How to find Below Market Value property
If you want to earn passive income as a professional property investor and avoid the costly mistakes of amateurs, buying property at a discount will be an important skill to learn. Called buying Below Market Value Property, it is a skill that seeks to create win-win situations for both the buyer and seller, as opposed to exploiting someone’s need to sell. To find out how this works and to gain some important tips, successful property investor, Amy Heward, shares what has been working for her in the real world.
What is a Below Market Value Property?
A Below Market Value Property (BMV Property) can be any property where the seller will be willing to accept a lower offer in exchange for a discreet, fast or easy sale. Their reasons will be manifold but can include the property being in a poor state of repair or having an issue with its title deeds or planning.
The seller’s circumstances can also be a key factor, for example they may have recently inherited the property or may be facing financial difficulties. Whatever the reasons, at Asset Academy teach ways in which we can help their distress and provide solutions that work for everyone.
However, the Full Market Value of a property is an interesting idea that we often take for granted, as Amy explains:
“Who is the person that decides what a property is worth? Yes you have surveyors and estate agents but at the end of the day, a property is worth what somebody is prepared to pay. To add another level, a property is worth what someone will pay within the time scale that the vendor needs to sell. Why is the buyer buying and why is the seller selling? That’s always going to affect the value that someone will put on it.”
How do you find Below Market Value Properties for sale?
There are essentially two routes to buying below market value properties. The first one is through an estate agent, while the other is going straight to a seller, called Direct to Vendor. Through either route, a key skill will be to start conversations and build rapport, either with the vendor, the estate agent or with others.
“It comes down to communication, talking to people. The more people around you that know what you are doing, the more people that will think of you when they know someone who is going to sell a house. I’ve had it where my tradesmen are doing a refurbishment and will chat to the neighbours, which will quite often lead to [learning about] a house up the road that is empty.”
Buying a Discount House through an Estate Agent
Spending the time and effort on building a relationship with estate agents will be central to finding discounted houses through them. They can only bring suitable properties to you if they understand how you work and realise that you can be beneficial to them in the right situations.
“There are a lot of amateur landlords out there that buy the cheapest houses and do not add any quality to them at all. Building that rapport with estate agents is the way we explain our model, the way we explain how we work and the way we explain that we are buying [rundown properties] to make premium housing. When they have vendors that say we just want it off our hands as quickly as possible, that is when the [estate agent] is going to ring me and say ‘will you come to have a look’.”
Finding BMV Property deals direct to vendor
Interacting directly with the seller can bring many benefits for both sides. It can be easier to agree on a price that works for everyone, it can be easier to understand the seller’s needs and some people simply do not want the fuss and expense that is associated with selling through an estate agent.
“I believe there are a lot of vendors that just prefer to sell without an a estate agent. A lot of vendors have in their mind that they would rather have a situation [that] is direct, then there is a lot more plain speaking. There are fewer unnecessary emails with asking lots of questions and I think a lot of vendors would rather just get on with it and work directly.”
There are many ways to find sellers that will consider a BMV offer, and you can hear some great ideas in the full podcast as Simon Evison interviews Amy Heward. Here we share Amy’s top three marketing methods:
“I do social media advertising with my professional business page that talks about Angel investing {and includes} before and after photos. I’ve done leaflet campaigns with nothing pushy, just – do you want to sell your house without the estate agent costs. I also do a lot of networking in my local area. It’s just getting to know local business people because a lot of the time they have connections to people that may want to sell. [Such as} those landlords who buy a few properties in an amateur way and realise that it is a lot more hard work than they expected.”
Talk to people
The big takeaway from the interview with Amy is simply talk to people. Take the time to build rapport and let everyone know what it is you do and how you can bring benefits to them. Property investing is one of the best passive income ideas, but to consistently earn passive income from it you will need to put in the effort to find the right vendors to work with.
To learn more about working with distressed sellers, you may enjoy reading our blog post: Distressed Seller – How You Can Resolve Their Pain. However, if you are new to property investing and want a great introduction, why not join a FREE one hour Discovery webinar to take your first steps towards earning rental income.
