When Douglas Graham, an editor with Time-Life Books, Inc., moved to Washington from the New York area in the summer of 1976, he and his wife, Elizabeth, sold their old house for a little less than they'd hoped. They paid "somewhat more for our new one," he said, "but at least we didn't have to worry."

His move, along with those of about 125 colleagues, was entirely paid for by his employer and arranged by a relocation management company.

Also known as a third-party house buyer, this type of company's main function is to purchase the house the employe is leaving, sparing the employe the expense of having to get "bridge" loans. The firm also helps the employe find a house in the transfer area and helps with moving and, sometimes, the securing of financing.

The relocation business has grown rapidly in the past decade. About 700 corporations now use the services of a half-dozen nationwide relocators as well as a score or more who operate regionally.

Five times as many Fortune-ranked firms used a relocator in 1977 as in 1970, according to Homequity/Homerica, one such relocation firm. The firms attribute their growth in part to the spiraling cost of housing plus corporations' willingness to accede to demands by transferred executives that they be spared the cost and hassle of moving.

A 1976 survey by the Employee Relocation Council, a non-profit organization that lists many of the top U.S. corporations as members, indicated that a third of those polled used an outside relocator, compared with 24 percent in 1974.

Only 16 percent of the companies polled maintained a staff to help with their own workers' transfers. About a fourth of the firms did not arrange moves, but said they make up any capital losses their employes suffer in selling their homes. And 23 percent said they reimbursed expenses.

When Time-Life Books decided to shift operations involving 312 positions to Alexandria, 128 employes chose to move with the Time Inc. subsidiary.The normal attrition rate in such a corporate move varies between 40 and 80 percent, with those on the lower end of the pay scale most often staying behind, according to the Employee Relocation Council.

Time-Life officials said the subsidiary's sales promotion and business department staffs were depleted by the move, but all but one of the managers came. A sizeable number of the 128 who moved were renters in the New York area.

Those who owned houses they wanted to sell received two independent appraisals arranged by Homequity/Homerica, the Wilton, Conn., firm with which Time-Life Books contracted to arrange the move. As specified in the contract, if the two appraisals fell within 7 1/2 percent of each other, Homequity offered to buy the house at the average of the two prices. Owners were given 30 days to try to find better prices, and where employes decided to sell to someone else, Homequity asked to act as the agent.

Douglas Graham said he and his wife, who has since come to work for Time-Life as a copy coodinator, were "mildly disappointed" in the price Homequity offered, but elected to sell to the firm anyway because the real estate market was dePressed in their section of Westchester County. As it turned out, Homequity was unable to resell the Graham house for more than six months.

On the other hand, Nicholas Benton, vice president of the book company, declined a Homequity offer of $146,500 for his upper East Side brownstone and subsequently sold it through another agent for $175,000.

In both cases Time-Life Books paid the sales commission. It also paid Homequity a fee for having the Benton home appraised.

Theodore W. Robinson of Homequity said the company tries to turn over the houses it buys within three months by selling them through local realtors. Because third-party buyers purchase a large number of houses at the same time - Homequity bought between 9,000 and 10,000 houses last year - they can negotiate resale commissions with the local brokers and pocket the differences as profit, sometimes as much as 1 percent.

Any capital gains realized in the sales are turned back to the original homeowners; any losses are reimbursed by the employer, as per Homequity's policy. In addition the contracting employer pays actual moving costs plus a fee to Homequity and a fee for arranging rental housing.

Homequity counseled Time-Life employes on the Virginia real estate market before they left New York. Realtors from Town & Country, a Northern Virginia firm with which Homequity has an exclusive relationship in this area, showed the employes around Fairfax County.

While rents are cheaper here, virtually all the New Yorkers were shocked at house prices, which they found to be 20 to 30 percent higher, Graham said. He and his wife thought they could get "a decent house with wooded property for $60,000," he recalled.

Graham and others made the mistake of comparing housing in the nearby suburbs of Washington with housing a much greater distance out of New York, partly because Town & County agents concentrated on Fairfax County. In the end some employes found cheaper homes outside of Fairfax and Alexandria, Benton said.

The Grahams ended up paying about 25 percent more than planned for their house near Clifton in Fairfax County. The couple also got a below-market-rate mortgage loan from one of the Virginia banks that had gone to New York to solicit Time-Life Book's business.

Industry sources said relocators can often reduce the going rate by one-eighth to one-fourth of a point.

Graham also said their new, contemporary house, bought from a bank, which had acquired it from a bankrupt builder, has turned out to have "lots of flaws" - and no warrantly against defects.

Time-Life Book president Jack McSweeney and other employes reported different experiences with Town & Country. McSweeney said they were shown only the price range they indicated.

The McSweeneys bought a McLean home on their own after seeing a sale sign in the front yard. In that case Town & Country split the commission with the listing realtor, but only after Homequity had taken a 25 percent referral fee off the top.

The company said the move to Alexandria cost Time-Life Books about $2 million, which works out to nearly $15,000 a household. (Homequity says the average is now approaching $20,000 each.)

Some 40,000 to 50,000 homes are bought each year by third party firms. Usually the property of higher-salaried employes the houses tend to be valued at 20 percent over the national average for existing homes, now about $49,000, according to the Employee Relocation Council and various relocators.

According to one industry insider, commissions on these transactions could run up to $20 million a year. As evidence of relocation's profitability, a number of small firms have recently been taken over by top U.S. corporations.

The largest of these is said to be Merrill Lynch Relocation Management Inc., based in White Plains, N.Y. The brokerage firm acquired Ticor one year ago for $14 million.

Homequity/Homerica, founded in 1955, is a wholly owned subsidiary of Peterson, Howell & Heather, Inc., a Baltimore company active in car and truck leasing. Last year H/H purchased about 10,000 homes valued at $500 million. Its gross billings rose 45 percent to about $65 million. Its 244 clients include IBM, Mobil, Gulf, C&P Telephone, and Republic Steel.

Another large relocator is Equitable Relocation Service, owned by Equitable Life Assurance Society of New York. ERS purchased about 4,500 houses last year.

Executrans of Greenwich, Conn., was founded in 1965, and purchased in 1976 by Allstate Enterprises, a subsidiary of Sears, Roebuck. In the first year after its acquisition, Executrans said it grew 131 percent. Its Washington brokers are Town & Country, and Long & Foster Realtors. Its clients include General Telephone and Electronics, Lockheed, Hewlett Packard, Comsat and Memorex.

Other large relocators are owned by Chicago Title and Trust Co. and the San Francisco conglomerate, Transmerica Corp.