What is BMV Property?
BMV simply means Below Market Value.
The term refers to buying property for less than it is worth. This normally illicits two responses in investors:
- This is an excellent idea. How do I identify the best techniques to buy BMV?
- Why would anyone would sell a property for less than it is worth?
Both viewpoints have merit.
What do people normally do with BMV acquisitions?
- rent it out
- rent it back to the seller (sometimes known as sale and leaseback)
- flip it (re-selling the property quickly for profit).
- repackage the property as part of deposit paid / no money down deal.
Beware of Common Mistakes
Do not confuse a discount from ASKING PRICE with a discount from true MARKET VALUE.
- Do not confuse ASKING price with MARKET price. Getting a discount on ASKING price is NOT the same as buying BMV.
- Do not confuse a POOR CONDITION DISCOUNT with BMV. A property in poor condition has a lower MARKET VALUE, reflecting the fact that whoever buys it will need to spend time and money resolving these problems.
- It can be very difficult to tell PRECISELY what the market value of a property is at the time you are making an offer.
Does true BMV exist?
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It all depends on the sellers motivation.
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BMV has nothing to do with the property, and everything to do with the vendor.
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An investment purchaser offers the vendor three things
The trick to buying BMV is identifying these vendors.
There are all kinds of techniques for trying to discover this, from simply asking, through leaflet drops, through simply making very low offers, and seeing whether there is any interest.
Questions the investor should ask
Why does the seller need to sell below market value - if there are un-researched problems, the buyer will surely inherit them.
Why would a vendor sell at BMV?
- Imminent Repossession - there is a business and logical motive.
Sellers in this situation are facing:
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losing their home
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gaining bad credit
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no chance of another mortgage at favourable rates.
This is where PropertyPortal.com can assist, providing investors willing to purchase quickly with data on homeowners facing this difficult situation.
In turn, we seek to create a win-win situation where all parties can benefit from a fair and ethical transaction.
If I am faced with having to sell at BMV, what are my options?
- If a repossession is involved, speedy access to cash is required from non- mainstream funding routes.
- Bridging finance can offer interim financing for an individual or business until permanent financing can be obtained.
- Money from the new financing (i.e. either the sale of the property or a remortgage) is generally used to "take out" (i.e. to pay back) the bridge loan, which is often supplied at a relatively high interest rate. This effectively allows anyone to purchase a property, regardless of their situation or its price, providing there is sufficient value in the property being purchased.
What if Bridging Finance is unacceptable and I have to market my property at BMV?
PropertyPortalAuctions
can assist, as sale by auction is often preferred for raising interest in BMV property.
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