Transferees Get Help
Making Ends Meet

House hunting in the New York City suburbs of Westchester County prior to a transfer from Raleigh-Durham, N.C., sent Susan Wilson and her husband Dean into severe sticker shock.

"We saw houses that were old, that weren't well taken care of, that had no land and were twice as much as our house. After the first day, I had to just stop looking and get a glass of wine," says Ms. Wilson.

Although Mr. Wilson had been offered a good promotion and significant raise at the Revlon corporate headquarters in Manhattan, the couple debated whether he should accept it. With the median price for a single-family home in Westchester at $588,250 in the third quarter of 2003, compared with an average price of $178,400 in Durham County for the same period, they would have to endure much higher housing costs and a possible lifestyle change.

"Back in Raleigh, we owned a new 3,800-square-foot house on a one-acre wooded lot. There was a community pool, tennis courts, and we were next to Falls Lake, a great recreation area. That house was under $400,000," says Ms. Wilson.

The Wilsons are among many transferees who are increasingly hesitant to move to high-cost areas for their companies, even when it means a promotion and raise.

"A couple of years ago, it never used to be a question of whether you would move for your career. But people have shifted in their priorities, they want more quality of life, more time with their families," says Margery Marshall, president of Prudential Relocation in Irvine, Calif., which assists relocating employees for other companies and tracks relocation trends.

According to a survey of companies conducted by Prudential last year, cost-of-living differentials and housing costs are the main obstacles for relocating employees. While more than half (52%) of these companies have reduced the number of employees they relocate, financial incentives were the most common way that companies encouraged employees to accept relocation, cited by 29% of employers surveyed.

According to Ms. Marshall and other industry analysts, many employers now award housing, moving and salary benefits that are designed specifically to help ease the financial strain of moving to high-cost areas.

"We're also seeing more and more companies giving lump sums of money that can cover a whole array of expenses," says Ms. Marshall.

For the Wilsons, an added boost in salary was the only way they could be convinced to move late last year.

"We sat down and figured out how much we would need to have the same standard of living and presented it to the company. It had its own cost-of-living analysis, and it was different than ours. But the company was great about it. It was willing to be in the same ballpark," says Ms. Wilson, who is a financial planner.

In addition, the company covered all of the Wilsons' closing costs and gave them a moving allowance and an incentive bonus for selling their house on their own. Companies have paid these expenses in the past, but now such assistance is becoming more common, according to Ms. Marshall.

Several companies also are providing more help with their transferees' mortgages.

"For transferees who are homeowners, housing prices here in the Bay Area are usually their biggest concern," says Jesus Romero, manager of relocation services for Levi Strauss & Co. in San Francisco.

To help relocating employees bite the bullet in a housing market where the median price for a single-family suburban home can be as high as $660,000, Mr. Romero says, the company now offers a short-term loan subsidy. This policy, called a temporary buy-down, offers the employee an interest-rate reduction for the first few years of a mortgage, which significantly helps them qualify for a mortgage and helps ease them into a higher-cost area. The company pays the difference on the mortgage on an annual basis, most commonly, three points for the first year, two for the second, one for the third.

"This has become an increasing trend among companies, to help with the housing costs instead of increasing their cost-of-living allowances," says Donna Barber, manager of consulting services for Cendant Mobility, a Danbury, Conn.-based company that relocates employees nationally and internationally. More than 40% of the companies Cendant works with now offer this kind of benefit, compared with 37% in 2002, according to Ms. Barber.

But Mr. Romero says that even with financial incentives, it has still been more difficult to get transferees to commit to moving to a high-cost area in the past few years.

"Most people think it's impossible to move from a place where the houses cost $200,000 to a place where they cost $700,000. It takes some time to turn them around," he says.

To persuade potential transferees to move, Mr. Romero now also devotes time to selling them on the lifestyle benefits of living on the West Coast.

"We sell the ambiance, the weather, the wine country. We take them on a tour of the East Bay, put them in touch with the lender…We hold their hand the whole way," Mr. Romero says.

When John Kennelly was recruited by Toyota Motor Corp. to move to the Los Angeles area, he and his wife Carol weren't sure they wanted to leave Detroit, where both were born and raised and where they owned a large house. The company wooed them, says Ms. Kennelly, by flying them to the area several times and selling them on the lifestyle.

"They flew us out several times and let us stay in a nice hotel. We met with different executives, they took us out to dinner, they really wanted us to like it out here, and that really helped," Ms. Kennelly says.

The Kennellys had to take on a significantly larger mortgage when they recently bought their house in Palos Verdes, but the company offered them a temporary buy-down, which has helped lower their payments for the first few years.

"We knew we were going to an area where there was a much higher cost of living, but we were still really shocked when we came out here the first time. But since they are offering us a special interest rate, it made it so much more affordable for us," says Ms. Kennelly.

According to Ms. Barber, this kind of pretransfer support can be the most motivating for potential transferees.

"It really helps when they know what they're getting into -- going on pretransfer visits to the new city [and] getting a lot of information up front, so they don't get there and expect the houses to cost $200,000," says Ms. Barber.

Companies that are flexible about transferees' housing needs also have more success in relocating them, according to Ms. Barber. While employers usually treat a transferee's housing status the same -- a renter back home is a renter in the new place -- in some cases, when the renter can't find an affordable rental, the employer will help him or her to buy a home. "It's a trend we're seeing when the prices are so high," Ms. Barber says.

Other transferees, like Becky and Dennis Ryan, who recently moved from Birmingham, Ala., to Ventura County, Calif., for a substantial promotion but without a generous housing allowance or cost-of-living adjustment, are absorbing much of the increased costs themselves.

"We paid less than $300,000 for our home in Birmingham, and you can't find anything less than twice that in California," says Ms. Ryan, whose husband works in the automobile industry.

The couple, who now live in Camarillo, Calif., with their nine-year-old daughter, have decided to accept the budget challenge in hopes that Mr. Ryan's future salary will make up the difference. "They paid for the move, and they told us that the next raise would be a big one," says Ms. Ryan.

Negotiation Tips

Budget tightening is one of the changes some transferees just choose to accept. For those who may have negotiating room, the following tips may help secure the best deal possible:

• Ask for complete disclosure of the company's relocation policy and inquire specifically about how the company handles housing-cost differentials. Policies that help with mortgages may be the most beneficial, says Ms. Barber, because they address what's typically an employee's biggest financial burden.
• Research the standard-of-living differential for moving to the new place and present this information to the company. This information is especially important for employees setting up satellite offices in new areas.
• Maintain realistic expectations. Since most relocations involve a promotion, employees should keep in mind that although their new house may cost more, there is likely opportunity for growth.

-- Ms. Lisle is a free-lance writer in Los Angeles.

Email your comments to rjeditor@dowjones.com.