Buyer Value Option HomeSale Program
The Buyer Value Option “BVO” program is the most widely used relocation HomeSale program in the USA. This cost-effective program allows fair market value to establish the home’s value and provides financial benefits to both your company and transferring employee.
With a Buyer Value Option, the Employer is invoiced for the costs associated with the home sale transaction, allowing the client company to cover the closing costs as normal operating costs, rather than a payroll expense. The Buyer Value Option is a tremendous cost saving solution in several ways:
The Two Closing Buyer Value Option Process:
Employee selects their preferred realtor from our network of 80,000+ agents and MoveCenter oversees our proprietary Aggressive Home Marketing process. When an acceptable offer is received, the Employee verbally counters/negotiates with the Outside Buyer, but does not sign the offer. Instead, in this tax protected HomeSale program, the Employee sells their home to MoveCenter. No closing costs are paid on this first transaction.
MoveCenter then sells the home to the Outside Buyer under the same terms the Employee negotiated/agreed with them. You, as our client are invoiced for closing costs, which are paid on this 2nd transaction only. The expense is a normal operating expense; there are no closing costs to reimburse your Employee for, thus eliminating payroll taxes and any employee income tax liability plus the need for gross-up.
MoveCenter’s process flow for a Buyer Value Option program is flexible.
We offer multiple options with a myriad of decisions, to meet the needs and desires of different clients. It is advisable that clients consult with legal counsel before making program decisions related to how your Buyer Value Option is structured. As a general rule, the following steps occur:
- Broker Market Analyses (BMA) are ordered from multiple top performing brokers who compete for the listing.
- Relocation Consultant discusses BMA’s and listing options with transferee
- Transferee selects their preferred listing agent
- Marketing strategy is developed and implemented
- Transferee receives acceptable – (we can accept finance contingency) bona fide offer from qualified buyer
- Contract terms are negotiated
- MoveCenter purchases home from transferee
- POINT OF CHOICE: Multiple choices exist for amount and timing of equity disbursement(s) to the Employee
- MoveCenter closes Buyer Value Option sale of home with outside buyer
- POINT OF CHOICE: Closing with outside buyer can be within hours of closing with the transferee, or days/weeks later
- POINT OF CHOICE: In the unlikely event the home sale falls through, options exist that can be exercised until another acceptable outside offer is received
As you research the Buyer Value Option(BVO), you may find that many suppliers are rigid with how they deliver the BVO HomeSale program, dictating the process flow. MoveCenter is willing to educate and respect your choices on what’s right for your company. The IRS has not considered the Buyer Value Option, and it is not discussed in Rev. Rul. 2005-74. Thus, while some hold the opinion that it should be treated the same as an AV, and that the method is covered by the analysis in Rev. Rul. 2005-74, the answer is not clear and is open to interpretation. Many clients feel that by structuring the BVO to closely align with these IRS rulings, they are reasonably safe from the possibility of future tax consequences. Others take an opposing viewpoint and opt to be more liberal with how their BVO programs are structured, realizing that either way, they may or may not realize tax consequences if/when the IRS does rule on the taxability of the BVO with what may or may not be a retroactive ruling.
Important to know: The IRS has not ruled on the taxability of the Buyer Value Option. While the IRS issued a publication in 1972 of Rev. Rul. 72-339, 1972-2 C.B.31, which addresses the taxability of an Appraised Value purchase, and Rev. Rul. 2005-74, 2005-51 IRB 1 which addresses both Appraised Value and Amended Value transactions, the BVO has not been mentioned.