It is one of the hidden risks in relocation today — and very few companies are talking about it.
If you offer a BVO (Buyer Value Option) program in the U.S. — or if your relocation provider administers one on your behalf — you may assume this benefit is “set it and forget it.” Designed for compliance, designed for tax effectiveness.
But recent trends in the U.S. housing market suggest that companies relying on BVO programs may be underestimating their real financial exposure — by quite a lot.
What the Data Is Telling Us
A recent report from Redfin showed that as of April 2025, 1 in 7 U.S. home sales are now falling through before closing.
Why?
- Buyers are backing out at the last minute due to soaring mortgage rates.
- Others are seeing uncertain employment situations and choosing not to proceed.
- Some deals are collapsing because appraisals are not meeting sale price expectations.
- More broadly, buyers are getting cold feet in an economy that is sending very mixed signals.
This is not a housing crash — but it is an environment where buyers are behaving very differently than they did even two years ago.
And that has very real consequences for BVO programs.
How a BVO Program Is Meant to Work
An ERC-compliant BVO program is structured to allow employees to benefit from tax-advantaged home sale assistance:
- The employee markets their home and negotiates with the buyer.
- Once a verbal deal is reached, the relocation company purchases the home from the employee (subject to clean inspection and other compliance factors).
- The relocation company then sells the home to the outside buyer.
To maintain compliance:
- The relocation company must take real risk of ownership.
- The process must follow very specific IRS guidelines to preserve the non-taxable nature of the benefit.
The Shift Companies May Not Have Noticed
A decade ago, relocation companies may have carried this risk on their own balance sheets. But after the 2008 housing crisis, most major players have rewritten their contracts:
Today, it is the corporation that bears this risk.
- If an outside sale collapses after the relocation company purchases the home (can I remind you that in April 1 out of 7 deals are falling through because they buyer walks), the corporation is responsible for:
- Carrying costs
- Property taxes
- Maintenance
- Potential resale loss (let’s just say definite loss in a declining market)
- In some cases, even taking title of the property if no other sale materializes
In other words — the BVO process still “works” for tax purposes, but your company may be more exposed than you realize.
Why 1 in 7 Deals Falling Through Is a Big Problem
BVO programs were designed with an assumption that collapse rates would be very low — typically in the 1-3% range.
If deals fell through occasionally, this was manageable. But today’s environment is very different:
- 14% collapse rate = 1 in 7 homes.
- That means that for every 10 BVO sales processed, you might now expect one or more to result in corporate inventory risk — something most companies are not budgeting for.
- Worse, few relocation programs have updated their governance or risk models to account for this new reality.
We have already seen corporate clients who were surprised to discover that they were suddenly liable for tens of thousands of dollars in capital loss and unexpected carrying costs.
The Wrong and Right Ways to Respond
Let’s be clear: watering down your BVO process is not the answer.
- Cutting corners to avoid taking title or skipping required pre-sale steps can jeopardize IRS compliance — exposing both your company and your transferees to tax risk.
- Nor should you abandon BVO entirely — it remains a valuable tool when properly managed. But you may only reserve it for some
The right response is governance and awareness.
- Review your BVO program and contracts today:
- Who carries the risk of a failed outside sale?
- What are your obligations if a deal falls through?
- Are you budgeting for that risk appropriately?
- Stress test your model:
- What happens if 5 or 10 homes land in inventory in a short window?
- Are your internal stakeholders aware of this possibility?
- Talk to your relocation partner:
- How are they monitoring market risk?
- What advice are they giving clients today regarding the new BVO environment?
Final Thoughts
This is not a hypothetical issue — it is already happening in the market.
Today’s BVO programs were designed in a very different economic and housing environment. If your governance hasn’t evolved in the past 2–3 years, you are likely exposed.
At All Points, we believe in helping our clients see around corners — and this is a corner many corporate relocation teams haven’t looked around yet.
If you would like to have a quiet conversation about your program’s current exposure — or about what we’re seeing across our client base — we would be happy to share what we know.
