Companies less generous with moving assistance
More employees are moving for a job as home prices recover from their plunge during the recession and employers have more secure outlooks, say providers of relocation services. But corporations are now less generous with moving assistance because of the decline in the housing market.
Just 11.9 percent of the population moved in 2008, the lowest level since record-keeping began in 1948, according to census data. That improved slightly in 2009, to 12.5 percent of the U.S. population.
In a housing market that's still rocky, the biggest roadblock for a job transfer is selling the employee's old house, said Elizabeth Portalla, a vice president at Mobility Services International. With the decline in home prices, it may be worth significantly less than when it was bought, or worth less than the mortgage.
That means an employer, afraid of incurring big losses, is much less likely to buy the moving employee's home outright, said Dan Keating, an executive at Cartus, which provides global mobility services.
"Companies are cutting back on actually buying employees' homes and are providing more support and assistance in helping employees sell the home," Keating said.
Employers are much more likely now to mandate a maximum price for the listing. A too-high listing could delay the sale of a house in a slow market, adding to a company's cost of providing temporary living assistance to employees in a new city.
In a survey done last year by Worldwide ERC, the relocation industry's professional association, 17 percent of companies said they added policies to help compensate employees for selling their homes at a loss during a job transfer. The reimbursement is usually tiered by employee's seniority level. A survey released in May by Weichert Relocation Resources found the most common maximum cap on such a payment was $50,000. Keating, who has worked in relocation services for 25 years, said the average cap he sees is probably about $25,000.
More companies are also offering bonus payments to get transferring employees to sell a home as fast as possible, Portalla said.
Below management level, policies are less generous. Keating said some level of assistance with a home sale is the norm. But sometimes a company just issues a lump-sum payment that covers the cost of selling a home, moving and a temporary living allowance in the new location, Portalla said.