Why You Should Buy Property Below Market Value

Below market value property, including homes that are about to become bank repossessed property, is one of the raging trends in the property market of South Africa these days. What happens in the below market value property market is that the property is either rented or swapped, which means, it is quickly resold for decent profit. Many purchasers have a knack of taking advantage of distressed property sellers, and purchasing property from them. A unique way to move ahead with the process is to check out the advertisements in the property section of local newspapers. The basic strategy is to highlight the fact that the purchaser happens to be a cash buyer and is capable of preventing the threat of repossession.

The buyer of say, repossessed property, needs to advertise that they are ready to pay at least 10% of the amount below market value which can be thereon negotiated with the seller. However, you need to be aware of the parameters of comparison when it comes to establishing prices. It is tough to look out for price databases for identical properties. This at times gets in the way of establishing the value of the below market price property. The price of the BMV property is its true value. The below market value property is a micro market that has the potential to inflate prices on target properties artificially by outbidding one another.

The optimism about below market price property is that the prices can fall beneath the 10% mark. As the principal rule of purchasing good property is to purchase at the lowest price, it helps if the property is below market value.

Purchasing below market price property, such as homes that are about to become bank repossessed properties, enables maximum profit to be acquired during the period of eventual sale. Although the concept is a simple one, it is nonetheless overlooked by a lot of buyers. Potential investors look at the prospect of buying below market value property as an important part of their real estate investment strategy. In an emerging market, BMV prices can be successfully attained as the prices are still very low, and are likely to remain that way before there is a significant appreciation of capital.

This is why buyers take advantage of the usual paradigms of demand and supply where the costs are escalated as more and more buyers are found. Buyers generally make off-plan purchases since they need to gain finance for funding the construction. BMV, after all, is a win-all situation both for the investors as well as for developers.