By Amy Hoak, MarketWatch
RISMEDIA, May 15, 2007-(MarketWatch)-Convincing job candidates to relocate can be a challenge even when the housing market is strong. But with homes in many markets around the country taking longer to sell and prices either flat or declining, employees being asked to relocate are starting to balk in greater numbers.
“If you’re in a market where prices have declined significantly, that’s a huge challenge for folks who bought at the top of the market,” said Kathy Morris, director of global consulting for Prudential Relocation.
Relocation experts say common reasons job candidates hesitate to uproot often has to do with people’s reluctance to leave their comfort zones, their families and their friends.
A Prudential Relocation survey on mobility trends, released in September, found that family issues were still the dominating reason employees turned down a job that would require relocation — 65% of those surveyed believed that to be a top concern. Sixty-one percent named cost-of-living and housing concerns as a top issue, while 22% said that selling the home, specifically, was a top concern.
But the timing of the survey reflects only the start of changing attitudes about many housing markets throughout the country, “While (real-estate markets) started declining in 2006, we haven’t seen a lot of the results of that yet,” Morris said.
That said, the effects will be different from market to market. . “In some markets, they’re just stabilized — they (prices) haven’t declined, they’re just not going up.”
Last year, some relocation companies were advising clients to institute a “loss on sale” program because of the expected market conditions, said Bonnie F. Casper, vice president of relocation for Comey & Shepherd Realtors, in Cincinnati.
“This kind of program allows transferees to accept their move without the great financial repercussions of a soft market,” she said in an e-mail interview. Such guarantees that transferees would not lose money on a home sale “had gone by the wayside because of the stellar market over the last five years.”
In her market, sellers aren’t often hesitant to relocate because of a home’s expected sale price, she said. That said, buyers are driving harder bargains, “leaving offers on the table and moving on to other properties when their terms have not been met in initial negotiations.”
But there are places where the soft housing markets are having a big effect on hiring, according to a survey from outplacement firm Challenger, Gray & Christmas. Some companies interviewed spoke of losing prized recruits or paying higher relocation costs for people who feared they’d lose money on the sale of their existing home.
For example, in order to get a candidate to relocate from Detroit to the Oklahoma City area — where Nextep, a human-resources outsourcing firm, is based — the company agreed to protect him against a loss on his current home.
“In this instance, the candidate was moving from a depressed housing market where there was a threat of suffering a financial loss from the move,” said Adam Graham, Nextep’s marketing manager, in an e-mail interview. “The magnitude of cost was affected by the softening housing market in Detroit, but the issues are same with every move. There are always costs associated with moving an employee; in this case the costs were just higher.”
For many employers, the addition of these housing-market hurdles for job seekers is coming at a bad time.
With a shortage of skilled workers as the baby boomers begin a wave of retirement, relocation efforts are now more important than ever, said Eric Winegardner, director of product adoption at Monster and a former recruiter. So companies have been busy creating more flexible relocation policies in order to attract the candidates they want, Winegardner said.
“In years past, the policy was the policy. Take it or leave it,” Winegardner said. “Today’s talent market has caused progressive recruiting organizations to take a more holistic approach to meet a candidate’s needs.”
It’s typical to see a tiered program for relocations, he said, with packages ranging from a set amount that the candidates use as they see fit to the executive relocation that involves a specialist who manages the move, he said. For the latter, it’s not unusual for a relocation package to cost as much as $100,000, Winegardner said.
While some large companies will be able to provide more financial assistance on the relocation front, many small- and medium-size companies “will probably be unable to cover the costs of relocation and make up for a candidate’s lost home value,” John A. Challenger, CEO of Challenger, Gray & Christmas, said in a recent news release.
According to the National Association of Realtors, sales of existing homes dropped 8.4% in March to a seasonally adjusted annual rate of 6.12 million. The median price of an existing home was $217,000 in March, a 0.3% year-over-year drop.
At the same time, relocation activity is expected to be heavy this year. An online poll by Prudential Relocation, conducted in December, found that 44% of those surveyed expected transferee volume to rise in 2007. Forty-nine percent expected volume to stay the same, and 7% anticipated volume decreasing. More than 130 organizations participated in the poll.
Words of advice
If you do find yourself facing a relocation decision, consider these tips:
An employee considering a move for a job should be clear on the details of the company’s relocation policy before accepting the job, Morris said. Any concerns should be directed to the human-resources professional. Don’t be afraid to ask for what you want.
Know the tax implications involved, Winegardner said. A majority of a relocation package can be considered taxable income; “if a company chooses to cover the tax liability for that benefit, you come out much further ahead,” he said.
Flexible relocation policies might allow an employee to substitute one expense for another, customizing the package to suit the individual’s needs. Morris said. If, for example, you don’t need temporary housing, you might be able to substitute those dollars for the expense associated with storing household goods, she said. Candidates might negotiate a lump-sum package if they’d rather hold on to the home until the local real-estate market improves, she added.
If you’re selling a house to relocate, realize it’s unlikely you’ll “make a killing” in many of the current markets, Morris said. To ensure a quicker sale, make the cosmetic changes that are necessary before listing the home and price it correctly from the start, she added.
Amy Hoak is a MarketWatch reporter based in Chicago.