthy market, an employee might prefer to sell on their own because there is a chance they can make more money than they would make through a relocation sale.

Rather, the relocation sale is a backstop to bring peace of mind to employees. Despite the cost, corporations benefit by protecting against productivity loss and boosting employee loyalty.

"We know that moving is the second-most stressful thing a person goes through," said Greg Wakefield, CEO and owner of Allied Alaska, a moving company that is part of relocation corporation Sirva. "You know an employee can't be focused on their job if they are worried about their move."

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Wakefield said business has been good this year with "all the majors moving people out to Houston, some going internationally and people retiring."

Still, he noted that while people are still moving to Alaska, he is handling more outbound than inbound moves.

"Are they good moves and the type we'd like to have? Yes. But moving people out and not in is not good for Alaska," Wakefield said. "And if it's not good for the state, it's not good for us."

Jeannette Lee Falsey

Jeannette Lee Falsey is a former reporter for Alaska Dispatch News. She left the ADN in 2017.

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