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Relocation Considerations
Learn more about factors that may impact your decision to relocate.

Top Ten Relocation Headaches
Gather as much information as possible about your new destination.

Relocation Issues for Kids
Every year, one out of five American families move. One of the most important issues to anyone with kids is their reaction to the news that they're moving and their adjustment to the new home.

Home Buyer Checklist
The Home Buyer Checklist identifies some of the important factors to consider when choosing a home.

Select a Relocation Professional
To begin your search for the right person to represent you in a home sale, ask a colleague or friend for a recommendation, preferably someone who has used the real estate agent's services.

Before You Relocate
Review a list of items to help you get ready to relocate.

After You Relocate
Review a list of items to help you settle in after you have relocated.


Relocation Considerations

Consider this common scenario faced by many employees: Your supervisor calls you into her office on a Friday afternoon and asks you to transfer to the New Jersey office. She says the new job includes a $10,000 increase in salary and loads of potential "in the future." She gives you the weekend to think about it. What do you say? No doubt, a million questions start popping into your head. You've heard New Jersey is expensive to live in. Is $10,000 enough? How much are the houses? What will your property taxes be? What about income taxes? What about your wife's job? Will the kids like it there? Will you like the new job? What is the impact on your career if you refuse the job transfer?

According to psychologists, relocation is among the most stressful events that can happen to a person or family. Changing jobs, which often occurs when relocating, is also high on the stress index. For many people the decision to relocate involves a complex set of variables of a financial, personal and emotional nature. These factors contribute to the stress in varying degrees, depending upon the individuals involved. The questions above can be broken down into two broad categories: objective and subjective. The emotional and personal aspects of relocation are subjective and thus difficult to model. Fortunately this is not true of the financial ramifications, which are more objective and easier to quantify. This article will discuss many of the financial variables which should be considered by employers and employees before a relocation decision is made.

When deciding on compensation packages for transferred employees, employers often do not consider that each employee is an individual, with unique financial considerations. No two families are alike and a relocation analysis must reflect differences in income tax brackets, housing size, property taxes, spousal income, dependents, etc. Using generic cost of living indices does not produce an accurate calculation of the financial impact of relocating. Using only a customized analysis will produce a true "apples to apples" comparison. The battle cry of the relocating employee is "AT LEAST KEEP ME WHOLE." In other words, the employee should not have to relocate, absorb the emotional stress, and lose money as well. The after tax cash flow should be at least zero.

An accurate, individualized, analysis has other benefits for the employer.

These are:

  1. If the employee is presently living in a high cost of living area, and the employee is moving out of this area to a lower cost of living area the analysis will most likely show a positive cash flow, which will encourage the employee to relocate.

  2. Employers in low cost areas will find the analysis useful in encouraging employees to transfer into the area from higher cost of living areas, since the analysis will probably show a positive cash flow. Lower salaries can be justified, and demonstrated to the employee, thus saving expenses.

  3. Employers in high cost of living areas can use the analysis for employees moving into the area, from lower cost areas, when cost of living concerns are negatively impacting the relocation decision, and there is a resistance to relocation. An analysis may convince the reluctant employee that the after tax cash flow isn't as bad as they thought. Often, reluctant employees must relocate to high cost areas for career advancement purposes, but want just compensation, calculated in gross salary dollars. A confidential analysis will show an employer how much the employee should be equitably paid, to compensate for cost of living differences.

  4. Employers can use the analysis to make sure employees are comparing apples to apples in their relocation decision. Many employees attempt to upgrade their standard of living, usually through unfair housing and community comparisons, at the employer's expense.


Most employees and employers perform a very superficial analysis of the financial impact of relocating. This is understandable since it is very complicated from a tax and financial planning point of view. The typical analysis involves a comparison of housing in the new area with the increased salary offer, if any. Or the salary is set based upon a comparison to other employees in similar positions. The effect upon a family's cash flow in the first year after the move is much more complex than this simple analysis. As a result costly errors can be made which affect not only the family's financial health but also their happiness as well. An employee who feels unfairly treated is not as productive and may seek other employment. If the employee is worth relocating he/she is worth fair compensation. After all, if suitable talent were available locally the relocation would be unnecessary. Relocation mistakes result in further relocation and additional stress for both the family and for employers. Performing a proper analysis before a relocation offer is accepted reduces stress by decreasing uncertainty. This allows the employee to evaluate the relocation offer more accurately and provides benefits to the employer by increasing employee happiness and retention.

Before describing the financial changes caused by relocation in more depth it should be noted that the analysis should be performed, not just for the relocating employee, but for the entire family. Often relocation can cause major financial changes for spouses, companions, children, dependent parents, and others. Also, all changes should include the federal, state and local tax impact, where appropriate, at the individual's projected marginal rates of tax.

The analysis should compare the old salary with the change in family salary, wages, and business income. It should not include changes that would have occurred anyway had the family not relocated, since this would obscure the real cost, and would be unfair to the employer. The change should be net of federal, state, and local (city) income taxes, as well as social security taxes. A common problem experienced by many families, sometimes called the "trailing spouse" problem, occurs when the spouse of a relocated employee experiences great difficulty finding employment in the new area. The analysis should be able to analyze the projected decrease in the spouse's income for the first year after the move.

Another area often neglected by relocating individuals is the change in wealth caused by changes in automobile expenses. This can be caused by changes in commuting distances, automobile insurance rates, personal mileage (for example to return home to see friends and relatives, or to access qualified medical care), tolls and parking, use of a company car, or an increase or decrease in amounts paid by employers for business use of your personal car. Some of these changes have tax effects and some do not. Most people underestimate how expensive it is to operate an automobile, probably because the major portion of the expense is depreciation (a non cash item), and because the expenses are paid gradually.

Changes in job benefits are often a factor if the employee is changing employers, and occasionally when transferring within the firm. Items to consider here include changes in medical insurance, life insurance, plans, and other perquisites such as day care.

Changes in state and local income taxes should be included, net of federal tax effects. The family's income should be recalculated using the tax laws of the new state, and city (if there are city income taxes).

Consideration must be given for employees choosing to live in one state and work in another, such as the millions of people who live in New Jersey and work in New York. In such cases they will pay non resident income taxes in the state they are working in. Most states have reciprocity agreements to prevent double taxation, which permit residents to deduct taxes paid to other states.

Changes in housing costs are, of course, a major item. It is important to make valid, meaningful, comparisons when comparing housing costs between areas. For example, comparisons should be made which compare the same size houses (square footage). Also included should be the real estate taxes, and rent, if the individual is not buying. Of course, the federal income tax impact of these changes should be included. Another factor to be considered is the change in interest rates caused by exchanging the old mortgage for a new one. If the employee is buying a cheaper house in the new area he/she may incur federal and state capital gains taxes. This tax should not be included in the analysis because it occurs only once, and should not be part of the calculation of ongoing salary. Of course, the employee should be reimbursed for this tax, since the relocation caused the imposition of the tax. Likewise, if the relocation causes the family to have to sell investment real estate, a partnership, or stock in a closely held business then there will be capital gains or losses incurred because of the realization of gains or losses on the sale of these assets. Distance or increased job responsibilities may require that these investments be sold. If the family wishes to compare owning vs. renting, or renting vs. owning, the analysis should be able to do this, although it may not be a fair comparison for negotiation purposes.

Finally, the analysis should not include the cost of moving household belongings, travel expenses including meals and lodging for the family, temporary living expenses in the new area, pre-move house hunting trips, real estate agent's fees, legal fees to buy and sell houses, points to payoff an old mortgage or secure a new mortgage, and redecorating expenses. These expenses are one time expenses which will not repeat in future years, and therefore should not be included when calculating salary. Of course, the employee should be reimbursed for these expenses, but if the purpose of the analysis is to show gross salary equivalents then moving expenses should be excluded, since they are not recurring. Most employers will pay some or all of these expenses, but it is wise to be specific about what will be reimbursed. The reimbursement of deductible expenses is not taxable, while the reimbursement of non deductible expenses is completely taxable. Therefore the employee must be reimbursed for federal, state, local, and social security tax impact on the portion of the reimbursement which is non deductible. This is called a tax gross up payment. Since the tax gross up payment is also taxable the calculation becomes a little complex. Many employers do not calculate this amount correctly. They usually do not reimburse for the state, local and social security tax impact and they assume all taxpayers are in the same tax bracket.

This article has highlighted the important financial variables which should be considered when making salary offers to employees who are relocating. An analysis based upon a superficial comparison of cost of living indices does little to reduce the very significant stress associated with relocating and changing jobs. The analysis must be individualized to each family, since families have different financial profiles such as different incomes, house sizes, etc. Relocation can be a significant financial planning tool when relocating to a lower cost of living area, which can increase cash flow and provide significant lifetime benefits which will help employees achieve their financial goals. A thorough analysis will not only reduce pre-move stress by eliminating financial uncertainty but will increase post move happiness for all involved.


Top Ten Relocation Headaches

by Shelley Seale,

  1. Not Having Enough Details & Demographics About Your New Hometown
    Gather as much information as possible about your new destination, from sources such as the internet, Chamber of Commerce newcomer packages, location magazines and your real estate professional.

  2. Not Having Your Home Priced and Ready to Sell
    Check your home thoroughly for all needed repairs before listing it for sale. Pay attention to details such as gapped caulking, chipped tiles, paint, etc... It's often these little things that potential buyers will notice. Also, have the home professionally cleaned, including carpets. If you haven't had your home appraised in the last two years, do it before putting the home up for sale. Also, have one or two real estate professionals give you a comparable market analysis. This will show what other comparable homes in your neighborhood have sold for recently. Over-pricing your home at the outset will result in slow showings and a delay in selling.

  3. Poor Research of What Your Money Can Buy in Your New City
    Many factors such as differing salary, cost of living, taxes and housing prices affect what the same dollar can buy in different parts of the country. Resources such as the local Chamber of Commerce, real estate professionals and neighborhood reports can give you this information.

  4. Not Getting a Mortgage Prequalification Letter Before House Hunting
    While prequalifying with us doesn't provide final loan approval, it does give you a realistic price guideline and shows sellers that you are a serious and qualified buyer.

  5. Not Protecting Yourself with the Best Home Inspection Possible
    This goes for both the home you're selling as well as the one you're buying, although who pays for the inspection (buyer or seller) is negotiable in each separate contract. A good inspector should be a member of the ASHI (American Society of Home Inspectors); bonded; licensed; insured; and able to provide references, an up front quote of his/her fees and what is included (are termite inspections extra, for example). Your real estate professional or mortgage originator can recommend a certified inspection company.

  6. Setting Up the Best Interim Housing Between Destinations
    When you first arrive in your new town, you'll most likely need to have temporary housing arrangements until you can close and move into a new home or find a permanent rental. This may be anywhere from a few days to a few months. If you foresee needing interim housing for less than 30 days, the easiest option is a suite hotel geared for extended stays. For a month or longer, corporate apartments or homes are much roomier, more comfortable, and usually 20-60% less than paying a daily or weekly hotel rate.

  7. Moving Your Household and Safely from Point A to Point B
    Depending on the size of your household and the distance of the move, you may want to consider hiring a moving company. Obviously, doing it yourself can save quite a bit of money; however, the time factor, experience of professional movers and the insurance they provide your contents may make hiring the better choice. Moving companies can give you either a binding or non-binding estimate. Binding means that the cost is held to exactly the estimate they give; this means that they will actually physically inspect your home before giving the estimate. A non-binding estimate is only an approximation and no guarantee that the final billing won't be more. However, federal law sets a ceiling of no more than 10% additional charges over the estimate. You will also want a moving company that can guarantee the pickup and delivery dates.

  8. Having a Trailing Spouse Who Needs to Relocate into a New Job
    In the year 2000, 65% of all households had two incomes, creating a significant burden when losing one income as a result of relocation. 27% of companies provide spouse employment assistance; if yours is one of them, take advantage of it. If not, try to begin establishing a network before you arrive, contacting any friends or acquaintances in your new city; subscribing to the newspaper; contacting recruiters, placement firms and career counselors; contacting the chamber of commerce and employment commission; and joining organizations, especially networking ones. If a job still hasn't been landed by move time, consider volunteering or joining a temporary agency. Great full time careers have been started from both.

  9. Finding the Best New Schools for Your Children
    Concerns about family and children is the second most frequently cited reason for reluctance to move. There are many ways to find out all the information you need to make a wise decision. If you haven't decided on a particular area of town, the chamber of commerce can give you a wealth of statistics on all local school districts, as well as private schools. Using the internet can also provide excellent information. If you have decided on a particular area, your real estate professional can get you a school district information package.

  10. Concerns Over Your Children Making a Smooth Transition
    In addition to educational concerns, we also worry about the emotional effects of a major move on our children. They may be resisting the move; may even be angry. Will they adapt well? Will they make new friends? Probably the best way to ease the way is to involve the kids in the move. Provide them with the same information about your new town that you have. Rent or buy videos about your destination to watch as a family. There are also many excellent books geared to children of all ages.


Relocation Issues for Kids

by Shelley Seale,

Every year, one out of five American families move. One of the most important issues to anyone with kids is their reaction to the news that they're moving and their adjustment to the new home. Being informed is very important to children. One of the worst mistakes we can make as adults is to assume that kids don't care or won't understand the details. Keeping them "in the loop," consulting them about choices whenever possible, and including them in the family game plan will work wonders toward their adjustment.

Other factors depend on the child's age:

Preschool Children
Kids under the age of six may worry about being left behind, or being separated from their parents. If you go on an orientation or house hunting trip beforehand without the children, it's important to reassure kids this age that you will be back. Bring something unique back to them from the new town. It's very important for them to express their feelings and fears about the move. Give them a job to do -- have them be responsible for boxing up their favorite toys, and "labeling" their boxes with crayons and stickers.

Ages 6 to 12
Elementary age kids are usually most concerned with how the everyday routines of their lives are going to change. Showing them pictures, videos and magazines of their new home will help a lot, especially if you can find new places in advance for the things they like to do. If your children take dance lessons, find and share information about the new dance studio they can go to. If they take karate, or play soccer...even if their favorite thing to do is go to the park or the pizza parlor, find these places in your new neighborhood and get brochures, pictures or videos.

These kids are most concerned with fitting in. They may react angrily to the move, even insist they're not going. This is usually due to the total lack of control they have over everything important in their lives, friends, school and jobs, being disrupted. These children can be very worried about making new friends, and what will be different in the new school. They are curious about the clothing, hairstyles, bicycles, cars, etc. that kids in the new city will have. Pictures of all these things are very helpful, so if you take an orientation trip be sure to take many detailed photos/videos of the schools they will be attending.

Other Tips for Making the Transition

  • Give young children an entertaining travel kit for the move.

  • Give older children a diary for recording the trip and move.

  • Give children of all ages a special address book and stationary set for keeping up with old friends.

  • Take videos of the new home if the kids won't get to see it before the move.

  • Arrive well before the movers so kids can explore and become acquainted first.

  • Give children a chore to do, such as working on their room (younger), supervising little siblings (middle), and painting or arranging furniture (older kids).

  • Take a break with the family as soon as possible to explore the museums, sights and recreation in your new city.

  • Arrange a visit to new schools and a meeting with the teacher before the actual first day of attendance.

  • Encourage the children to bring new friends home.


Home Buyer Checklist

The Home Buyer Checklist identifies some of the important factors to consider when choosing a home. In addition to an affordable sales price, you will also want to be sure that the neighborhood and house meet the needs of your family.

Take this checklist along when you go shopping for your house. It will help you evaluate the neighborhoods and assess the availability and condition of various features of up to three homes in a side by side comparison.

Home Buyer Checklist


Select a Relocation Professional

To begin your search for the right person to represent you in a home sale, ask a colleague or friend for a recommendation, preferably someone who has used the real estate agent's services. You want an agent who is familiar with home sales in your price range and in your neighborhood. It is essential that you feel comfortable with the agent during an interview since comfort level and good communication are very important. During your interview, don't hesitate to ask the agent about the number of homes the agent has listed and actually sold. The length of time the agent has been in business is not necessarily the best yardstick.

Make sure to ask about their commission fees as well. These fees will average 6 percent to 7 percent but may be negotiable. Remember, the agent you choose is going to be one of your main sources of information. A good agent will advise you and guide you in many ways. Look for a representative who is pursuing sales, returning telephone calls, aggressively working in your best interest and whose only job is real estate.

Interview Checklist

  • How often will you promise to call or write me with activity on the home?

  • I would like to have a list of your satisfied clients (of comparable properties) as references.

  • Describe your history of real estate sales. Most agents sell just 30 percent to 60 percent of their listings before the listings expire. Choose an agent who sells 85 percent.

  • What percentage of the asking price, on average, have you received for the homes you've sold during the last year?

  • What is the average number of days your listed homes stayed on the market?

  • Why should I pick you over all other agents?


Before You Relocate

One Month Before Moving

  • Obtain an IRS Change of Address form, call 1-800-829-1040. Gather moving supplies, boxes, tape, rope.

  • If moving far away, make any necessary travel arrangements like airline, hotel, and rental car reservations, or plan your travel route if driving.

  • Call a moving company or make truck rental reservations to move yourself.

  • Finalize real estate and apartment rental needs. Place legal, medical, and insurance records in a safe and accessible place. Give your mailers your new address (using Address Change Notification Cards):

    • Friends and family members

    • Banks, insurance companies, and other financial institutions

    • Charge card and credit card companies

    • Doctors, dentists, and other service providers

    • State and Federal Tax authorities and any other government agencies as needed.

    • Internal Revenue Service

  • Save moving receipts (many moving expenses are tax deductible).

  • Make maps of your new neighborhood to familiarize yourself and your family with your new area.

  • Plan your moving budget


Two Weeks Before Moving

  • Inform gas, electric, water, cable, local telephone and trash removal services of your move. Sign up for services at your new address.

  • Get new cable service for your new home.

  • Inform long distance phone company of your move. Sign up for long distance service at your new address.

  • Recruit moving day help.

  • Confirm travel reservation.

  • Arrange to close or transfer your bank account, if appropriate.


The Day Before Moving

  • Set aside moving materials like a tape measure, pocket knife, packing boxes, tape and markers.

  • Pick up rental truck.

  • Check oil and gas in your car.

  • If traveling, make sure you have tickets, charge cards, and other essentials.


Packing Tips

  • Keep the Following Supplies and Accessories on Hand

    • Boxes, all sizes

    • Bubble wrap or other cushioning material

    • Marking pens

    • Tape measure

    • Furniture pads or old blankets

    • Packing tape and scissors

    • Money and credit cards

  • Label each box with the room in the new home to which it should be delivered.

  • Number the boxes and keep a list of what is in each box.

  • Clearly mark fragile items.

  • Pack a bag of personal items you'll need during the move (change of clothes, toiletries, medicine, maps, food, and drinks). Keep it in an easy to find place when you pack.

  • Keep a medical kit accessible.

  • If you have children, pack a bag of games and activities for the trip.


After You Relocate

During the First Week After Moving

  • Locate police and fire stations as well as hospitals and gas stations near your home.

  • Scout your new neighborhood for shopping areas. You may need furniture, tools or housewares unexpectedly.

  • Call the Department of Sanitation in your new town to find out which day the trash is collected. Also ask whether your new community has recycling programs.

  • Seek out new service providers such as a bank, cleaners, veterinarian.

  • Register to vote. Call your local board of elections for specific registration information. Ask them how to notify your previous voting district of your change of address.

  • If you have moved into a different state, contact the Department of Motor Vehicles to exchange your driver's license.

  • Call your Chamber of Commerce for helpful information on: schools, cable service, cultural events and community activities, Libraries and parks, and availability of emergency calling services, such as 911.

  • Provide your new doctor and dentist with your medical history. You may need to request your file from your previous doctor/dentist.

  • Transfer insurance policies to an agent in your new community. You may also wish to make a detailed list of your belongings, their value and your coverage.

  • Give your new home a good cleaning.

  • Moving can be stressful. Watch for effects on family members and pets so you can give comfort and a helping hand.


Relocation Considerations
Top Ten Relocation Headaches
Relocation Issues for Kids
Home Buyer Checklist
Select a Relocation Professional
Before You Relocate
After You Relocate
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