WHAT IS BELOW MARKET VALUE?

Everyone is searching for the Holy Grail.

When an item is considered the ultimate prize in its given field it is often referred to as "the Holy Grail of..." something. In property investment the "Holy Grail" has always been considered to be able to purchase properties below what they are really worth. These are called BMV properties which stands for Below Market Value properties.

The issue has always been how do you locate these deals and then, more importantly, define their true market value? It is all well and good buying a property for a price you believe to be a discount, but how do you decide what really is the true market value?

At Choices Acquisitions we have always specialised in sourcing these types of deals. This role comes with a massive responsibility. Our clients have to trust our judgement and due diligence and be confident in our ability to only pass on genuinely discounted deals.

Step 1: Locating distress deals.

In order to attract the most amount of people you need to advertise on the Internet. At the small cost of around £50,000 per month we do just that. Type "sell property fast" or "property wanted" into the Goggle search bar and Choices name pops up. Coupled with newspaper advertising this gets us between 500 -600 enquiries per month. Given the competition this is what it now takes just to find people in the first place.

Step 2: What's it worth? No really what's it worth?

Many other companies we see tend only to pick an Estate Agents marketing price as market value. If a house is on the market at £249,950 most companies would say that this represents its value and so paying £212,500 for example would be purchasing at 15% below market value.

The trouble with this is that marketing price is not always a true indication of value. The estate agents job is to get the highest price for the seller and they always build an "offer buffer" into the marketing price. If an agent feels a house is worth £240,000. The agent will market higher than this to anticipate the offers a buyer will make. The other issue estate agents face is competition from one another. Therefore many revert to over promising on the price to get an instruction. Therefore marketing price is not enough.

As we have an Estate agency network we have unique access to Rightmove Plus and therefore we can see not only what price a property has been on but how long it has been on for. How many agents it has been on with. Price reductions and previous sold prices.

As many are away from the numerous websites like Rightmove and Nethouseprices you really need to know what houses actually sold for. These figures are found on the land registry and give a much better indication of price. 

Step 3: What are the economic and social trends of the area?

The final step in deciding the true value of the property is analysing the trends of the market condition and social breakdown of the area. We pay a substantial annual subscription to obtain this information so we can see how house trends are performing. Looking at the local population to see employment levels, age breakdowns, car ownership, average earnings, rental market and any other pertinent information. This way we can make a final decision on what we believe market value to be and then negotiate our price from the value we state.

In conclusion.

We hope you find that all interesting and hope it highlights how in depth the process is when deciding the market value, and then working out what a true BMV price should be. Many investors we have met believe they can do this process on their own. 

Included below is a brief summary of some recent distress sales which were on the market and required a quick sale. We have done this to show you how hard we are on the property before deciding to accept it and how easy it would of been to pay a much higher price and still believe you were getting a good deal.

The purpose of this email is to show how we source property and then decide what market value truly is and how we then work the discount from our valuation. We hope it highlights that the process is long and expensive. The good news is for a modest fee we'll do it for you! We must be mad.

If you are interested in accessing BMV opportunities as the become available and profiting in this fantastic buyer's market then call us on 01342 840050. 

Kind Regards

Choices Property Acquisitions & Investments