Hi Specs,
I am looking to get into BMV so I can make money and acheive my ambitions in life. Being new to this I have been struggling with the ethical/moral issues also. Here is my understanding:
I started looking at aquiring property as I read in Rich Dad Poor Dad (a famous self help book) that property is a great asset to own as it increases in value over the long term -I'm sure you know that.
I remortgaged my house and worked out that with the money I could buy 2 houses and rent them out for a small income. Unfortunately, the income would not get me out of working in a job I don't like too much (hold the violins!), and the time taken for the properties to appreciate would not be soon enough for me to buy more properties. This was a strategy that would not help me reach my goal. I had to try and find or create 'No money down deals'. This is where I could buy at a price that left no money in the deal; effectively allowing me to recover all my costs and theoretically have unlimited buying potential. Now if I can do this I will definately be able to realise my dreams of financial independence.
Anyhow after putting countless offers into Agents and being laughed off the phone it became clear that my offers were not acceptable to the vendors.
I realised that I needed to find sellers were they have other criteria that they regard to be more important than price. Known as motivated sellers.
Is it wrong that I need to find motivated sellers for my strategy to work? If I had caused the sellers to be motivated then yes, definately. But bearing in mind they are naturally occuring? I think not. Even if there were no BMVers, motivated sellers would still exist.
Motivated sellers occur in all walks of life from business owners selling their businesses to Buy 1 Get 1 Free at the supermarket, all sellers are affected by their circumstances.
It is basic economics that if a seller (or buyer) wants to sell (or buy) under conditions that are not supported by the mass market, individuals willing to buy (or sell) under these conditions (of which there will be fewer by virtue) will charge a higher price for the transaction to reflect their scarcity (driven by risk, knowledge and other factors).
e.g. If I want to buy a new sports car with a 2 yr waiting list, I can wait 2 yrs and have the car for £70k or I can buy the car now on the open market for £90k. I am paying the extra for the luxury of time and scarcity. I can choose which route I decide to take.
BMV and distressed sellers is a more extreme version of this. Due to circumstance the motivated sellers do not have the luxury of time and buyers who can meet these transaction requirements are relatively scarce. BUT the distressed sellers still have the luxury of choice. The Buyers did not create the situation that the distressed seller finds themselves. Am I taking advantage of this situation? Yes. This is basic business. No different from a baker buying flour and using his/her skill to make bread, then to sell to me at a profit because I suck at making bread and I can't be bothered. -I could save myself a load of money and buy some flour and learn to make my own bread, but I choose not to as the perceived effort outweighs the perceived gain. I am sure distressed sellers (if so inclined) could focus their energies and find a way to prevent repossession or at least delay it until they find a solution. But when a BMVer presents them with a solution, some sellers take the offering as they percieve it to give greater value compared to the time and effort they would have to expend to come up with a similar solution. It may also be true that the sellers who are facing repossession may not be the most resourceful of people and lack the skills to dig their way out of their own hole. -again this is not directly related to the BMVer.
Like all service providers, I am looking to exploit a niche in a market. To ensure I am successful it is in my best interests to ensure the seller is happy with the deal...they still can choose to decline my offer -making me no money.
I understand your viewpoint and I am sure that for every BMVer there is another Specs or more...that's OK. I admire ur strength of stance and can see that you are not for turning! That's fine too.
I believe that as long as there are people who need this kind of transaction, there will be people fulfilling this need. And we all do not have to agree. I do not wish to pursuade you that BMV is cool.
Like all things from postmen to judges to BMVers there will be a spectrum as to their ethical operation. This is true for all people in all professions. Even in what you do.
I can see that it is beyond logic to generalise all BMVers as unethical.
All the best.
Paul