Guaranteed Buyout vs. Buyer Value Option: Blending talent management goals with risk tolerance.The trend of offering a structured, tax efficient home sale plan has not wavered for many years.  Companies understand that home sale assistance is necessary to attract talent.  Approximately 90% of surveyed companies offer structured homesale assistance (such as a guaranteed buyout or Buyer Value Option (BVO) sale) in their mobility programs.  What has fluxed is the breakdown of whether a buyout or BVO is a company’s primary home sale program. The statistics may surprise you. While there is no doubt that BVO has been gaining in usage over the years, the progression has not been straight, which means that many factors are at play.

Is your homesale program competitive with your competitors? Below are the general differences between the two programs.

	Guaranteed Buyout	Buyer Value Option
Marketing Assistance	Available Required or recommended initial list price parameters help ensure home is priced correctly from the outset of marketing Marketing may be required prior to the start of the appraisal process, usually 30-60 days	Available Required or recommended initial list price parameters help ensure home is priced correctly from the outset of marketing Marketing begins immediately
Offer Calculation	Most commonly average of two independent appraisals if values are within 5% of each other If  values are out of spread, a third appraisal is ordered. Most common method is to average the two closest values	Determined by the buyer’s offer Appraisals are not completed
Inspections	Completed concurrent with appraisal process Employee responsible for repairs	May or may not be completed upfront/prior to a sale. If completed, employee responsible for repairs Buyer will likely have inspections completed
Home Sale Incentive	Depending on real estate market, may be offered to help encourage employee to sell the home and keep homes out of inventory	Depending on real estate market, may be offered to help encourage employee to sell the home quickly
Offer Period	Once guaranteed buyout offer (appraised value offer) has been presented, set offer period of 30-90 days (most commonly 60 days) to accept or reject offer	N/A
Sale Process	Follows Worldwide ERC’s 11 Key Elements of an Amended Sale If sold prior to establishing the guaranteed buyout offer, contract reflects sale price. If sold after guaranteed buyout offer has been presented, contract is amended to reflect the sale price	Follows Worldwide ERC’s 11 Key Elements of an Amended Sale Contract reflects sale price
Pros	Higher level of service to the employee with potential for increased productivity	Reduced upfront costs
Cons	Can be costly if home does not sell during the offer process/period and employee accepts the guaranteed buyout offer; home comes into inventory	May not provide enough support in difficult real estate markets or for challenging homes, which may result in increased temporary living and storage costs