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What Is Below Market Value Property

 

Below Market Value or BMV properties are residential properties that are available below their market value. This happens because the owner of the specific property is faced with some financial obstacle and needs to sell his/her property urgently without going through the entire sales process. Lately, a brand-new industry has formed around Below Market Value properties. It is not uncommon to see property investment chat rooms full of people claiming to have found a below market value property at a decent rate. You can get very lucky and end up making profit on a Below Market Value property as you get an instant equity value added to your property-  it’s a win-win situation!

 What Is BMV In Property

Let me give you an example, say you purchase a house for £70,000 which is £30,000 less that the current market value of £100,000. Thus, you have instantly gained £30,000 in equity.

How Do You Find BMV Properties?

 The best ways to get your hands on BMV properties are shared below:

  1. Property auctions are a great place to find a BMV property
  2. Online Auctions
  3. You can find potential below market value property deals online using different apps
  4. You can find BMV property deals through reliable property networks
  5. You can find BMV property deals through estate agents

Below Market Value (BMV) Dangers

 The 1986 Insolvency Act allows trustees of a bankrupt to protect themselves from the bankrupt giving away their assets or selling at the below the market price. So, the buyer who purchases a BMV property is exposed to this danger. To make it simple for your understanding, the buyer who purchases the BMV can find himself in trouble if the seller becomes bankrupt and their trustee comes after the buyer with a court order to either reverse the sale to claim back the difference between the open market value of the property and its sale price.

Now it possible for the buyer who invests in an under-value property to protect himself from this legal loophole. In order to do that, the buyer needs to execute a Deed of Solvency and sign and undertaking to say they were solvent at the time of sale. The buyer’s solicitor as part of the transaction will then need to arrange an insurance policy. This policy will cover the buyer for the two year period from the date of the transaction in which they are exposed to the potential that the seller goes bankrupt and that the trustee can make a claim against the landlord to set-aside the transaction.

 Conclusion- Below Market Value Property

 To sum it up, you can find BMV properties through different platforms, such as auctions, estate agents and real estate companies. It is best to avoid middleman companies selling BMV properties if you wish to maximise your profit.

Firstly, If you purchase a BMV property, always remember to ensure the authenticity of a Below Market Value Property by evaluating the value of the property through a reliable and professional expert. Don’t let yourself get fooled by the cheaper sale price as that does not necessarily guarantee that the property will cost you less in the long run.

Secondly, once you have found your ideal BMV property, you need to consider your financing options. You can always consider your own cash, mortgage, property investors or go for other ways of external funding. Once you have purchased a BMV property, and pulled money out of it, you can always do so with multiple properties. This way you can create more profit