In order to find below market value property abroad, you need to be ruthless. In most locations around the world properties are still over-priced; in many to succeed in bmv property investment you need to take what you are hearing is the lowest price for comparable properties and aim to get at least another 20% off.
The international financial crisis gave birth to more bmv properties than international investors could shake a stick at. And this is where the ruthlessness comes in; sellers were knocking their price down by the amount prices in their area had fallen in their area and calling it below market value. For example, by early 2009 UK house prices had fallen about 20% on average, a slew of sellers launched deals on properties 20% below market value, at prices 15% below valuations given at the peak of the boom.
But in actual fact the best way to find property below market value is to stop looking for it. Most active in bmv investment nowadays know that market analysis is only the start; that the shrewd investor will look at individual deals to decide what to invest in. In doing so, these investors will likely find properties that are truly below market value in most markets.
This is because in a down cycle below market value discounts cannot be calculated based on a previous valuation minus the vendor's generosity; it must be calculated by working out what a properties true current value is, minus the asking price/how much more you can get off the asking price.
America in recent times is a prime example of this. In the aftermath of the financial shock American property values crashed among the fastest in the world, as millions of repossessions drove down prices to record lows in record time.
Sellers wanted to sell, buyers wanted bargains, and in a market with way more supply than demand the latter was definitely in the driving seat. In order to attract attention it became common practice to quote prices as below market value. Properties that were valued at 20% below their peak valuation were being sold at that price, but with below market value in the sales pitch.
Buyers soon caught onto this, as they analysed individual deals to assess the current market value of the properties, before deciding whether the asking price was or was not below that. But American property values continued to crash, and the gap between supply and demand widened so much that values were almost in a state of flux, so much so that below market value became almost impossible to call.
Sellers looking to sell fast began offering their properties, quoting the discount against the properties replacement build cost, how much it would cost to rebuild the property new. This is a true measure of discount and allows buyers to truly find bmv property in America.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.