What Does BMV Mean?

BMV stands for "Below Market Value"

In other words, the property being sold has an asking price which is considered low compared to similar sized properties in the same location.

BMV properties are highly desirable by investors, who are usually the individuals/parties who will find and snap up the deals.

However, for that matter, BMV properties are desirable by everyone – if you found an attractive property with a hefty discount of 20-30%, in most circumstances, you’d seal the deal.

Why Would Someone Sell For Less Than Market Value?

It’s understandable that you may be wondering why someone would sell their property for less than they could achieve at market value, however, there are a few common causes for a BMV deal:

• Financial difficulties
• Rundown or damaged property
• Unmortgageable property
• Developer early sell-off

1. Financial Difficulties

There are an abundance of reasons that someone could run into financial difficulties and be in a situation where they are unable to afford their mortgage repayments.

In order to mitigate accumulating late payment fees or having their property repossessed, a quick sale can be achieved by offering the property at a discounted price.

Individuals selling property at BMV are known as “motivated sellers”.

2. Rundown or Damaged Properties

Properties which are rundown or damaged will usually be sold BMV as the future buyer will be required to spend £x to refurbish the interior and/or structure so that the property is habitable.

3. Unmortgageable Properties

There are various reasons which can make a property unmortgageable.

It is rare for a buyer to purchase a home without a mortgage. Therefore if a future buyer were unable to secure a mortgage on the property, it would be very unlikely that anyone will be interested in purchasing.

4. Developer Early Sell-Off

In the majority of BMV sales, the property will be sold directly from a developer who is looking to raise funds for completing a current or future project.

However, developers ideally sell off large chunks of the development in one go. I.e. they won’t sell one unit on it’s own.

Who Buys BMV Properties?

As mentioned above, the majority of BMV sales are direct from developers.

For this reason, you’ll require at the very least £1 million to secure numerous units in one deal of a new development.

Due to this, usually large property investment firms purchase the BMV units from developers.

However saying that, anyone is eligible to purchase a BMV property.

If you’ve discovered a deal which you believe to be significantly lower than market value, then by all means go for the deal – just be sure to do a thorough investigation as to why the seller is motivated to sell.

Are There Downsides to BMV Sales?

It may seem like there is a catch to purchasing properties that are BMV.

In all honesty, there are no catches if the deal is legitimate*. However, BMV deals are very rare outside of direct from developer sales.

*If you are offered a deal that sounds too good to be true, then exercise extensive due diligence.

How Can I Find BMV Properties?

There are various property investment and management companies that offer properties at BMV rates;

They purchase multiple BMV off-plan units from developers and offer them to customers at a higher price, but still under market value.

These companies will make a small % profit from the difference in prices, while you will benefit from a below market value purchase.

Innovative Ways to Find BMV Deals

Many developers have their own websites from which they may sell units directly to customers. This could be a potential option to finding BMV deals.

Finding motivated sellers – this can be done through a number of methods. In many cases the property may not have a BMV price, however if the seller is in a rocky period, then you have some leverage.

Advertise that you are willing to purchase properties quickly – With targeted online advertising, you may find individuals who are in financial difficulty but do not have their property for sale.

Want to learn more about investing in real estate? Check out these 13 fundamentals to property investing.