I must get three to four below market value deals every day coming into my inbox. They are constantly offering “22% BMV” or “discounted deals” and I’ve done the analysis on many of these to see if they stack up – unfortunately my findings are they rarely do.
Are these properties REALLY discounted?
In my view the majority aren’t and when I know this because I check them out by visiting the area and talking to my contacts, getting them to give me their opinion.
There are lots of reasons these companies can claim to have got the properties at a ‘good price’:-
It might be a distressed sale such as a pending repossession.
Sometimes they get a discount from a developer because they offer to sell all of their properties at a price below the value they were hoping to achieve
A developer may be in financial difficulties so they need to sell properties fast
But the problem is you are reliant on the property company’s information saying it is a discounted. And they may be rubbish at property valuations! Worst still they may just be being dishonest, many people have been caught by scammers pretending to sell properties below what their worth, only then to find out they don’t rent at the price they had been promised and the mortgage lender downgrades the value to.
Some really bad companies – ones who are after making a quick buck out of you rather than actually ‘helping you’ as they claim. What some do is offer a property at one of the street which is say right on a busy main road, or opposite something like an electric pylon, then give you a higher priced property further up the road as a comparable which actually sells for more because it’s not in so much of a desirable situation.
Be very wary of anyone bringing you deals that they have ‘found’ and want to ‘sell on to you’ or ‘joint venture’ with you on – you need a proper legal contract for this, involve a RICs surveyor to confirm valuations etc and ALWAYS run a mile if they tell you ‘you can’t meet the buyer’ or can’t ‘visit the property’. These are classic scammer tactics. Don’t fall for them, it’s likely to cost you thousands of pounds and then not be worth spending more money on legals as they are likely never to pay you.
Some, illegally, make a claim that the property is ‘below market value’ according to a “RICS valuation” – any that make this claim are doing so illegally, so run a mile if they make this claim!
How do you really find properties that are Below Market Value?
For me there are ways of finding deals on property, but I think it’s better (and cheaper) to go and find them yourself, making sure you use a real RIC surveyor to confirm that you are actually getting the property for ‘below market value’.
One way to research and find distressed sales is by working with EiGroup.co.uk I have known David and the team that run this fantastic service which lets you know all the auction deals coming up and then lets you know what they sold for – or if any are unsold.
The service doesn’t cost ‘thousands’! It costs hundreds and is worth every pay in my opinion. They can even make sure you only get distressed sales in your inbox for properties in areas you want to buy. You might not get many, but if you are short on time to go searching, it’s worth having the team work with you to narrow down your search so it’s just right.
Need more information? Read our Auction checklist or give them a call on 01737 226150.