What is BMV Property

BMV is an abbreviation for “Below Market Value” – the theory behind the process of buying property for less than it’s ‘market value’. The property is then either rented out, rented back to the seller or flipped (re-selling the property quickly for a modest profit). Alternatively, some investors choose to repackage the property as part of deposit paid / no money down deal (made popular in the USA during the mid 90s).

There is however the dilemma that the market value of a property is only what someone would pay. In establishing a price, there are few benchmarks for comparison. There is no trade data available, other than land registry and letting agent data. Even the most experienced surveyors are struggling to agree valuations in the current climate. As such, it is impossible to tell precisely what the market value of a property is at the time you are making an offer.

At best, you can get a general idea of what other properties are selling for by asking what other offers have been made, but this is where the number one mistake is made. Many, many, people confuse asking price with market price. Getting a discount on asking price is not the same as buying BMV. Just as the purchase is most important part of any property deal, the motive for selling below value becomes the most important part of a BMV deal.

The buyer should be concerned why the seller would need to sell below market value, as whatever problems the seller may have, the buyer will inevitably inherit.Of these reasons, there is one reason, which is both a logical and a business motive for selling below value - imminent Repossession. When a homeowner is faced with a repossession, not only will they lose their home, but they also gain bad credit, making it almost impossible to secure another mortgage at favourable rates.

This is where we come in, providing investors willing to purchase quickly with data on homeowners facing this difficult situation. In turn, we seek to create a win-win situation where all parties can benefit from a fair and ethical transaction.

 

Other People's Money

In order to stop a repossession, you will inevitably have to act fast, often needing cash to purchase a property as opposed to going down mainstream funding routes.

This is where bridging finance comes in, offering interim financing for an individual or business until permanent financing can be obtained (Definition 'borrowed" from Wikipedia.com). Money from the new financing (i.e. either the sale of the property or a remortgage) is generally used to "take out" (i.e. to pay back) the bridge loan, which is often supplied at a relatively high interest rate.

This effectively allows anyone to purchase a property, regardless of their situation or its price, providing there is sufficient value in the property being purchased.