Buying a property may be an expensive investment; but no matter how high prices go, there are always bargains to be had. For property investors, these bargains are usually referred to as BMV (Below Market Value) properties, and they're not as hard to find as you may think.
Why would anyone want to sell a property at Below Market Value?
So you're wondering if Below Market Value means there's something wrong with the property, or the area in which it is situated. But in truth, there are a number of reasons why someone might be willing to sell their property at a lower price; reasons that have nothing to do with it being built on a graveyard or infested by giant rats.
For example, home owners often need to sell their homes within a specific timeframe. Perhaps they have their eye on a property in a different area and they fear missing the opportunity if they don't get the funds soon. In such cases, the need to sell is so urgent that the seller will be prepared to let the property go at a discount price.
So, a BMV label might have nothing to do with the property being of inferior quality, and it presents property investors with the opportunity to make a purchase at a bargain price; something you don't hear about often in the UK property industry, where all the talk is of exorbitant housing rates.
How can you be sure of the market value?
In most cases, market value is what the property would be sold for if it had been marketed through all the usual channels, and neither buyer nor seller was under any pressure to conclude negotiations within a timeframe. It shouldn't be too far removed from the general selling price of similar sized properties in the same location.
If you're concerned that the seller might be over-inflating the market value of the property in order to promote it as below market value, here are a few precautions you can take to ensure that you don’t fall for the ruse:
• You can investigate the value yourself by doing a land-registry search and comparing it to going prices for other properties in the same area.
• You could also employ the services of an estate agent with knowledge of the area in which the property is situated. They will be able to provide estimated market values, as well as more in-depth information on the factors that affect property valuation in that area. These days, even some online estate agents have good local knowledge.
• A precaution any property investor should always take, regardless of the nature of the property, is to visit it in person and ensure that it suits their needs.
• Also be sure not to exchange any money until the deal has been finalised. No seller, no matter how desperate, should expect money up front. If they do, it's reason to be suspicious.
Buying properties at bargain prices may sound too good to be true, but it's a common occurrence. There's no reason to be suspicious of the practice in general, though naturally there will be some who seek to exploit the desperation of home buyers. Just be sure to seek professional advice from agencies such as Tepilo, and you should have no difficulty separating the scams from the genuine bargains.
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