Real estate market stalls recruiting, promotions

By Rana L. Cash

The Atlanta Journal-Constitution

When executive Wade Ledbetter leaped at the opportunity to move up in his company, the shackles of relocation snatched him back down to earth.

That fabulous promotion came with a price: The $30,000 he’d invested in home improvements, the 20 percent he’d put down on his house and the extra payment every year for 7 1/2 years would be a wash, along with settling on a selling price well below what he’d paid for the home and just about all its contents. Add living away from his family in a one-bedroom apartment for eight months while his home languished on the market and his frustration accrued.

“It was horrible,” said Ledbetter, who relied in part on relocation assistance from his company. “It was constant, horrid stress. There were a number of times I said to myself, ‘What have I done?’ ”

Opportunity? Try headache.

The recessionary picture of corporate advancement has two faces. There’s the happy appeal of climbing the ladder, confronted by the grim real estate market weakened by upside-down mortgages. Combined, it poses a sometimes insurmountable challenge for the companies recruiting and promoting job candidates.

“It creates a barrier,” acknowledged David Cochenour, vice president of human resources for Atlanta-based Incomm. “Companies are really having to be creative about how they deal with it.”

In the 2010 Atlas Corporate Relocation Survey released in April, 56 percent of firms that responded saw employees turn down the chance to move in 2009, especially among large and mid-size companies. That’s not surprising considering the data:

According to the national research company CoreLogic, there were 399,129 homeowners with negative home equity in metro Atlanta in the first three months of 2010. Moody’s Economy.com reported that there were more than a half million homes “underwater” in Georgia and 14.9 million nationally at the end of the fourth quarter of 2009.

Real estate data company Zillow says metro Atlanta has the third-largest number of single-family homes underwater in the country.

The conclusion isn’t hard to draw: Just dangling a handsome salary as bait doesn’t guarantee a catch. When a job candidate is in a home that might sit on the market or cost a boatload to unload, they are marooned — boxed into their current position, or at least their geographic location, until the real estate market improves.

Jill Heineck, chief relocation officer for The Agent Advisory, experiences the difficulties regularly. She said one client secured a career advancement from a regional chain to a global one. The company wanted to move him to New England from Tennessee and offered a $140,000 relocation package. But he had purchased a $400,000 home three years earlier, and found it was valued at only $300,000 when it came time to move.

After paying that gap plus the cost to close the sale, he wouldn’t be able to afford a down payment on a new home in New England. While his salary increase was significant, it couldn’t bail him out of the jam. End result: He stayed put.

“The real estate piece is the most expensive piece in a relocation package,” Heineck said. “That has always been the case and [is] even more so now.”

The news for employees is getting better, though, according to a study by Worldwide ERC. It said 17 percent of companies it surveyed increased the amount provided for loss-on-sale assistance in 2009.

“For a long time companies were saying, ‘We will not relocate,’ ” said Jim Munson of relocation company Munson International. “But there is so much great talent out there that they have to pay attention to the talent they can get ... If the hire is going to make that much of a difference to their bottom line, they are willing to do it.”

That willingness doesn’t have to mean handing over a blank check, though. Corporations are finding creative solutions to the conundrum.

Home Depot human resource director Jan LeQuier said the company is expending a lot of time helping market the homes, for instance. She said Home Depot continues to provide “solid” relocation packages for transfers.

“If that’s the right person for the position or someone we are going to grow, we recognize we have to give some thought to the cost, but we’re going to take care of our associates,” she said.

Economic distress itself put an obvious clamp on hiring anyway, holding down relocations. Like many companies, UPS put in place a management hiring freeze in 2008 and 2009 to control costs. While the company reduced the number of management relocations to save money, it kept in place its housing policy, including buying a home if it does not sell.

Dave King, vice president of human resources at Kool Smiles, said that many companies have placed more caps on relocation allowances and many of them are tier-based, according to the level of the position. In some instances, employees have to come up with the astronomical closing costs and be reimbursed later.

Companies are also coping by using third-party relocation companies to get price reductions on moving services and recruiting regionally for new employees.

“I’m not saying a company walks away from talent, but there may be equally solid talent closer to home,” King said. “It’s a cost-benefit analysis.”

Real estate agents, including Ledbetter’s agent Ronnie Schmucker, are working harder than ever to piece together the difficult packages.

When pressed, candidates take another option: short sales. It’s the kind of work keeping John Damiano, an associate broker with RE/MAX of Greater Atlanta, busy.

Unwilling to risk foreclosure, new employees — especially those who have been unemployed — willingly take a loss on their house in order to expedite the move to a new job.

“It’s a challenge for the candidate as well,” Damiano said. “A lot of talented people, the opportunities are passing them by because the package to [cover their entire move] isn’t there. A lot of them are deciding to go through short sales because they can’t afford two mortgages. It’s a difficult position to be in, through no fault of their own.”

Sometimes, it’s a no-win situation. Munson’s relocation company worked with a candidate from Connecticut who got a job in Atlanta.

He carried two mortgages on his home, owed more than $200,000 on his house beyond its value and was going to be paid $150,000 a year.

“I told him to stay in the house and look for a job in Connecticut,” Munson said. “You don’t want an employer or employee to have sour grapes.”

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Companies changing relocation policies

Worldwide ERC provided data on policy changes made by 129 companies in 2009. Among them:

● 28 percent of employers with buyout programs have added a requirement that transfer employees list their homes within a certain percentage range of the appraised value in order to qualify for assistance.

● 26 percent of employers surveyed have added incentives for employees who find buyers for their homes.

● 26 percent have extended the length of time they provide temporary living assistance.

● 20 percent of employers have added a requirement that employees use selected real estate agents to market their homes to qualify for home sale assistance.

● 17 percent added loss-on-sale assistance.

● 9 percent modified their policies to reduce loss-on-sale assistance.

Source: Worldwide ERC