Buyer Value Option: How BVO Home Sale Programs Work

For employers relocating homeowners, the sale of an employee home can be one of the largest expenses within a relocation program. Real estate commissions, closing costs, and the tax treatment of those expenses can significantly increase the total cost of a relocation.

A Buyer Value Option, commonly referred to as a BVO, is a tax-protected home sale program designed to reduce those costs while providing structured support for the relocating employee.

When properly designed and administered, a Buyer Value Option can help employers avoid taxable reimbursements for qualifying home sale expenses, reduce the need for tax gross-up, and provide employees with professional assistance throughout the home sale process.

What Is a Buyer Value Option?

A Buyer Value Option is an employee relocation home sale program in which the relocating employee markets the home and secures an outside buyer before the relocation management company purchases the property.

Once a qualified outside buyer is identified, the relocation management company purchases the home from the employee based on the outside offer. The relocation management company then completes a separate sale of the property to the outside buyer.

This creates two distinct home sale transactions rather than having the employer reimburse the employee for qualifying real estate expenses after a traditional home sale.

The structure is important because properly administered home sale programs can provide significant tax advantages for the employer and relocating employee.

How Does a Buyer Value Option Work?

A typical BVO home sale program follows these steps:

1. The employee lists and markets the home

The relocating employee works with a qualified real estate broker to market the property. The relocation management company provides oversight and coordinates the process according to the employer relocation policy.

2. An outside buyer makes an acceptable offer

The employee markets the property until a qualified outside buyer is identified and an acceptable offer is received.

3. The relocation management company purchases the home

The relocation management company purchases the property from the employee based on the price and terms established by the outside offer.

4. The relocation management company sells the home to the outside buyer

The relocation management company then completes a separate transaction with the outside buyer.

This two-transaction structure is a fundamental component of a properly administered tax-protected home sale program.

Why the Two Sale Structure Matters

Under a traditional direct reimbursement approach, an employee may sell the home directly to an outside buyer and then receive reimbursement from the employer for eligible real estate commissions and closing costs.

Those reimbursements can create taxable income for the employee, potentially requiring the employer to provide additional tax assistance or a gross-up.

A properly structured BVO works differently.

The first transaction occurs between the employee and the relocation management company. The second transaction occurs between the relocation management company and the outside buyer.

Real estate commissions and qualifying closing costs associated with the second transaction are incurred as part of the business transaction rather than being reimbursed directly to the employee.

The result can be substantial savings for an employer that relocates homeowners.

Buyer Value Option and IRS Revenue Ruling 2005 74

IRS Revenue Ruling 2005 74 provides important guidance regarding the federal tax treatment of employer-sponsored home sale programs.

The ruling addresses different relocation home purchase arrangements and distinguishes between programs in which a relocation company becomes the beneficial owner of an employee residence and arrangements that function primarily as reimbursement mechanisms.

For employers, this distinction makes proper BVO program design and administration critical. Simply labeling a home sale program a Buyer Value Option does not automatically create favorable tax treatment. The structure and execution of the transactions matter.

Employers should work with experienced relocation and tax professionals when designing or reviewing a tax-protected home sale program.

BVO vs. Direct Home Sale Reimbursement

The primary financial difference between a BVO and direct reimbursement is how eligible home sale expenses are incurred and treated.

With direct reimbursement, the employee typically sells the home and the employer reimburses eligible commissions and closing costs. Depending on applicable tax treatment, those reimbursements can create additional taxable income and associated employer tax costs.

With a properly structured Buyer Value Option, the relocation management company becomes part of the home sale transaction. This can eliminate the need to reimburse the employee for qualifying home sale expenses and reduce the associated tax gross-up.

For organizations with recurring homeowner relocations, the difference can become significant across an entire relocation program.

How BVO Can Reduce Corporate Relocation Costs

Consider a relocating employee selling a home for $400,000.

Real estate commissions and other eligible home sale expenses can represent a substantial portion of the total relocation cost. If those expenses are reimbursed as taxable income, the employer may also incur additional costs associated with tax assistance.

Under the example previously calculated by Signature Relocation, a properly administered tax-protected home sale program on a $400,000 home can generate more than $16,000 in potential employer savings per home sale compared with a taxable reimbursement structure.

For an organization relocating 20 homeowners under similar circumstances, that represents potential savings of approximately $320,000.

Actual savings vary based on home value, commissions, closing costs, applicable taxes, policy design and individual circumstances.

Benefits of a Buyer Value Option for Employers

Cost reduction is one of the primary reasons employers implement BVO programs, but it is not the only benefit.

A properly administered BVO can help employers:

• Reduce taxable home sale reimbursements
• Reduce tax gross-up expenses
• Establish consistent home sale procedures
• Provide professional oversight of real estate transactions
• Improve relocation budget predictability
• Reduce the administrative burden placed on internal HR teams
• Provide employees with structured home sale support

For companies relocating multiple homeowners each year, these benefits can have a meaningful impact on overall relocation program costs.

Benefits of BVO for Relocating Employees

Selling a home while preparing for a relocation can create significant demands on an employee.

A BVO program provides professional coordination throughout the home sale process while allowing the employee to market the property to outside buyers.

The relocation management company can coordinate with the employee, real estate broker, and other parties involved in the transaction. This gives the employee a central point of coordination and helps keep the home sale aligned with the employer relocation policy.

The employee can then focus more attention on the new position, family considerations, and the transition to the destination location.

BVO vs. Guaranteed Buyout

Buyer Value Option and Guaranteed Buyout programs are both structured home sale programs, but there is an important difference.

Under a BVO, an outside buyer is generally secured before the relocation management company purchases the home from the employee. This limits the financial risk associated with the relocation management company taking the property into inventory.

Under a Guaranteed Buyout program, commonly called a GBO, the home may be purchased from the employee based on an established appraisal process if an outside buyer is not secured within the specified marketing period.

A GBO can provide additional certainty for the relocating employee, but it can also create greater financial risk and potential carrying costs for the employer.

The appropriate program depends on company objectives, employee population, relocation policy, and risk tolerance.

Who Should Consider a Buyer Value Option Program?

A BVO may be appropriate for employers that regularly relocate homeowners and currently reimburse employees for home sale expenses.

It can also be valuable for organizations reviewing relocation costs, tax gross-up expenses, or the competitiveness of their relocation benefits.

HR and mobility leaders may want to evaluate their current home sale approach when:

• Home sale reimbursements are generating substantial tax gross-up
• Relocation costs are increasing
• The organization is relocating more homeowners
• HR is spending significant time coordinating individual home sales
• Existing relocation policies have not been reviewed recently
• The company wants greater consistency across employee relocations

The potential value of a BVO increases when an organization looks at savings across the entire relocation program rather than evaluating a single move in isolation.

Frequently Asked Questions About Buyer Value Option

What does BVO mean in relocation?

BVO stands for Buyer Value Option. It is a structured employee relocation home sale program in which an outside buyer is secured before a relocation management company purchases the home from the relocating employee.

What is a BVO home sale?

A BVO home sale involves two separate transactions. The relocation management company purchases the home from the employee after an outside buyer is identified, then sells the property to that outside buyer.

Is a Buyer Value Option a tax-protected home sale program?

A properly structured and administered BVO can qualify as a tax-protected home sale program. Program structure and execution are important to the tax treatment. IRS Revenue Ruling 2005 74 provides federal guidance regarding relocation home purchase programs.

How does a BVO save an employer money?

A BVO can reduce or eliminate taxable reimbursements of qualifying real estate commissions and home sale closing costs. This can also reduce the tax gross-up expense that would otherwise accompany taxable reimbursements.

Does the employee have to find a buyer before the BVO begins?

In a traditional Buyer Value Option, the employee markets the property, and an outside buyer is identified before the relocation management company purchases the home.

What is the difference between BVO and GBO?

With a BVO, an outside buyer is secured before the relocation management company purchases the employee home. A Guaranteed Buyout can provide for the relocation management company to purchase the home based on an appraisal process when an outside buyer has not been secured within the established marketing period.

Buyer Value Option Program Management

A Buyer Value Option can be an effective way for employers to control relocation costs while providing valuable home sale assistance to relocating employees.

The financial benefits, however, depend on proper program structure and administration.

Signature Relocation works with employers to develop and administer BVO home sale programs based on company relocation policies, employee needs, and program objectives. Our team coordinates the home sale process from initial marketing through the two-sale transaction while providing a single point of contact for the relocating employee.

For organizations evaluating current home sale benefits, reviewing existing reimbursement expenses, tax gross-up, and homeowner relocation volume can help determine whether a Buyer Value Option could reduce overall relocation costs.

About Signature Relocation

Signature Relocation is an independent, family-owned relocation management company providing domestic and global employee relocation services. For over 28 years, we have helped organizations develop and manage relocation programs that control costs, reduce the administrative burden on HR teams, and provide high-quality support for relocating employees. Backed by our Quality Assurance Guarantee.

Our services include home sale programs, destination services, temporary housing, policy development, tax support, household goods management, and customized relocation solutions. Clients receive a single point of contact, direct access to leadership, and relocation support backed by experienced professionals and technology that provides visibility throughout the process.

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