Buyer Value Option (BVO)

🏠 Understanding Buyer Value Option (BVO) vs. Amended Value (AV) vs. Direct Reimbursement

Relocation home sale programs come with their own terminology and complexities. While programs like Buyer Value Option (BVO), Amended Value (AV), and Direct Reimbursement may sound similar, their financial and tax implications can vary dramatically.

Let’s break down these options to help your organization and employees make smarter relocation decisions.

💡 What Is a Buyer Value Option (BVO)?

The Buyer Value Option, also referred to as an Amended Sale, is one of the most tax-advantaged home sale options available.

After the 2018 Tax Reform Bill, most relocation expenses became taxable. However, BVO programs remain IRS-compliant and help corporations avoid gross-ups, especially on high-ticket items like home sales.

✅ BVO Advantages:

Removes upfront financial strain from the employee

Eliminates front-end and back-end tax costs

Prevents costly gross-up calculations

Simplifies the home sale experience

❌ BVO Considerations:

If the buyer backs out, the company may need to take home into inventory

Mispriced homes may lead to delays or extra costs

🛠️ How Does a BVO Program Work?

The employee lists and markets their home.

An outside buyer makes an offer.

The relocation company purchases the home from the employee at that price.

The relocation company then sells the property to the outside buyer.

All closing costs and commissions are covered as tax-deductible business expenses.

📘 Example:

Pam lists her home for $250,000. An offer is made, and CARS buys the home at that price. Pam avoids any tax burden, and her employer avoids a $15K+ gross-up.

🔄 BVO vs. Direct Reimbursement Comparison

Category

Direct Reimbursement

Buyer Value Option

Home Sale Price

$500,000

$500,000

Real Estate Commission

$30,000

$30,000

Closing Costs

$10,000

$10,000

Total Cost

$60,000 (after gross-up)

$40,000

Tax Withholding

Yes (32% avg.)

None

Net to Employee

$28,000

Full coverage

Company Savings

—

$20,000 avg.

Employee Savings

—

$12,000 avg.

🏆 Why BVO Wins:

Zero tax withholding

No gross-up required

Major savings for both employer and employee

Meets IRS Rev. Rul. 2005-7 compliance

📝 Direct Reimbursement Explained

Direct reimbursement means the employee pays upfront, then submits expenses for reimbursement. But the IRS treats this as taxable income, requiring employers to gross-up to ensure the employee isn’t penalized.

This method:

💸 Increases employer cost by 30–50%

😖 Stresses employees who need to front thousands

🧾 Complicates tax reporting

🔄 BVO vs. Amended Value (AV)

Though often used interchangeably, Amended Value typically refers to the process within a Guaranteed Buyout (GBO) program where an employee receives a higher third-party offer, and the company adjusts accordingly.

In contrast:

BVO begins with the employee’s market-driven buyer offer

AV starts with the company’s guaranteed offer, and later “amends” it to reflect outside buyer value

💵 Hidden Costs to Watch For

In any home sale, additional charges may apply:

Recording fees

Transfer taxes

Title services

Escrow charges

Inspections & repairs

Appraisal mismatches

📌 CARS ensures all costs are transparently reviewed and communicated to both the transferee and employer.

🏢 Why Choose CARS for Your BVO Program?

✅ Independent, award-winning provider
✅ Approved BVO vendor under GSA Schedule 653-5
✅ Certified compliant with IRS & ERC guidelines
✅ Trusted by U.S. Government & Fortune 500 employers
✅ Recognized by HRO Baker’s Dozen & 5-star transferee ratings

📣 Final Thoughts

If you’re looking to reduce costs, simplify home sales, and improve transferee satisfaction, the Buyer Value Option is your best bet. Backed by CARS’s proven expertise, it’s a win-win solution for companies and employees alike.

📞 Ready to implement a BVO program?
Contact CARS for a custom consultation or access our relocation policy samples.

🔗 For full IRS guidance, refer to IRS Revenue Ruling 2005-7