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Many property trainers talk up the need to buy below market value and I'm a big fan of making money on the purchase as well as the exit. However it can be tricky to find these deals and know how to proceed.
So What is B.M.V.?
In a nutshell it's a property that is priced for sale, below the assumed market value (or going rate) for that type of property in that location.
I'm not going to discuss the why's and wherefores' of a vendor selling below market value, I want to talk about how you can actually find these golden nuggets and potential deals.
Where to Start
There are two main routes, you either go direct to vendor and engage in conversation directly with the owner, or you can use an estate agent and go online.
Let's keep this easy and simple so, I'm going to talk about the low hanging fruit and go online for my search.
Ok, so when sourcing online, you must use 'search filters' (I prefer Zoopla for this).
Pick an area to search in
Set your property type & budget
Click on filters and select 'most reduced'
This will bring up a search and give you the most reduced properties in that area.
The next thing you want to pay attention to, is how long a property has been on the market for...
You can safely assume that you have a motivated seller when one of the below happens with a property advert:
The property has been on the market for 6 months plus OR
A property is continually being reduced in price (THEY NEED TO SELL NOW!)
It's worth noting that not every property that fit's this criteria makes a good property investment or deal. You have to still carry out the due diligence and see if it stacks up financially.
You can bet your bottom dollar if a property has been on the market for a very long time, that other investors have looked at it and decided against progressing, but it's still worth running the numbers and asking the questions of the agent/vendor.
I find the longer a property has been on the market, the more transparent and open the agent is as to why it hasn't sold.
Another filter to look at is the 'lowest priced' filter. Now it's obvious why you would look at this one. Add any properties that need some basic works doing to them, a lick of paint, a new bathroom or kitchen and add them to a list of potentials. Then go look at recent sold prices on that road or street using Zoopla again: https://www.zoopla.co.uk/house-prices/
You may just have some great deals that you can buy, add value to and then either rent, sell or refinance and pull a lump sum of equity out. If your flipping properties, then this is just bread and butter housing stock you can make money on.
Another tool you can use is called Property Data!
There are so many sourcing tools on this website, you can source using pre-set filters such as these ones below:
Slow to Sell Properties
Price Reduced by 15% or more
Cash Buyers Only
Quick Sale
Repossessed Properties
Unmodernised
High Yield in Yield Hot Spots
Growth Zones
Back on Market
HMO's
Planning Granted
Land/Plots
Tenanted Properties for Sale
Auction
New Build
Short Lease
You do have to have a subscription, but it's an awesome tool when sourcing, and it cut's down on time when carrying out due diligence too. As you have access to all sorts of local area data too. Visit the site here: https://propertydata.co.uk/ I'm pretty sure you can try it out for free and carry out a couple of searches.
More Property Tools to Use
When sourcing for BMV a good indication of a motivated seller is big reductions in price, but unless your watching the market every day and logging prices your going to miss that happen. So you can use various apps. One I use is called 'Property Log', it will give you the details on all the price changes on each advert! This is amazing knowledge as you can see how motivated a seller is directly by how big or quick the reduction happens after being listed.
Imagine you have a house come on the market and then 4 weeks later the price drops by £10,000, that screams 'motivated seller' if the property wasn't over-priced to begin with! So paying close attention to prices and reductions is crucial when sourcing.
You can find the google chrome plugin right here: Property Log
You'll notice that on the image below, you can add a Property Data plugin too, which gives you some amazing local data, that helps really sharpen up your sourcing process.
Another thing you may notice using the Property Log plugin to show price changes is this... When a property reduces it's price, often agents will want to drive traffic to it to increase views so they change the description to say it's NEW ON THE MARKET. They might also alter the settings and re-submit it to Rightmove, so for anybody looking it displays as 'new to market' in the search, when in actual fact, you can see in this advert it's been listed since August and actually been on the market for quite some time.
In Summary:
You can find plenty of low hanging fruit by using search filters on various sites. The key with B.M.V. is understanding why it's below the market value in the first place!
There may be a good reason to avoid what looks like 'deal of the century' at first glance, so be sure to do your homework fully.
If you enjoyed this blog, be sure to check out our others... you might just pick up something useful!
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