The world of BMV properties is a bit of a grey area. On one side you have the shady characters who promise they can get you a house for 30 per cent less than the market value (just so long as you pay them £200 for their eBook containing all their trade secrets). On the other side you have BMV sceptics claiming that it is actually impossible to buy or sell a property at below its market value.
The truth is somewhere in the middle, so we’ve put together this handy guide to BMV properties to help you answer some of the most often asked questions.
- What is a BMV property?
A property which is deemed to be Below Market Value (BMV) is simply one which is available for sale for less than the seller would be likely to achieve on the open market.
- How do I find and buy a BMV property?
BMV homes are not usually available to buy on the open market. There can be any number of reasons for this, such as the bank has repossessed the house, the owner has gone to prison or is missing, or sometimes that the owner has died and there is nobody to inherit the property. These types of homes are usually only for sale through specialist agents, so you will need to work with one of these to find and buy your property.
- Can I live in a BMV property?
In some cases the property will be sold with tenants already living there, in which case you would need to honour the terms of their contract when you take over the property. In repossession cases, there is often a requirement to rent out the house to the previous owner, although you will be the legal owner and the person who collects the rent. The majority of BMV properties are bought by people intending to let them out, but that doesn’t mean you can’t find one that is suitable for you to move into if that’s what you are looking for.
- How can I pay for a BMV property?
Cash buyers have an advantage when it comes to buying a BMV property, due to the rapid pace at which this niche market moves. However, not everyone can get their hands on this much cash all at once, so there are also suitable mortgages in place for BMV investors, such as the ‘Buy to Let’ mortgage. First time buyers may struggle to buy a BMV property if they need a first time mortgage, as the bank will usually not release the mortgage until all relevant surveys have been completed, which is usually too time consuming for this fast moving marketplace.
- How do I know the house is truly being offered at less than the market value?
Most BMV agents will encourage buyers to have their own independent RICS valuation done on the property to confirm its BMV status. Properties can be anything from 5 or 10 per cent up to a massive 50 per cent off their actual market value, but it’s worth getting an independent valuation to give yourself peace of mind that what you are being offered is realistic.
The world of the BMV property doesn’t need to be confusing or grey. As long as you enter into your investment with your eyes wide open, it’s a great way to make some money and take care of your future.