A Buyer Value Option (BVO) is a tax-protected corporate home sale program that helps your relocating employees sell their homes without triggering taxable income on the closing costs. It’s one of the most cost-effective home sale benefits available, and on average it saves companies $15,000 or more per move when compared to direct reimbursement.
The employee finds a buyer, and the offer sets the home’s value
The relocation management company (RMC) buys the home from the employee, then resells it to the outside buyer in a separate transaction
All commissions and closing costs are paid by the RMC and billed to the company as a business expense
No gross-up is needed because the costs aren’t taxable income to the employee
What Is a Buyer Value Option?
A Buyer Value Option, sometimes called an “amended sale,” is a structured home sale program where your relocating employee finds a buyer for their property, and the offer from that buyer sets the value of the home. The relocation company then steps in, purchases the home from your employee at that buyer-established price, and handles a second, separate sale to the outside buyer.
This two-sale structure is what makes the BVO tax-protected. Because the company is paying the closing costs as part of its own real estate transaction, those costs are treated as a business expense rather than taxable income to the employee. That’s a meaningful distinction. The 2017 Tax Cuts and Jobs Act eliminated nearly every relocation-related deduction, but properly structured home sale programs like the BVO still preserve tax protection on what’s typically the single largest expense in any move.
For companies that “tax assist” or gross up their employees, the home sale gross-up is consistently the biggest line item in the relocation budget. A BVO eliminates the need for that gross-up entirely, which is where the savings come from.
Pros
Removes financial burden to employee for “reimbursement” process Eliminates front-end tax costs Eliminates back-end tax costs (“gross-up” and “true-up”) Stream-lines the home sale process
Cons
Sale must present risk of a “fall thru” and the home could be taken into inventory (increasing costs to the company)
How Does a Buyer Value Option Program Work?
Here’s how a typical BVO transaction unfolds:
Your employee lists their home for sale and receives marketing support from the relocation management company.
An outside buyer makes a bona fide offer, and your employee accepts the terms.
The RMC purchases the home from your employee at the price set by the outside buyer’s offer. Your employee receives their equity and is free to focus on the new role.
The RMC enters into a new listing agreement and executes a second, separate contract of sale with the outside buyer.
The RMC pays all real estate commissions, closing costs, and transaction fees.
The RMC bills your company for the costs as a business expense, with no gross-up required.
It’s worth taking a look at a quick example. Pam is relocating and needs to sell her home. She lists it at $250,000, finds a buyer, and accepts the offer. ARC purchases Pam’s home at the buyer’s offer price and pays Pam her equity.
ARC then sells the property to the original buyer, covers all commissions and closing costs, and invoices Pam’s employer. Pam moves on to her new role with no out-of-pocket costs and no tax burden, and her employer avoids tens of thousands in gross-up expenses.
Example Home Owner BVO Policy
Buyer Value Option vs. Guaranteed Buyout: What’s the Difference?
As opposed to Buyer Value or “Amended Sale” programs, Direct Reimbursement Programs used to be the most common home sale programs utilized by corporations. With this program, the employer literally reimburses the employee for the selling costs associated with the sale of the employee’s home. While this may seem like an easy method for paying the employee back for the costs incurred by the employee for relocation, in reality, the tax liability is much greater for both the employer and employee than with the BVO program.
Here’s why…
The reimbursed amount paid to the employee for relocation costs are actually viewed by the IRS as taxable income to the employee. In order to level out the tax burden for the employee, it has become common practice for the employer to “tax assist” or “gross-up” the employee for the taxes to help make that employee whole in the transaction. This can become a never ending cycle, as the IRS also views the gross-up amount as taxable income to the employee.
In some cases this can throw the employee into a higher tax bracket for the entire year, which means that there are both “front end” and “back end” costs to be considered.
Here’s how the reimbursement scenario might look:
Direct Reimbursement Program
$500,000
Sales price of the home
$30,000
Real estate commission (6% of sales price)
$10,000
Closing costs (2% of sales price, which can vary by state and county)
$40,000
Total cost to sell the home
-$12,000
Tax with-holdings to the employee (25% Fed Income Tax and 5% State Income Tax. In this example if the company does not “tax assist/gross-up” the employee is left with a net check of $28,000 when reimbursed for the selling costs of $40,000)
$60,000
Cost to the company to get the employee a “net check” for $40,000 (considering the tax with-holdings and subsequent tax assistance/gross-up)
Buyer Value Program Example
In contrast, the BVO Program is structured based on recommendations from Worldwide ERC’s Amended Value (AV) Sale process so that the payment of closing costs may be provided by the employer to the employee without tax consequences to the employee.
Under the BVO, the Third Party Relocation Management Company (RMC) purchases the Employee’s home, and the Brokers’ commissions and closing costs are not charged to the employee. With BVOs, there are two separate real estate transactions. First the RMC buys the home from the employee based on the sales price the buyer is willing to pay for the property, and then the RMC sells the home directly to the buyer in a second transaction. The RMC then pays all of the Broker commissions and closing costs. The RMC then bills the employer, and the cost is considered a “business expense” and avoids the entire tax burden of direct reimbursement. One of the keys to this process is that the two sales transactions cannot be tied to one another.
BVO Program
$500,000
Sales price of the home
$30,000
Real estate commission (6% of sales price)
$10,000
Closing costs (2% of sales price, which can vary by state and county)
$40,000
Total cost to sell the home/Cost to the company
$0
Amount required by IRS to be with-held from the employee for taxes
$0
Cost to the employer for Tax Assistance/Gross-Up
$20,000
Amount saved by company in tax assistance
$12,000
Amount saved by employee in lost taxes
BVO Tax Implications and IRS Guidelines
The BVO program is structured around guidance from Worldwide ERC’s Amended Value (AV) sale process and the principles laid out in IRS Revenue Ruling 2005-74. While the IRS hasn’t issued a ruling specifically on BVOs, the AV ruling provides the framework that properly structured BVO programs follow.
For a home sale program to qualify for tax protection, the transaction must satisfy the “Eleven Key Elements” recommended by Worldwide ERC. The core requirements are:
Two arms-length transactions. The sale from the employee to the RMC and the sale from the RMC to the outside buyer must be legally separate.
An element of risk. The RMC must take beneficial ownership of the property and accept the financial risk that comes with it.
No “take-backs.” If the second sale falls through, it can’t unwind the first.
The tax protection is built on the company’s willingness to take on real risk. That risk is what differentiates a tax-protected home sale from a simple reimbursement, and it’s why the IRS treats the costs as a business expense rather than taxable wages.
A note on terminology: ARC strongly recommends consulting your company’s tax and legal advisors when designing or updating a BVO policy. Tax regulations evolve, and a small structural deviation can disqualify the program from the protection you’re counting on.
What Happens If the Home Doesn’t Sell? Understanding Sunset Clauses
One of the most common questions HR and global mobility teams ask about BVOs is what happens when a home sits on the market for too long. That’s where a sunset clause comes in.
A sunset clause converts the BVO to a Guaranteed Buyout after a defined marketing period, often 90 or 180 days. If the employee hasn’t secured an outside buyer by then, the RMC orders appraisals and extends a guaranteed offer based on the appraised value. The employee gets certainty, the relocation moves forward, and the company avoids the productivity loss that comes with a stuck transferee.
ARC works with each client to set sunset terms that fit the company’s risk tolerance and the markets where employees are typically selling. In healthy markets with realistic list pricing, sunset clauses rarely activate. They’re an insurance policy more than a regular occurrence, but they remove one of the biggest objections companies have when evaluating a BVO for the first time.
What’s Included in ARC’s BVO Program
When you partner with ARC on a Buyer Value Option program, your employees get full-service support from listing through close. Here’s what’s included:
Two Broker Price Opinions (BPOs) and a reconciled value recommendation
Listing price guidance and competitive market analysis
Realtor selection support, drawing on ARC’s vetted broker network
Marketing strategy development and listing optimization
Property photography guidance and home preparation tips
Weekly feedback from the listing agent
Contract review and negotiation support
Coordination of inspections, repairs, and required disclosures
Two-transaction closing management (employee to RMC, RMC to outside buyer)
Equity disbursement to the employee on vacate or contract execution, whichever is later
All commission and closing cost payments handled directly by ARC
Detailed invoicing and reporting to your finance and mobility teams
Your employee never attends a closing with the outside buyer. ARC handles it remotely so they can focus on the new role and getting settled.
Why Companies Choose ARC for BVO Management
ARC has been managing tax-protected home sale programs for both private-sector clients and federal agencies for years. ARC is an approved Buyer Value Option provider to the United States Government under GSA Schedule 653-5, and ARC delivers BVO services to employees relocating with several of the same agencies that regulate the relocation industry.
That federal vetting matters. ARC’s processes, technical capabilities, and compliance practices have all been reviewed and approved by GSA, which means the same rigor protects every private-sector client. ARC also consistently ranks at the top of customer satisfaction surveys across the relocation industry, with strong feedback from both corporate clients and the transferees who actually use the program.
ARC’s relocation counselors are trained on the full IRS and Worldwide ERC framework for tax-protected home sales, and ARC works directly with your tax and legal teams to make sure your BVO policy is structured for maximum protection.
Frequently Asked Questions
What is a Buyer Value Option in relocation?
A Buyer Value Option is a tax-protected corporate home sale program where the relocating employee finds a buyer, and the buyer’s offer establishes the home’s value. The relocation management company then purchases the home from the employee and resells it to the outside buyer in a separate transaction.
How does a BVO differ from a Guaranteed Buyout?
A BVO sets the home’s value based on an actual outside buyer’s offer, while a GBO sets the value based on the average of two independent appraisals. A BVO costs less and shifts less risk to the company, but it requires the employee to find a buyer before the program activates.
Is a Buyer Value Option taxable to the employee?
No. When the BVO is structured according to IRS and Worldwide ERC guidelines, the closing costs are treated as a business expense paid by the company rather than taxable income to the employee. That’s the entire point of the program.
What IRS ruling governs BVO programs?
The closest direct guidance is IRS Revenue Ruling 2005-74, which addresses Amended Value home sale programs. The IRS has not issued a ruling specifically on BVOs, but properly structured BVO programs follow the same Eleven Key Elements that Worldwide ERC developed based on the AV ruling.
How much does a BVO program save companies?
On average, a BVO saves a company $15,000 or more per home sale compared to direct reimbursement with gross-up. The exact savings depend on the home’s sale price, the employee’s tax bracket, and your company’s gross-up methodology.
What happens if the buyer falls through in a BVO?
If the second sale (RMC to outside buyer) falls through, the company takes beneficial ownership of the home until a new buyer is found. Industry fall-through rates are typically less than 1%, and ARC takes specific precautions during contract review to minimize the risk.
What is a sunset clause in a BVO program?
A sunset clause automatically converts the BVO to a Guaranteed Buyout if the employee’s home hasn’t sold within a defined marketing window, often 90 or 180 days. It gives your employee a backstop and helps keep the relocation on schedule.
Who pays the closing costs in a BVO?
The relocation management company pays all commissions, closing costs, and transaction fees as part of its own sale to the outside buyer. The company is then billed by the RMC, and the costs are treated as a deductible business expense.
For more information about BVO or any other of our services, please contact us.
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