How to maximize the benefits of moving for a new job
One of the best ways for a raise is to take on a new job. Employers tend to increase pay by a small percentage every year after you have been hired at a certain level. However, if you bring your experience to bear in a new position at a company, you have the chance to negotiate a compensation package that is appropriate for current market rates and your increased responsibilities.
The unemployment rate in September was 3.7%. This is the lowest level since 1969. Employers may struggle to find talent in times of labor shortages. It could be an opportunity to improve your career.
Moving to a different place for work can bring you greater financial benefits, depending on your circumstances. It’s possible to get a higher salary and a better standard living if you can move to a place with a lower cost-of-living than your current area.
Minneapolis-St. Paul is an excellent example of how moving to work can be beneficial. The Twin Cities’ economy is booming according to Bloomberg News. The unemployment rate for as of July was 2.6%, which is less than half the national rate. It’s also very affordable. According to realtor.com, the median home value in Minneapolis was $260,000. This is less than half of the average home price in Los Angeles, and only one-fifth of the median home cost in San Francisco.
Boomtowns are popping up all across the country as companies set up new offices in lower-cost cities that offer a better lifestyle and operating cost. Atlanta is fast becoming the Hollywood of the South. Tech startups are flourishing all over the country, from Phoenix to Nashville.
Although moving to a new place for work is a smart financial move, the actual move can be expensive. This is particularly true for homeowners who must consider all moving expenses, including the risks and costs of Selling House and buying a new home.
There are many great ways to save money when you move for a job. Some of these may surprise you.
Tax deductions are available for a nominal fee
The bad news is that moving expenses for work purposes are not deductible in tax years 2018-2025, according to the IRS. This H&R Block article explains the details of the deduction and what you should know now. *
Since private industry is performing so well, it seems that many businesses are helping to cover the expenses and ease the burden for employees who have to relocate, while the deduction remains in limbo. Nearly three-quarters of all companies that were surveyed in the 51st annual Atlas Van Lines Corporate Relocation Survey revealed that they will be making changes to their relocation policies due to the new tax code. Nearly 60% said that they would offer additional money to offset the tax burden for employers offering relocation benefits.
Your company should foot the bill
Many people are unaware of the extent of the services that relocation companies offer. Many companies, big and small, have a policy for reimbursement. Many firms are working to increase their policies to stay competitive.
Atlas found that 45% of companies surveyed reported that the number of employees who moved in 2017 was either slightly or significantly higher than 2016. 43% of respondents said that they had increased their relocation budgets for 2017 while a similar percentage expected to see budgets increase this year.
The amount you are offered to relocate depends on several factors. This includes your job, how expensive your move will be, and what you ask for. This is especially important for homeowners.
Worldwide ERC, a trade association representing relocation companies, found that moving a homeowner is more expensive than moving a renter. According to Worldwide ERC, the average cost of moving a homeowner to a new job was $61,622 in 2015. This compares to $21,327 for renters. Home-sale assistance accounted for the largest portion of the total cost. It covered closing costs, tax liabilities and any loss that could be incurred.
According to Worldwide, the average loss-on-sale aid payout was almost $22,000 in 2015. These figures might seem surprising considering that it is still a seller’s marketplace in many metropolitan areas across the country. You may not want to give everything to your new employer regarding your move, particularly the sale of your most valuable asset.
Employers will often offer to buy your home direct in order to simplify the homeowner’s move. While it might be tempting to take this route, remember that the appraisal value of your home is not always the same rate as the current market rate.
Rent first to experience the area.
You may not be ready to move back into homeownership after accepting the job and going through the difficult process of selling your house. Renting in your new location could save you money for a variety of reasons.
One, if you have a letter of offer and a history of making mortgage payments, you may be able to find a great rental. There is also evidence that there is a softening in the rental market. Apartmentlist.com research shows that rents have increased in the U.S. by just 1% this year. This is only two percentage points less than 2017 In 28 of the 100 largest cities, rents declined year-over–year in August 2018.
This leverage may allow you to negotiate with your landlord. A lot of people don’t know that landlords will sometimes make concessions to attract good tenants. It may be possible to negotiate lower monthly rents, pay a smaller deposit, get a shorter term lease if you plan on buying soon or receive the first month’s rent free.
A 12-month standard lease for an apartment rents at $2,000 per month. Negotiating for the first month free effectively lowers you monthly rent by $167. You can also keep the signing bonus and use it to pay down your down payment when you are ready to buy.
Flexibility is the key to success
The home sale and subsequent purchase are often the most stressful and expensive aspects of moving for work. Selling a home to move to work can be more unpredictable than if you are looking to update your home or downsize in retirement.
Most companies offer relocation packages. Candidates have two weeks to reject or accept the offer and four weeks to move. Imagine your move, including the purchase of a home in another city and moving your family to a new place. All this happens within just 42 days.
According to the realtor.com residential listing database, the August median days on the market was 61. This doesn’t account for the escrow period which can be extended by 30 days after acceptance of an offer. It’s easy to see why details can slip through the cracks in a traditional home sale with such a short timeline.
We have written about the cost savings benefits to timing your move before. This can lead to thousands of dollars in savings and a higher selling price if you are able to plan everything well. Consider emerging options instead of the traditional home selling process due to the time constraints and high stakes involved.