A below market value property is one offered at less than the comparable sales in its street would support, and the phrase is used far more often than the discount exists: a listing that says below market value properties on it is making a claim about a figure the investor has not yet checked. Investment buyers only, the other phrase on such listings, usually means a property with a sitting tenant, a short lease, a structural note or a mortgage problem, which is why a lender will not touch it and why the price is what it is. This page sets out what a BMV deal really is, how the discount is proved from the comps, and how an investment-buyers-only listing is read.
Market value is the comps, so the discount is worked, not read
A discount is a difference between two figures, and only one of them is on the listing. The other is what the street's recent sales and lets support per square foot, which the investor works from the Land Registry's price paid data and from the rent comparables sheet on this site. A property offered at what it would fetch anyway is not below market value because the listing says so, and one offered at a real discount usually has a reason on the survey. The comps make the discount a number; the survey explains it.
What investment buyers only usually means
A sitting tenant on an old tenancy and a rent below the street's, so the property cannot be sold with vacant possession and cannot be let at the comps' rate; a short lease that no ordinary lender will lend on; a structural or damp note on the survey; a title or planning problem. Each is a reason the open market will not pay the full figure, and each has a cost the appraisal has to carry: the years until the tenant leaves, the premium to extend the lease, the works. Investment buyers only is a description of the problem, not of the opportunity, until the appraisal says which.
Filing the deal so the discount is remembered as a fact
A BMV claim that turned out to be the street's price is worth keeping, because the same agent will make it again. A deal file that records the listing's claim, the comps that tested it, the survey's reason and the appraisal keeps the investor's own view of that street, which is what Yieldzo Pro is for. The next below market value property in the postcode is then read against a record rather than a memory of being disappointed.
Questions people ask about below market value property
How much below market value is a real BMV deal?
Whatever the comps say, and no round number. A discount is real when the price is under what the recent sales per square foot support for that condition, and the survey explains why; a discount that has no reason is usually a listing that has no discount.
Can I get a mortgage on an investment buyers only property?
Often not on the standard terms, which is why the phrase is there: a sitting tenant, a short lease or a structural note takes the property out of most lenders' criteria. That is the borrower's question and a broker's answer; this site works the rent and the price, not the loan.
Where do below market value properties actually come from?
Probate, repossession, retiring landlords, chains that collapsed and vendors who need to move in weeks. Each is a sourcing route with a cost, and the guides on sourcing and on repossessed and derelict stock on this site set them out.
Sources
- HM Land Registry, Price Paid Data: every residential sale in England and Wales
- GOV.UK, Search for property information from HM Land Registry: the title, the owner and the price paid for a property
- ONS, Private rent and house prices, UK: the monthly Price Index of Private Rents and House Price Index by area