Corporate Relocation: I’ve taken five corporate relocation in my career, including three major moves paid for by the company which involved the sale of a home. Corporation relocation helped me increase my pay nine-fold while working for the same company. I worked in a professional level job for a Fortune 500 company and through my research, our relocation benefits were fairly ordinary. Taking on a relocation with your company is a major decision: There is a lot to consider and here are some takeaways from someone who’s done it a lot!
1) Relocation is a One Way Ticket. Make no mistake about it, every relocation is a one way ticket. You must carefully consider the benefits of the area you are moving to as if you’ll need to live there for the rest of your career. If not, you should set aside and be mentally prepared to pay the cost of moving back. Companies can change, leadership can change, the business can go through expense cuts. Unless you get a return trip in writing, assume the move is permanent or the trip back will be on your own dime.
In our last move, we relocated 850 miles for the company and in a direction further away from family and friends. Eighteen months into the move, leadership changed and the quality of the role deteriorated. There were not easy options to move and those I found were a lateral position with the work front loaded. I was close enough to retiring early and decided to stick out the existing job. Now that I’ve retired early, we’re seeing the cost of the return ticket.
2) The relocation package will come with a repayment agreement. At the company I worked for, we had a three year repayment agreement we signed when taking a company paid move. The average relocation package was $20,000 for a renter and over $50,000 for a homeowner. Each month I worked after the relocation this bill was reduced by 1/36th. If I changed companies? Pay it back. If they fired me? I still owed the money. Even better, if I took a second move with the company, the first wasn’t forgiven, but stacked on top of the last one. I took two moves within a year and owed over $90,000 to the company at the peak. This is a tough hurdle to overcome if/when a great job offer from another company would come along.
3) Dealing with a home is complicated. We’ve sold three homes as part of a corporate relocation. The first relocation worked well, it was early 2007, the home’s relocation was for much more than expected, and there was no home inspection either because of the good housing market or because it was a townhouse. The second home sale process was a disaster and the wounds were still fresh by the time we sold the third and negotiated a different deal. The biggest benefit we saw in the corporate relocation was the company covered the real estate agent’s commission. This flipped the sell vs. keep as a rental analysis on our first house since the company was picking up the near $10,000 in real estate commissions.
On home sale number two, the relocation company my employer used appraised the house and then hired a home inspector to come through the house and he produced a 15 page punch-list of items to be repaired. We loved the house and my wife was leaving her job for this move, all this was put into motion and then we get surprised with nearly $10,000 in nit-picking repairs. We now had to manage getting these repairs done while already in the process of moving and handling a couple of jobs. It was a swift kick in the teeth to be loosing money on the house, giving up a location we had been in for seven years, and having our total household income go down. The nasty inspection report was the final straw. It was not a good couple months for us and had we gotten this up front, the relocation decision might be different. This taught us to negotiate a different deal on the next relocation.
4) Don’t underestimate the emotional toll of a relocation (both professionally and personally)
Professionally a relocation could mean different clients, different employees, and a different business community. If you’re moving from a small market to a big city early in your career, this is likely a net positive. However in move #3 I was already established professionally in a large city and then moving to a smaller market. The unsolicited job offers from people I knew plus the recruiter calls dried up. I was in sales and it meant I became less valuable to outside employers while early on the performance in the new job will not be what it was in the prior job. Stacked on top of this, six months into relocation #3 there were significant corporate reductions and a few nervous moments about what I had just done.
Personally a relocation takes it toll as well. The challenges start with your circle of friends changing, but everything becomes new and uncomfortable. Your weekly routine is different, your gym is different, grocery stores are different, and you have to find new dentists, doctors, auto repair shops, ect. Don’t underestimate the stress of your significant other going to a dentist you tried only to figure out he was crooked by the second or third appointment.
5) Carefully consider the Rent vs. Buy decision on a home. The convenient decision will be to buy a home right away. Its only one move, only one set of address changes, and you’re not paying for a 2nd move personally. The better financial move in every instance would have been to rent first. We twice bought right away and twice rented. In the first move, we rented and figured out what we wanted to buy down to the specific townhouse complex and watched that area. We did well on that house.
In move #2, we bought right away and purchased exactly one year before the housing market collapsed. Not only did the market collapse, but my office moved six months into the job and my three mile commute just became nine in grueling Atlanta traffic. We lost around $70,000 in total on that house in seven years between its fall in value in major capital repairs we could have avoided through more disciplined shopping. We were also underwater which hampered our ability to move and turned us sour on real estate during a once in a generation sale on rental properties.
On move #3, we bought right away again and knew the area we wanted to be in. Since we (okay, not we, this was entirely a ME mistake) knew the spot we wanted to be in and were in a time crunch, we bought a dog of a house. Ten months later I get another job offer/relocation and eat a five figure loss on the house, plus the sunk cost of months of sweat equity my wife and I put into the home. (We failed at the live-in flip) Had we rented in this move a lot of pain have been avoided.
In the last move we rented first for a year and found exactly what we wanted with a 2.5 mile commute to my office. We’ll probably break even plus or minus a few percent on this house after agent commissions, but we I had the benefit of a 2.5 mile commute and we owned exactly what we wanted/where we wanted.
In hindsight we wish we rented first in all four of our moves. It would have kept the relocation payback down and avoided a couple of five figure losses.
6) Almost Everything Is Negotiable: A lesson I didn’t realize until the later moves is that things are negotiable. At the company I worked for, there were a few non-negotiable and plenty of negotiable items. The company is usually making a decision to either move you and pay relocation costs, or hire someone from the outside and pay a signing bonus. At my specific company, a few items that were negotiable that I wish I had known earlier:
- Get an appraisal/inspection on your house before fully committing to the move
- The length of time the company will cover/pay for an apartment as part of the move
- The details around the home-sale process. I negotiated a DIY option on home sale #3 and completely avoided the inspection process.
Things that were not negotiable at my employer but may be at others:
- A cash relocation bonus. The company had a sliding scale for a small cash payment, but they would not pay outside of this. I saw a peer be asked to make a tough move for the company and he asked for a $50,000 bonus to make up for higher cost of living, missed bonuses from his old job, ect. The company outright declined, even though it would have been a better business decision to pay it (sometimes the dumb things people at large companies do “out of principle”). This ultimately soured his relationship with the company and he left a year later.
- Home loss protection. The company capped the amount they would contribute if the seller was in a loss scenario. They viewed anything above this as another form of a cash bonus. Later on I realized most people lining up to take a rough loss on their house negotiated a higher salary.
This leads to my final piece of advice: The big thing that was negotiable in a move / corporate relocation is probably your annual compensation. I didn’t figure this out until the last move, but the negotiation in that move was worth six figures over the following four years. Negotiating with your existing employer is complicated, but had I known the full details on the house situation I could have used that to my advantage. Usually you are given an offer for the new job and you have one opportunity to make a case on why it should be more. The management I worked for still had a conscience and didn’t want an employee moving on behalf of a company to come out worse for the move. That was what I presented on the final move after the first offer and the second was much better.
So what should you do if you’re considering a corporate relocation? Proceed with caution. Carefully consider the benefits of the new job/role and ensure you negotiate appropriately for the life change you’re about to impose on yourself and your family. Its often okay to say no, there are other employers in your field and your company is not your family, its a market exchange of your time for money. You should ensure those negotiations around a move aren’t based on future promises but instead on tangible pay that are quantifiable in the present and immediate future.