Published on January 24, 2013

house1.jpgA Buyer Value Option (BVO) program for your relocating employee can have several benefits for both your company and your employee.

For your employee, it provides peace of mind, both financially and otherwise. It also allows him or her to concentrate on moving and successfully acclimating to the new work environment.

For more information on real estate considerations for your executive relocation policy, read our free article. 

On your end, a BVO program ensures you get maximum value and productivity from your employee in the shortest amount of time upon relocation. Even more importantly, this type of seller assistance program can massively increase your employee's loyalty and productivity in the long run.

How Does a BVO Program Work?

There are several moving parts to a BVO program. While your company (or likely your relocation company) handles the closing of the property the employee is responsible to list the home up for sale and obtain a bona fide offer.

This doesn't mean that you and your business are left out of the process. In fact, many companies help their employees find a real estate listing agent. Unlike an Appraised Value Offer program, there are no appraisals of the home to determine its fair market value. Instead, the value of the home is determined by the bona fide offer from a prospective purchaser.

Once the contract terms are negotiated, your company - instead of the buyer - purchases the property, and sells it to the buyer. (If you use a relocation management company, they will buy the property on your behalf instead.) If the steps are handled properly and in accordance with IRS guidelines, a benefit of this for your employee is that he or she won't need to report any sales expenses associated with the sale as earned income since there are no reimbursements from the company to the employee. Instead, closing costs and other related fees are paid by you (or by the employee relocation company). This is more than just a pass-through - your company must actually own the home, then sell it to the original interested buyer.

As you might guess, there is some degree of risk involved - but the closing occurs a vast majority of the time. One benefit of this method is the immediate productivity you will secure when your employee can settle into their new position without having to worry about a home sale. This is also an effective way to make sure the employee stays in his or her new position, and doesn't leave due to failure to sell their home.

Finally, it's also a great way to secure employee loyalty, which can have huge real-dollar benefits for your business in the future. Add up all these benefits and you'll see why many so many businesses are still utilizing BVO programs inside of their relocation packages - even given the risks involved.

It's also possible to gain all of the above-listed benefits with none of the risks. An employee relocation company can take care of the entire process for you.

In fact, an employee relocation service can usually take care of it better than most HR departments. They have the knowledge, experience, and connections to make it happen more quickly and work more fluidly than anyone who isn't involved in the relocation business.

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