Singing Pig

Hi flatstomachfatwallet

read this with interest - Simon Zutshi, an invetsment adviser, recently sent me a report about BMV/NMD and the state of BTL and I blogged about it over on FindaProperty recently - specifically about whether financing was possible now. He followed up with a video presentation explaining new ways of financing such deals, but have to say it all looks quite risky to me. However, you guys on this forum are at the sharp end and know a lot more about it than I do, so I'd be really interested to hear your comments on his suggestions. The piece is here:

 http://blog.findaproperty.com/general/nmd-deals-2/

cheers

I've just finished reading the whole of this fascinating thread.... for the first time.  I'll need a second go to assimilate all the information and marshall it in my head.  Meanwhile, can anyone tell me:

i)  How are we now, at this point supposed to estimate market value and, therefore, BMV?

ii) Once we have reached some sort of figure, how do lenders then estimate market value? 

The whole situation just seem so volatile to me that I can't see how these NMD cash out deals can be effected, if the "value" drops substantially in the 6, 8, 10 weeks between finding the property and completing.  Using property bee shows the kind of drops in asking price that have taken place over the last few months.  There's a property Im interested in locally which started in April at 115, dropped in May to 105 and is now 99,950.  If I aim for 30% BMV, should I be offering 70?  Or would a lender consider that to be already somewhat below market value?

Sorry if I sound naive or stupid, but I'm just trying to get this all clear in my head.

Cheers

Molly

Molly

The point you raise is not naive or stupid at all.  In fact, i think it is probably one of the most thought-out posts on this thread and raises the vital question of whether valuations below market value actually exist in the current market.  We are in un-charted terratory, i've been practicing as a chartered surveyor for more years that i care to mention and i cannot remember a time when the market was behaving as strangely as it is at the moment. It is currently very difficult to put a figure on a property due to a number reasons, not least the lack of comparable evidence.  In situations like this surveyors refer to the age old adage that says a property is worth what someone is willing to pay for it, therefore the concept of BMV doesn't really exist.

good pertinant points

it all comes down to knowing your local market

for instance there are two properties i have identified in my local town that at beginning of 2007 would sell for around 135k (maybe more), there are others in the same road/style, selling/have sold for that kind of money

however they are both up at 99,950 (one repo and one forced sale), which is more like the price of the 2/3 bed ex la houses (which the ones in question are not, they are the 'next step up' property) so yes comparable in price but not in size,style and location.

so where is the value..... well in my mind, when the recovery comes and lending/sentiment returns, these houses will again be regarded as being the 'next step up' in price from the other houses at the 100k mark thus in short order back to where they should be at 135k

are they BMV, i would say yes BUT only when the market returns to normal function as they are not caomparable with other properties at the 100k mark today,

will i buy them.... yes, but at 75k!

Rik

Thanks John and Rik.  Seems it all comes down to knowing the market and driving VERY hard bargains.  I can live with that... :)

Cheers

Molly 

Hi Everyone

Molly - I totally understand were you are coming from. I too think I am totally naive as regards what figure to take as the market value to base an offer, especially when you have no comps.  I used to base my offers around past prices (which worked quite nicely)  but that does not really help in this crazy current market.

If you don't mind me asking, but how do all you experts and professionals structure a deal now?

Is it best just offer say 75% (or whatever) of a surveyors valuation, without committing to a figure upfront? However if the vendor is not happy with your figure, and pulls out,  then you risk losing your valuation fee. Do you then make them commit using a contract beforehand to re-reimburse the fee should they decide not to go ahead?  I know of some, who ask for the valuation fee upfront, then say they will make a competitive offer - but this does not seem fair somehow.

 Any advice would be much appreciated - and apologies if my question is a daft one, I am prone to the odd 'doh' moment.

 
Thanks in advance
 

Hi,

Hope you dont mind me joining in this thread, but i have recently bought a flat that, to be honest i though was too much money,  but i had a tenant for it, and if the figures worked it would make a small profit, even after service charges etc.

I was concerned about the price, so asked the owner to arrange a RICS val and we then sat down and negotaited the discount back, obviously this will only work if the vendor is very motivated to sell for waht ever reason, it worked for me, and i have advised another Investor to try the same who knows.

Hope this is of some use to you

Cheers

Martin 

Hello All,

I suspect some are getting bored of hearing it, but I am also a naive buy-to-let landlord.

I have two properties that are being let out, but they were bought as homes to begin with and for various reasonsI did not sell them and so they have been let. So not really buy-to-let, more buy-to-live-and-became-let.

I am though now in the fortunate position of being able to get further in to the market and whilst I see the value of property dropping further, this is probably one of the best times ever to be able to snap up property at very attractive prices, with a medium to long term view of capital appreciation.. Clearly no one really knows what will happen to the housing market except that it will continue to drop for some to come, maybe significantly drop. Rentals in popular locations though seem to be holding up reasonably well, according to my information though.

I suppose, in a way, we are in competition with each other, but can anyone explain how to access listings of properties that are available at significant % BMV? As has been stated before in this thread, guaging market value is somewhat of an "art", but at least properties published BMV properties. How do you get people to sell for substantially less than thye market value, or is just a case of being in the right place at the right time? Are there are any hints and tips regarding financing the buy-to-let properties?

 Great thread - clearly some very experienced individuals who understand the pros and cons of the various aspects of the market - hopefully the thread will flourish.