CRP Real Estate and Home Sale Programs 1 — Questions and Answers
Question 1: What is a 'Buyer Value Option' (BVO) in corporate relocation?
- A discount given to employees buying homes in the new city
- A program where a relocation company purchases the home after the employee finds an outside buyer (Correct answer)
- A government-backed mortgage program for relocating employees
- A fixed buyout price set by the employer
Correct answer: A program where a relocation company purchases the home after the employee finds an outside buyer
Under BVO, the employee markets the home and once an outside buyer is found, the relocation company purchases it to complete the transaction, preserving tax-exclusion benefits.
Question 2: Which home sale program offers the employee a guaranteed purchase price based on an appraised value?
- Buyer Value Option (BVO)
- Amended Value program
- Guaranteed Buyout (GBO) (Correct answer)
- Direct Reimbursement program
Correct answer: Guaranteed Buyout (GBO)
A Guaranteed Buyout provides the employee with a firm offer based on an independent appraisal, giving certainty even if no outside buyer is found.
Question 3: Under the 'Amended Value' home sale program, what triggers the amendment?
- A change in interest rates
- An outside buyer's offer that exceeds the appraised value offer (Correct answer)
- A second appraisal ordered by the employee
- The employee's request for a price review
Correct answer: An outside buyer's offer that exceeds the appraised value offer
If the employee obtains an outside buyer's offer higher than the appraisal offer, the relocation company amends its offer to match, allowing the employee to benefit from the higher price.
Question 4: What is the primary tax advantage of a BVO program compared to direct reimbursement of loss-on-sale?
- The employee receives a larger check
- The transaction qualifies as an employer home purchase, avoiding taxable income on the sale (Correct answer)
- The employee is exempt from capital gains tax
- The employer can deduct the full home value
Correct answer: The transaction qualifies as an employer home purchase, avoiding taxable income on the sale
When structured correctly, the relocation company's purchase is treated as an employer acquisition, making employer-paid home sale assistance non-taxable to the employee.
Question 5: How many independent appraisals are typically required to set the buyout offer in a corporate home sale program?
- One
- Two (Correct answer)
- Three
- Four
Correct answer: Two
Most corporate programs require two independent appraisals; the offer is usually the average of the two, ensuring a fair market value estimate.
Question 6: An employee who turns down the guaranteed buyout offer and sells on the open market for more will typically receive:
- Nothing additional
- A broker referral fee from the relocation company
- Only direct cost reimbursements under direct reimbursement provisions (Correct answer)
- A supplemental payment equal to the difference
Correct answer: Only direct cost reimbursements under direct reimbursement provisions
If the employee rejects the buyout and sells independently, they typically fall back to direct reimbursement of eligible selling costs rather than gaining the full corporate sale benefits.
CRP Real Estate and Home Sale Programs 1
What is a 'Buyer Value Option' (BVO) in corporate relocation?