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Young woman setting a box downMoving is an extremely stressful life event. There’s packing, enrolling your kids in a new school system, figuring out the best way to get to work (often juggling a new job at the same time).

My friend and fellow Quicken Loans Home Loan Expert Patrick recently experienced a move himself. He wrote about all the things he wished he had known beforehand.

Patrick probably could’ve saved himself a lot of trouble if he had known Bill Mulholland. Bill is the CEO of American Relocation Connections. The company specializes in relocation for individuals and employers, moving people all over the world.

Bill recently took the time to answer a few of my questions.

Q: What are some items people commonly forget in the move?

A: It sounds silly, but I can’t tell you how many times people have left important documents or items out when the movers come through and the items are packed, boxed and loaded onto the truck all in the blink of an eye! If you’ve never experienced a move with a “full service” professional moving company, it’s amazing how fast they wrap, pack and load! Most movers will have your entire life packed in a matter of hours! As such, we always advise our clients to have a “no move” room or area in their house that is off limits to the movers. This can include important papers for closing, car keys and other items you’ll want to have once the truck leaves!

Another key item buyers can forget is their checkbook on a home finding trip. Sellers in most markets expect an earnest money deposit to accompany an offer. As such, the client will need to have a check with them while house hunting even though the closing may be months away!

Q: Since relocations are often far away, do you have any tips for buying a new home and selling an old one at the same time?

A: Absolutely. If a seller must sell their home in order to purchase a new one, we always advise the client to not schedule a house hunting trip or to make any offers to purchase a new home until their original home is under contract. If the client is comfortable not waiting to sell their home in order to purchase a new one, we always encourage the client to confirm with the mortgage loan officer that they qualify to be approved for a loan while owning both homes. Once the original home is under contract, we encourage our clients to schedule a home finding trip and to make any offers contingent on the successful closing of their own house. This way if for any reason the contract on the original house were to be cancelled, our client in turn has the right to terminate the contract at the new home without penalty. Some employees are offered a “guaranteed buyout” as part of the relocation benefits. This means the relocation company offers to buy the home if the employee doesn’t get any offers, so it’s important for the client to understand their benefits and any restrictions or requirements that their policy may put on those benefits. We always encourage our clients to consult with all parties involved to take a collaborative approach in benchmarking best practices to transition homes. These parties typically include the real estate agent, loan officer and the relocation consultant. Consulting with all parties before accepting or making an offer will drastically reduce the chances of the client jeopardizing any benefits or incurring any unnecessary costs or delays.

Q: Are there any relocation costs that a homeowner can deduct from their taxes?

A: Yes. Most commonly the client can deduct the transportation of household goods and the final travel costs, but it’s always best to consult a tax adviser who is familiar with IRS restrictions and guidelines. There is also a process in which employers can tax protect the home selling costs for employees known as a “Buyer Value Option” (BVO). Learn more about BVOs in this short video.

Q: I see that you do international relocations. Are there any special considerations that come along with that? What does the client need to be aware of?

ARC is a large global relocation provider. In fact, one of ARC’s clients is U.S. Customs and Border Protection. As such, ARC must lead the relocation industry in best practices for global relocations. There are many factors for clients to consider and be aware of when relocating internationally. Examples include,visas (timeline restrictions, costs, requirements, restrictions), foreign law (what is and is not allowed), tax implications (for example the U.S. requires employees to “equalize” to pay U.S. taxes and foreign taxes while working abroad), and current industry trends (foreign economies, gas prices, issues at port, civil unrest, etc.) are just a few of the top considerations we review when on-boarding a new client for a global relocation.

Q: If an employee is looking to negotiate a relocation package, what are some common things they might try to bargain for? What expenses are typically included?

Each relocation and situation is unique, but as a rule there are five major cost factors that employees should be aware of when negotiating a relocation package.

1) The cost of shipping household goods: This should be covered as a baseline benefit to accept a move. The average shipment in the U.S. last year was 15,000 lbs. and the cost was $13,000.

2) Home Selling Costs: If an employee has a home to sell this will be the most expensive event in the relocation process every time. The standard real estate agent commission in the U.S. is 6% and the average for closing costs is 2%. While these sound like cute little numbers, once you do the math they can be quite a large dollar amount. The average selling costs in the U.S. last year were $24,000. About half of employers cover the costs of selling a home in their corporate relocation policy.

3) The costs of purchasing a new home at your new destination: Average home purchase costs in the U.S. are 2% of the home purchase price.

4) Temporary housing when in transition between homes: The average cost is $3,500 per month.

5) Last (and certainly not least) is “tax assistance.” Will you be “grossed up” for taxes by your employer? If not, factor in a minimum of 30% going to Uncle Sam.

Also make sure if there is a cap on the dollar amount of your relocation budget so you know what the cap is and if it is realistic for the costs that you will incur. A $30,000 budget may sound like a large number, but may not even cover the home selling costs depending on your sale price.

Q: What can you do to help your family, particularly children, during the moving process?

A: Children are hands down always the most important consideration for parents during relocation. The National Institute of Health consistently ranks relocation as third in life’s most stressful events (just behind death and divorce). Relocating can be even more stressful on children. The reason it’s particularly stressful is the lack of control they often have during the process and the fact that they don’t know what to expect (the unknown factor). As such, we encourage our clients to make the children part of the relocation process by offering children’s activities such as

  • Mapping out their new room (where to put their bed, dresser, etc.)
  • Creating an activity list for the new area (sign up for karate, soccer, ballet, etc.)
  • Packing labels to use on moving day (so they have their own labels for their toys, books and clothes)
  • Postcards to send their friends with their new address

Allowing the child to take part in and be excited about the moving process greatly reduces stress and is often cited by our clients as the most valued benefit of the process!

Q: What should people look for when scouting a new location to live?

A: The top considerations are:

1) School Systems: Not only is this important for clients with children but it is the number one indicator for resale value.

2) Mass Transit/Roads: What will my commute be like if I purchase in this area vs. another town? Is there nearby access to highways, a subway or bus system?

3) Recreation Info: What type of amenities does a particular community have to offer (shopping, grocery stores, parks, etc.)?

4) House Pricing: The costs of homes can vary drastically based on location, schools and amenities.

Q: Is there anything people don’t realize about relocating across long distances that would be helpful to know?

A: Yes. Many people don’t realize that relocation companies exist. Relocation companies were created to act as a single point of contact that can bring all of the various service providers together under one platform that an individual will need to work with when moving long distances. The other large advantage that relocation companies can offer to clients is to act as an advocate by leveraging their collective volume to offer clients discounts on pricing through the service providers. Last but certainly not least, the relocation company can offer benchmarking and industry best practices as someone who relocates people every day (as the average American only moves once every seven years).

The great news is that most service providers are highly regulated. For example, the Department of Transportation regulates movers for the shipment of household goods across state lines. States regulate the laws when buying and selling real estate. RESPA  regulates mortgage lenders. As such, many service providers are required to be licensed and abide by the rules, regulations and laws when using their services. People need to be sure that they are using providers who have been vetted for pricing and quality service.

Thanks Bill!

Do you have any questions about moving? How about tips that have worked for you? Share them with us in the comments.

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