What is a Buyer Value Option (BVO) Home Sale Program?

Under a GBO, the relocation management company (RMC) orders two home appraisals and simply averages the two to determine a guaranteed offer.
As an example:

• Appraiser A values a relocating employee’s home at $330,000
• Appraiser B values the same home at $335,000
• $332,500 is considered the “GBO”

The relocating employee then takes the offer of $332,500 and moves to their new location, unencumbered by their former home. In turn, the RMC sells the property on the
open market, and the employer is charged for all of the associated real estate expenses upon the conclusion of the sale.

The employer can treat the home sale costs as “business expenses,” so none of the expenses are considered income to the employee (for federal tax purposes).
This process is validated by the IRS in Revenue Ruling (2005-74), which specifically addresses this type of home sale program.

Essentially, BVO is very similar to a GBO, with the exception that with a BVO home sale program, no appraisals are completed. Instead, the buyout offer is based on a bona fide fair market offer received by the employee from a qualified third-party buyer. With BVO, the employee is responsible for listing their home for sale, and receives marketing assistance from the RMC.  

Once a contract is deemed valid, the RMC offers to buy the home from the employee at a price based on the outside sale price, and the employee is funded their equity based on this amount. The RMC will enter into a new listing agreement with the employee’s broker and proceed to close the transaction with the outside buyer while honoring all agreed terms and conditions. All home sale costs are treated in the same manner as with a GBO program.  

The BVO home sale program provides all the tax benefits to both the employer and employee. However, it is the responsibility of the employee to secure an outside buyer ready, willing, and able to purchase the property at a fair market value. 

• • Tax Savings: A properly structured BVO program that adheres to IRS requirements provides significant tax savings that benefit employees as well as employers.
  • Minimized Risk for Employees: Employees avoid the financial risk and stress of carrying two mortgages if they have to move before their home is sold.
  • Expedited Relocation: Employees can move to their new location more quickly, knowing that their home sale is being managed.
  • Cost Efficiency for Employers: Employers can manage relocation costs more effectively and help maintain employee productivity by reducing the stress and financial burden associated with home selling.

• Escrow Fees
• Seller Concessions
• Repairs
• Inspections
• Miscellaneous

A Buyer Value Option home sale program is a valuable tool for companies looking to support their relocating employees. By assisting with the home sale process, companies can alleviate a significant source of stress for their employees, ensuring a smoother transition and enhancing overall job satisfaction.

For the company, this can translate into higher retention rates, more successful relocations, and a stronger ability to attract top talent. 

RFP – Relocation Request for Proposal Generator