Tag: mobility

BVO Savings

The Buyer Value Option (BVO) program avoids the costly process of “grossing up” dollars used to pay for the commissions and closing costs on the sale of a transferee’s home, enabling a company to reduce relocation expenses.

Typically, the commissions and closing costs associated with the sale of a transferee’s home represent the majority of the total costs incurred during a relocation. Reimbursement to a transferee of these expenses is considered taxable compensation by federal and state authorities.

Most corporations use a form of tax assistance, known as gross-up, to help offset the tax impact felt by the transferee receiving reimbursement. The gross-up expense can add substantial costs.

Example:

A transferee in the 40% tax bracket receiving a $24,000 home sale expense reimbursement will require around $39,900 in order to approximately cover the impact of income taxes being withheld and still net the $24,000 needed to cover the actual expenses.

Total Savings:                           $11,400

*Commissions and closing costs shown reflect a 6% commission and 2% closing costs. Actual costs, including BVO fee, may vary.

Once a transferee receives a valid offer to purchase from a 3rd party buyer, and after the relocation management company (RMC) has been able to verify that all contractual terms are customary, the transferee turns the sale of the home over to the RMC.

The RMC then purchases the home from the transferee and subsequently transfers the home to the 3rd party purchaser. All closing costs and realtor commissions are paid by the RMC and billed directly to the employer. Since the transferee never incurs any home sale expense, normal reimbursement of these expenses is not required.

Fast, Easy, and Economical

Once the origin home is turned over to the RMC, the transferee relinquishes all obligations including attending the actual closing. The RMC manages the entire sale and closing process on behalf of the transferee. The BVO program allows the transferee to move quickly, and focus on his or her new job and community. This is one more way of reducing both the stress and expenses associated with workforce mobility.

To learn more about BVOs or other relocation programs, please visit our contact page and an experienced Global Mobility Solutions relocation consultant will answer all of your questions.