So the first condition should be (something like):
condition: template
value_template: >
{% if is_state('device_tracker.bill', 'home') and ('input_select.master_bedroom_override', 'Sleep') %}true
{% elif is_state('device_tracker.bill', 'not_home') and ('input_select.master_bedroom_override', 'Automatic') %}true
{% else %} false {% endif %}