Below Market Value

Understanding Property Transactions at Below Market Value (BMV)

M’Cube Holdings stands out as the market’s upcoming authority on below-market-value investment purchases.

Exploring the Niche of Below Market Value Property Purchases

As the upcoming experts in below-market-value investment purchases within the bridging market, we have compiled some valuable information to help you successfully place and complete your Below Market Value Purchase case.

All applications require a survey, and although we do not reveal the purchase price to the surveyor at the time of instruction, there are several common factors to consider that might result in a below-market-value survey reflecting the purchase price rather than the expected market value.

On Market Transaction

Is the property being marketed publicly (e.g., on RightMove, estate agent websites)? If we can see it, the surveyor can see it too, which may influence their valuation. Additionally, a surveyor might contact the estate agents to confirm the purchase price and gather information about the number of viewings or offers the property has received.

Auction Purchase

While clients may perceive they are securing a bargain based on expected market value, auction house records publicly disclose the purchase price, presenting a similar challenge to on-market transactions mentioned earlier.

This very commonly shapes a Surveyor’s valuation of a property once they see this, which they usually will.

Lack of Comparable Properties

Where did the client get their OMV from? Websites such as Zoopla, MousePrice and other online algorithm-based software can vary widely from a Surveyor’s estimate depending on the postcode.

When you submit a query to M’Cube Holdings, we conduct a thorough analysis of comparables in the area. We’ll provide you with this information, empowering you to proceed with confidence or engage in a conversation with your client before advancing further into the process.

Poor Market Strength

Are properties selling effectively in the postcode and local area? This factor could influence the surveyor’s assessment during the survey stage. At the outset of the process, when you submit your inquiry to M’Cube Holdings, we assess the market strength for the purchase and provide this information to you.

Another aspect to consider when encountering a Below Market Value Purchase is the rationale behind the discounted price. Is there a familial relationship between the vendor and the buyer? Is this an inter-family transaction? Such scenarios would render M’Cube Holdings and many other lenders in the bridging market unable to provide funding, as it would classify as a Regulated Bridging Loan.

Distressed Sale

Is the vendor under serious financial pressure?

Is there a risk of bankruptcy, either presently or in the foreseeable future? Under bankruptcy law, any transaction deemed to be ‘offloading’ assets could potentially be set aside for up to 6 years.

This issue is likely to pose a challenge for most bridging lenders.