Financially battered relocation giant Sirva Inc., which conducts about 300,000 relocations per year, has filed for bankruptcy in an effort to reorganize and survive the U.S. real estate downturn.

The company’s stock was de-listed from the New York Stock Exchange in November, after the company reported a $10.4 million net loss for the third quarter ended Sept. 30. For the first nine months of 2007 the company reported a $45.2 million net loss, which followed a $36.5 million net loss for the first nine months of 2006.

The bankruptcy reorganization "will not impact day-to-day operations for employees, customers, agents, suppliers and general business operations in the U.S.," the company reported today.

Company officials had blamed Sirva’s poor performance and anticipated weak future results on continued weakness in the U.S. real estate market. Relocation companies work with real estate professionals to assist clients’ employees in selling their homes and finding and purchasing homes in a new location. Real estate professionals that work with relocation companies agree to pay a share of their commission income with the relocation companies in exchange for the referral of business.

In addition to its home purchase and sale services, Sirva also offers moving services, mortgage services and closing and settlement services. The company’s brands include Allied, Allied International, Global northAmerican, and northAmerican International, among others.

"As a result of challenging conditions in the real estate market and, more recently, the mortgage market, we have been taking more homes into inventory as the real estate markets continue their decline and available financing for potential buyers becomes more volatile," the company reported in an earnings statement.

"As these homes come into inventory, they impose additional capital requirements on us. The longer that these homes stay in inventory, the more likely we will realize a loss on their eventual sale, as well as incur additional carrying costs until their sale." The company cited declining home values, decreasing sales of new and existing homes, and rising levels of inventory as signs of the weak overall real estate market.

U.S. relocations are expected to be fairly flat this year compared to last, while global relocation is still growing. Collie said that the industry has weathered markets like this before, and has seen mortgage interest rates pass 17 percent. "We were still able to sell transferees’ homes," he said. "The industry is very innovative."

In a down market, relocation companies may incur more costs as homes take longer to sell, and in some cases relocation companies have programs that allow them to take ownership of homes that don’t sell in order to facilitate a relocation. Collie said he expects more home purchases by relocation companies — "I think they’re going to have to scale up on them — in some cases it may be the only way they can move an employee."

Also, relocation companies’ clients may wish to offer buyer incentives to help employees’ properties sell quicker. "A lot of companies are going back to techniques used in the mid-’80s and really honing their skills, pricing properties properly and getting them sold and moving on," Collie said. "What is old is new again."

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