A Beginners Guide to Finding BMV Properties
With property prices on the rise, below market value properties are increasingly in demand. Whether you are a homebuyer or looking for good investment opportunities, finding a house below its market value especially in this property climate is by far the best deal you can get.
As the term suggests, a below market value (or BMV) property is a home that is on offer at a price below its actual market value. For example, a property’s bank value is RM350, 000 but the seller is offering it at RM245, 000. This is a BMV property that is 30% below its market value. While it is quite straightforward, this basic principle should not to be confused with properties that are advertised to be on offer but is still priced at market value. In this way, buying a BMV property can be tricky. There are many aspects to consider if you are keen on finding and buying a BMV property. Here, we give you a guide on how to go about finding below market value properties:
1. Study the area thoroughly
Get familiar with the lay of the land. Establish what the market value of the properties are in the area, what is the top and bottom of the market and the rental yield. This way, you can determine if a property is BMV or not and if it will provide good cash flow.
2. Consider the small things
Locating a BMV property is exciting but do your homework. Look at the condition of the home – does it require a lot of repairs that adds up to the home’s market value? Consider the rental yield, will it more than cover the mortgage? Other hidden costs may also include unpaid utilities and maintenance fees, assessment, legal fees if you need to apply for court order to evict disgruntled homeowners.
3. Get a property agent
Look up the property agents in the area and brief them on what you are looking for. Be persuasive with the agent until he brings you something or goes searching for what you want. This way, you will be the first in the market responding to the opportunities as soon as they come up or better still, before it is up in the market.
4. Look for bank foreclosures
Distress properties are often selling at below market value. Look for these properties on bank or online property websites. Alternatively, look for properties on auction in the newspapers, which are advertised a couple of weeks before the auction date.
5. Know the best time
The best time to be on the look out is during the end of the property market cycle. There are bound to be distressed property owners who are looking to sell and at below market value, simply to earn back the money they spent to buy the property. As the property value would have appreciated since the seller first bought it, you are sure to be getting it at below market value.
6. Be prepared
Be ready to jump on the deal – get your loan pre-approvals, secure your deposit and financial settlement terms. You will have a better advantage to negotiate and seal the deal quickly especially when it comes to distressed properties or divorced estates. If you’re in an auction, make sure you have more than enough money to make a deposit. If another bidder offers a higher deposit, be ready to put down more money.
7. Learn to negotiate
When you make the first offer, make sure it is a significantly lower amount to what you are willing to pay. Follow that with an offer closer to what you intended to pay so that the seller and agent will be more agreeable to the amount you are willing to pay.
8. Seal the deal quickly
The most important part about buying below market is sealing the deal the moment the opportunity comes up. This is why it’s important to be pre-approved, to secure the financial terms and have enough money to put down a good deposit. It puts you in a strong position to set a cut-off time for the seller to decide on the offer. Still, be sure to stay on the offer (but don’t be pushy) until it is in the bag.
Clearly, finding a BMV property is no easy task. It takes a lot of time, effort and patience but it is definitely worth it. Securing a BMV property is not only economical but is financially rewarding in the long run. With Speedprop Global, you can get BMV property listing with all the important data you need to make an informed decision in your fingertips. Using advance artificial intelligence powered software, you can find the best property deals out there.