Buying a Below Market Value (BMV) Property
At the sound of a below market value product, almost everyone will rush at the opportunity. Buying below market value can allow you to make an excellent return on investment. Who would not want a good bargain without even trying so hard? However, it does not necessarily mean that whenever you buy below market value it is a good investment. This is why you are should be cautious about putting in an offer for a so called BMV property.
Why would anyone Sell a Property that’s Below Market Value
In this imperfect world, we prey on our neighbors’ sorrow. In the same way, the issues that push individuals to sell their property below market value are quite sad but they enable you to benefit. On the positive side when you buy a below market value property it can help someone to avoid house repossession.
In the real sense, nobody wishes to offer their property for less than its actual value. The biggest reason for the push to sell below market value is pressure and time.
The following are some of the reasons for selling BMV:
- Relocation because of a job transfer
- Interest in another property
- Financial Difficulties
If a below market value house come on the market you need to move quickly to give yourself the best possible chance to buy the property.
However, don’t be too quick to take a decision as there are some questions that need to be asked like the reason for sale:
- How long the property has been on the market?
- Why the owner is choosing to sell below market value?
- Are there any major issues with the property?
These questions will help you in determining whether this is a good investment or not.
Other Considerations when choosing to Buy Below Market Value
Properties that have been on the market for a long time are most probably going to give you the best below market value. Because the product has been on the market for a long time, its value automatically keeps on dropping in order to get buyers. However, just like when making any other kind of purchase, you will need to research about the property to make sure that there is nothing wrong with it.
That research may also include making sure that there is nothing structurally wrong with the property or if it has not been rejected because of a strange reason.
The best option is to get help from a professional buyers’ agent. Given their knowledge and negotiating expertise, you can get a much better deal. They can as well provide you with advice especially when it comes to making sure that you do not pay above for a property that is not even worth it. With this as your option however, additional expenses paid to the agent should be put into consideration of course without going overboard in relation to the market value.
During the negotiation process, one of the ways to get the property to below market value is if you use its flaws to your advantage. These could be structural, although even then you have to be careful not to make a wrong investment in the long run when the property turns out to be high maintenance.
NOTE: It is very important if possible to approach the owners of the house directly. It enables you to get hands on information about the house and allows better negotiation between the buyer and the seller. Although if the seller has a real estate agent it may be virtually impossible to contact the owner.
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