Buyer Value Option (BVO) vs Guaranteed Buyout (GBO) Home Sale Programs. How Do they Compare?

In the realm of corporate relocation, home sale assistance programs play a crucial role in easing the transition for employees and companies alike.

Among the relocation home sale programs, the most popular options are the Buyer Value Option (BVO) and the Guaranteed Buyout Option (GBO) programs.

Each option offering distinct advantages tailored to different needs, our blog will review:

BVO vs GBO Home Sale Benefit home sale with contract

Buyer Value Option
(BVO)

In a Buyer Value Option program (BVO), the employee is responsible for listing their home for sale, with marketing assistance from the Relocation Management Company (RMC). The employee must secure an outside buyer willing to purchase the home at a fair market value. A buyer value option program provides all the tax benefits to the employer and employee, but it depends on the employee securing an outside buyer. The employee is funded their equity, if the contract is deemed valid, based on the outside offer amount. The RMC closes the sale with the buyer at a future date. In a BVO home sale scenario, home appraisals are never ordered.

Buyer value options are a good way for an employee to oversee the entire process and ensure the best fit for their home. The risk of the home sale falling through falls onto the employee in this home sale option.

Guaranteed Buyout Option
(GBO)

What is a Guaranteed Buyout (GBO) program and how does it differ from a Buyer Value Option (BVO)?

Under a GBO program, the RMC orders two home appraisals and then averages the two to determine a guaranteed offer, with a fixed acceptance period. If the employee cannot sell their home on their own, the employer takes the home into inventory. The employer must maintain it until the company can resell it. This carries potential risks and additional costs for an employer.

A BVO home sale, on the other hand, minimizes this risk since the employer only purchases the home after the employee has secured an outside buyer. BVO and GBO home sale programs provide tax benefits to the employer and employee.

BVO Home Sale versus GBO Home Sale

When comparing the two, the choice between BVO and GBO depends largely on the company’s risk tolerance, market conditions, and the level of support they wish to provide to their employees.

BVO programs are cost-effective for companies but can place additional burdens on employees, making them more suitable for strong housing markets.

Conversely, GBO programs, while more expensive, offer greater assurance to employees, making them a preferred choice in uncertain markets or when a company prioritizes employee satisfaction and seamless relocations.

Relocation Home Sale Comparison reviews Buyer Value Option versus Guarantee Buyout Option

Here’s a side-by-side comparison of Buyer Value Option (BVO) and Guaranteed Buyout Option (GBO) home sale programs

Program Structure
Risk to Employee
Risk to Company
Home Sale Timeline
Employee Involvement
Financial Considerations
Market Impact
Flexibility
Appeal to Employees
Usage
Buyer Value Option (BVO)
Employee secures an outside buyer before the company purchases the home
Low risk if the home is sold quickly; however, the employee bears the risk if the market is slow
Lower financial risk since the company only purchases the home after an offer is secured
Typically, longer as the employee must find a buyer before the company purchase
High, as the employee is responsible for marketing and negotiating the sale of their home
Costs are generally lower for the company, but the process can be more stressful for the employee
The success of the BVO depends heavily on the current housing market
More flexible for companies that prefer to minimize upfront financial commitment
May be less attractive to employees due to potential delays and uncertainties
Preferred in stable or strong housing markets where homes are likely to sell quickly
Guaranteed Buyout Option (GBO)
Company provides a guaranteed buyout offer to the employee before listing
No risk to the employee as the company guarantees a buyout, regardless of market conditions
Higher financial risk for the company as they commit to buying the home regardless of market conditions
Generally faster, as the company buys the home directly if it doesn't sell within a set period
Lower, as the company takes over the home sale process after providing the buyout offer
Higher costs for the company due to the guaranteed purchase but provides more certainty and support for the employee
The GBO is less impacted by market conditions as the company assumes the risk
Less flexible due to the company’s financial commitment but provides more stability for employees
Generally, more appealing to employees due to the certainty and reduced personal risk
Often used in slower or volatile markets where securing a buyer may be difficult

Our countless years of BVO and GBO Home Sales experience can help you better navigate your journey.

This can include the range of tax implications, relocation variables, benefit payouts/amounts, and marketing work.

Let the experts at WHR Global help you with your BVO or GBO home sale relocation
and other global mobility program needs

WHR Global,a leader in global mobility, is an independent, full-service relocation management company with offices in the US, Switzerland, and Singapore. WHR strives to offer cost-effective relocation benefits without compromising empathy, ethics, or service

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The Best Types of Expatriate Assignments for Your Mobility Program

Finding the right person for an open position can be challenging, especially in today’s job market. Offering international assignments can be a powerful tool for retaining (and attracting) top talent.

Employees who are given the opportunity to work abroad feel more valued and motivated, leading to higher levels of engagement and loyalty.  Additionally, international assignments can be seen as a prestigious career move, which can attract high-caliber candidates and enhance the company’s reputation as an employer of choice.

The complexities of an international move have intensified in recent years.  Beyond offering a pay raise, covering relocation expenses, or finding them an incredible new home, it is crucial to address the broader needs of expatriates and their families.

In today’s dynamic work environment, assignments can quickly go off course if not managed with a focus on flexibility, cultural integration, and the overall well-being of the employee. 

A lot of preparation and planning goes into sending your employees abroad, which is why it is important to understand the advantages and disadvantages of the most common types of expat assignments: long-term, short-term, and extended business travel.

Pros and Cons of the 3 Types of Expatriate Assignments including Long Term, Short Term and Extended Business Traveler

Some companies may choose to use just one type of assignment or include multiple different options, depending on the employee and the position available. Either way, finding the best expat program for both your company and your employee will ensure both are successful long term.

Long-Term Expat Assignment (LTA)

A long-term assignment (LTA) refers to the relocation of an employee from their home country to work in a foreign country for an extended period, typically ranging from one to five years or more.  Unlike short-term assignments (STA’s), which might last only a few months, LTAs involve a deeper commitment and often require significant personal and professional adjustments for the expat employee.

During an LTA, the employee is expected to fully integrate into the local work environment, often taking on key roles that contribute to the company’s strategic goals in the host country.  This could include tasks like establishing new operations, leading a local team, implementing corporate strategies, or facilitating knowledge transfer between the home and host offices.

One of the most important things to note is that this type of assignment is not a permanent transfer; the employee intends to return to his or her home country after the long-term assignment is complete.

Long Term Assignment container shipment of household goods

Pros_Green-CheckmarkPros of a Long-Term Expat Assignment

LTAs provide a unique opportunity for employees to develop leadership skills in a global context.

By exposing them to different markets, cultures, and business practices, companies can groom future leaders who are adaptable, culturally aware, and capable of managing diverse teams. These global experiences are invaluable for shaping executives who can drive the company’s international strategy.

Expat employees often serve as a vital link between the headquarters and the host country’s office, ensuring that the company’s global strategies are effectively implemented at the local level. In the past, it was important to instill the culture of the parent company into the foreign entity and help drive revenue growth in the overseas location.

Today this still exists, but the opposite is also true. Overseas workers are being deployed to the parent country or other countries to gain experience, transfer knowledge, and run specific project-based work.

 

Con-Red-Checkmark Cons of a Long-Term Expat Assignment

One of the biggest challenges of long-term expatriate assignments is the potential strain on personal and family life. Relocating to a foreign country can disrupt children’s education, create challenges for a spouse’s career, and lead to feelings of isolation due to cultural differences and distance from extended family and friends.

Not all LTAs succeed. If an expat employee fails to adapt to the new environment or if personal issues arise, the assignment may need to be cut short, leading to significant costs. Costs are extremely high for expat assignments and many companies do not properly vet the individual being offered the assignment.

There are benefits available including candidate assessments and pre-decision services that are designed to assess the person’s ability to thrive in a “foreign” location and adapt culturally.  Additionally, many companies forego cultural and language training which is essential in providing a foundation for a successful transition.  Simple things like how to conduct a business meeting or learning the norms for handing out a business card are just some of the subtle social norms that will ensure success. Unfortunately, many companies choose not to or do not know the importance of this investment.

There are countless compliance requirements as well, and without the assistance of a relocation company, it can be hard to navigate. Many companies have chosen another route: short-term expat assignments.

 

 

Short-Term Expat Assignment (STA)

A short-term assignment (STA) typically refers to a temporary work arrangement where an employee is relocated to a foreign country for a limited period, usually ranging from a few months to a year.  Unlike long-term assignments (LTAs), which often involve significant life adjustments such as family relocation and long-term planning, STAs are more focused on specific projects, skill development, or filling immediate business needs.  STA’s can offer great flexibility and less commitment, but less fluidity and insurance.

Many companies will not allow the family to accompany the employee on these STAs but will provide other options such as more frequent trips home, furnished accommodations, per diems, travel allowances, etc.

Relocation management companies like WHR Global, can help manage short-term expatriates and provide the structure and benefits available to this group of assignees.

Short Term expat assignment with small shipment of items

Pros_Green-Checkmark Pros of a Short-Term Expat Assignment

The problems of dissatisfaction and homesickness became apparent with long-term moves, so short-term overseas engagements were developed as an alternative to pulling up roots and moving families across the globe for extended periods. Short-term assignments involve fewer personal and professional disruptions for employees. Family members often remain in the home country, minimizing the impact on schooling, careers, and social networks.

From your company’s perspective, a short duration generally costs less upfront, and it gives you more flexibility when developing a mobile, global workforce. Additionally, the consequences of individuals becoming “taxable” in the foreign location can be managed effectively, thus significantly decreasing the cost of the expat assignment.

Lastly, the pool of willing candidates inevitably increases as it is a short-term expat assignment, which reduces the potential impact on families and financial ramifications.

Con-Red-Checkmark Cons of a Short-Term Expat Assignment

The cons of short-term expatriate assignments revolve around demands to rotate a variety of personnel, which requires more planning and administrative time for everyone involved.

There is a trade-off between a series of short-term assignments versus a single long-term assignment.  What works for your company may not work well for others.

These assignments allow companies to leverage global talent efficiently while providing employees with international exposure and professional growth opportunities without the extended commitment of a permanent move.

Extended Business Traveler (EBT)

An Extended Business Traveler (EBT) program is a structured framework designed to manage employees who frequently travel internationally for business over extended periods, typically ranging from a few weeks to a few months.

Unlike traditional expatriate assignments, EBT programs cater to employees who remain officially based in their home country but spend significant time working in foreign locations. These programs are increasingly popular in global companies as they allow for flexibility and quick deployment of talent across borders without the need for full relocation.

Typically, these employees are not on a formal assignment; however, there are still potential tax and immigration considerations that need to be made when sending someone on these extended business trips.

Extended business traveler

Pro_Green-Checkmark Pros of an Extended Business Traveler

EBT programs allow companies to deploy talent quickly and efficiently across multiple locations without committing to long-term relocations. This flexibility is ideal for addressing short-term business needs, project launches, or client demands. For everyone involved, business traveling simply causes less disruption.

Your workforce has much more control over how they perform duties, and you do not have to permanently allocate resources to a foreign location.

Con-Red-Checkmark Cons of an Extended Business Traveler

Work visa requirements differ widely from country to country and can be impacted by the home and host locations involved.

In some instances, a worker may enter the country on a work permit waiver, but in other countries it may be illegal to perform a single work duty without having the proper work visas in place.

Conclusion

How companies manage expat assignments has changed in this post pandemic world. Ever changing immigration policies, unpredictable travel restrictions, and increased costs make managing these assignments more challenging than ever before.

Regardless of the assignment type that is considered, each type of expatriate assignment has its strengths and pitfalls. Every company needs to determine what is optimal for their workforce and the business needs requiring these assignments. Let the experts at WHR Global help guide your employees and company through these types of decisions and implementations.

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What is a Buyer Value Option (BVO) Home Sale Program?

A BVO home sale program is a program which is designed to help relocating employees sell their homes quickly and efficiently without the company taking ownership of the property.

According to WHR’s 2024 Global Mobility Benchmark, a BVO program remains one of the most competitive relocation offerings.

  • 60% of respondents offer home sale and/or purchase benefits.
    • Of those,
      • 59% offer BVOs to new hire non-executives
      • 78% offer BVOs to new hire executives
      • 67% offer BVOs to existing employee non-executives
      • 74% offer BVOs to existing employee executives

The best way to describe a BVO is in the context of
a traditional Guaranteed Buyout (GBO) program

Under a GBO, the relocation management company (RMC) orders two home appraisals and simply averages the two to determine a guaranteed offer.
As an example:

  • Appraiser A values a relocating employee’s home at $330,000
  • Appraiser B values the same home at $335,000
  • $332,500 is considered the “GBO”

The relocating employee then takes the offer of $332,500 and moves to their new location, unencumbered by their former home. In turn, the RMC sells the property on the
open market, and the employer is charged for all of the associated real estate expenses upon the conclusion of the sale.

The employer can treat the home sale costs as “business expenses,” so none of the expenses are considered income to the employee (for federal tax purposes).
This process is validated by the IRS in Revenue Ruling (2005-74), which specifically addresses this type of home sale program.

What is a Buyer Value Option (BVO)?

Essentially, BVO is very similar to a GBO, with the exception that with a BVO home sale program, no appraisals are completed. Instead, the buyout offer is based on a bona fide fair market offer received by the employee from a qualified third-party buyer. With BVO, the employee is responsible for listing their home for sale, and receives marketing assistance from the RMC.  

Once a contract is deemed valid, the RMC offers to buy the home from the employee at a price based on the outside sale price, and the employee is funded their equity based on this amount. The RMC will enter into a new listing agreement with the employee’s broker and proceed to close the transaction with the outside buyer while honoring all agreed terms and conditions. All home sale costs are treated in the same manner as with a GBO program.  

The BVO home sale program provides all the tax benefits to both the employer and employee. However, it is the responsibility of the employee to secure an outside buyer ready, willing, and able to purchase the property at a fair market value. 

Why should you offer your relocating employees a BVO?

    • Tax Savings: A properly structured BVO program that adheres to IRS requirements provides significant tax savings that benefit employees as well as employers.
    • Minimized Risk for Employees: Employees avoid the financial risk and stress of carrying two mortgages if they have to move before their home is sold.
    • Expedited Relocation: Employees can move to their new location more quickly, knowing that their home sale is being managed.
    • Cost Efficiency for Employers: Employers can manage relocation costs more effectively and help maintain employee productivity by reducing the stress and financial burden associated with home selling.

WHR Global provides the following
BVO support to help your employee
sell the home to an outside buyer:

    • Obtain two Broker Price Opinions (Broker Market Analyses)
    • Reconcile the two opinions of value
    • Suggest a listing price
    • Develop a comprehensive marketing strategy
    • Obtain pictures of the home
    • Provide tips to paint, declutter, etc.
    • Assist with Realtor selection
    • Obtain weekly feedback from Realtor
    • Assist in contract negotiation

Be aware: From a cost standpoint, when selling a home, the following expenditures are typical in a home sale transaction. 

When selling a home, there are several expenditures in a typical home sale transaction
  • Real Estate Commissions
  • Recording Fees
  • Transfer Taxes
  • Title Expenses
  • Notary
  • Escrow Fees
  • Seller Concessions
  • Repairs
  • Inspections
  • Miscellaneous

A Buyer Value Option home sale program is a valuable tool for companies looking to support their relocating employees. By assisting with the home sale process, companies can alleviate a significant source of stress for their employees, ensuring a smoother transition and enhancing overall job satisfaction.

For the company, this can translate into higher retention rates, more successful relocations, and a stronger ability to attract top talent. 

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Temporary Housing Pricing Benchmark – Ask an Expert!

Milwaukee, August 8, 2024 — WHR Global (WHR), a relocation management company and leader in the global mobility and corporate relocation industry, announced the release of its Ask an Expert! Temporary Housing Pricing Benchmark.

The report covers temporary housing prices in over 140 cities worldwide, allowing global mobility teams to benchmark costs effectively.  

WHR always strives to deliver exceptional relocation services. The “Ask an Expert” Temporary Housing Pricing Benchmark Report is a testament to this mission, providing invaluable insights into the cost of temporary housing.

Drawing on data from experts in the temporary housing industry, the report presents average prices for 1–3-bedroom housing facilities per night and month, quoted in US Dollars and effective Q2 2024. 

Why Temporary Housing? 

 Temporary housing plays a crucial role in the relocation process, offering a safe and pleasant place for workers and their families while they seek permanent housing. This stability is vital during the transition period, helping employees settle into their new environment more comfortably. 

 This option also allows employees time to explore their new city and find permanent housing that meets their needs, offering convenience and budget-friendly options.
 

 Additional Benefits of Temporary Housing: 

  • Reduced Stress: Relocation can be stressful, but temporary housing offers a familiar and comfortable place to stay, easing the transition
  • Improved Productivity: Employees who settle quickly and feel at home in their new city are more likely to be productive at work
  • Increased Morale: Employees supported by their employer during relocation are generally happier and more motivated in their work

WHR Global (WHR) is a private, client-driven global relocation management company known for its best-in-class service delivery and cutting-edge, proprietary technology. WHR has offices in the United States, Switzerland, and Singapore, boasting a 100% client retention rate over the past decade. WHR remains a trusted leader in global employee relocation, living by its vision of Advancing Lives Forward® and Making the Complex Simple. 

Contact WHR Global today for more information on global mobility and corporate relocation services or download our Global Mobility Benchmark Report 

WHR Global,a leader in global mobility, is an independent, full-service relocation management company with offices in the US, Switzerland, and Singapore. WHR strives to offer cost-effective relocation benefits without compromising empathy, ethics, or service

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Culture and Language Training – Ask an Expert!

In today’s globalized world, the importance of cultural and language training in global mobility programs cannot be overstated.

Companies like WHR Global and Global LT are leading the way by integrating these essential services into their offerings, ensuring smoother transitions and greater success for expatriates and their families. 

Table of Contents:

  • Program Statistics
  • Learner Centric Client Trends
  • Benefits of Cultural & Language Training
  • How is the Service Facilitated and Delivered
Culture and Language Training

65% of international permanent relocation programs offer cultural training and 58% offer language training.

80% of international assignment packages offer cultural training, with 74% offering language training, according to WHR’s Global Mobility Benchmark Report.

“Reported rates of population bilingualism in places such as Europe (67%), Canada (55%), India (25%), and the United States (20%) indicate that bilingualism is both common and growing,” according to a research paper published in the National Library of Medicine measuring and reporting bilingualism.

Cultural and Language Training Client and Industry Trends

Understanding and respecting cultural differences empowers professionals and their families to live, work, and communicate successfully worldwide.​ Speaking the native language is a critical component to fostering better interactions and collaboration. While these two services were often treated as separate components of a learning program, we are seeing industry trends integrating both Culture and Language training into one service.

  • Learner-Centric Ecosystem Combining Culture and Language Training:  
    •  Cost Savings: Integrating these services can lead to significant savings 
    •  Synergy: Culture and language training complement each other  
  • Sustainability: Sustainable practices in training programs 
  • Family-Centered Services: Catering to the entire family, including spouses, partners, and children
  • Flexible Training Options: Individual or group training, accommodating up to 10 individuals. 
  • Customized Learning Plans:  Personalized experiences for effective integration, confidence, and belonging such as:
    • Community etiquette (dining experiences such as tipping, ordering, and eating etiquette or grocery shopping)
    • Business etiquette (in-office)
    • Educational assimilation through play for children

“When working with clients to benchmark their language and cultural training benefits, I can’t help but draw from my own experiences. As a UK-US dual citizen who has worked in Japan, Belgium, Spain, Mauritania, Ghana, Greece, and now Switzerland, linguistic and cultural impacts are inescapable. Without understanding the nuanced business etiquette in Japan, an expat in Tokyo may unintentionally disrespect their superior before they even work on a new project. Depending on the location in Switzerland, your employee (and their spouse) may be expected to know German, French, or Italian to maintain their immigration permit. Companies like WHR Global and Global LT are pivotal in providing these essential services, ensuring that professionals and their families are well-prepared to navigate their new environments successfully.”

Jennifer Elsby, GMS®, MIM+
Client Services Manager EMEA at WHR Global

Language and Culture Training focused on Human Relationships

Human interaction fosters meaningful connections and provides significant benefits to individuals undergoing relocation. Global LT trainers craft personalized experiences aimed at delivering in-depth coaching sessions, whether conducted in person or virtually. These sessions are designed to offer tailored guidance, unwavering support, and motivational insights to both employees and organizations alike.

  • Employees and Professionals:
    • Global Workforce: Effective communication and strong relationships with diverse colleagues, clients, and partners.
    • Expatriates and their families: Understanding local culture, norms, and business practices for smoother transitions. Families feel more connected and have a sense of belonging in their new country.
  • Organizations:
    • Increased employee retention rates, higher employee involvement and engagement.
    • Higher reported satisfaction in company culture and benefits.
    • Multinational Corporations: Navigating complex international markets and fostering cohesive corporate cultures.
    • Small and Medium Enterprises: Engaging with global partners and clients, ensuring smoother collaborations. 

Benefits of Cultural and Language Training

Cross-cultural training is crucial for fostering understanding and collaboration and provides practical tools and insights that can be applied immediately, yielding several benefits:

  • Enhanced Communication Skills: Overcoming language barriers and developing non-verbal communication skills for effective interaction.
  • Improved Conflict Resolution: Better handling of disputes by understanding cultural differences in conflict resolution styles.
  • Increased Cultural Awareness: Insights into cultural norms, values, and etiquette, reducing misunderstandings and fostering respect.
  • Boosted Productivity and Efficiency: Culturally competent employees can navigate nuances and avoid miscommunications, leading to efficiency.
  • Enhanced Global Mobility: Opens up more opportunities for international assignments and career advancement.
  • Stronger Customer Relationships: Tailoring products, services, and marketing strategies to diverse cultural preferences, increasing customer loyalty and revenue.
  • Fostering Innovation: Diverse teams bring different perspectives and ideas, driving creativity and innovation.
WHR Global and Global LT Cultural and Language Training Process

“You may know the language, but if you don’t understand the culture, you won’t communicate successfully.  Likewise, if you know the culture but don’t speak the language, communication will still fail. We ensure successful assignments, so learners thrive and communicate successfully no matter the country, culture, or language.”

Heather Jamison, CRP®, GMS®
Vice President of Customer Success at Global LT

Conclusion

Cultural and language training is not just an add-on; it is a fundamental component of successful global mobility programs.

By partnering with experts like WHR Global and Global LT, companies can ensure their employees are well-equipped to thrive in diverse environments, ultimately leading to greater personal and professional success. 

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