6 REASONS WHY PROPERTIES ARE SOLD BELOW MARKET VALUE
One question people ask Nathan Birch all the time is, “How can you purchase properties below market value ?” The answer lies in the network he has built as a property investor as well as the negotiation skills he has perfected over the past 13 years.
WHAT IS “BELOW MARKET VALUE?”
Market value relates to the amount that buyers are willing to pay for a particular type of property. Nathan gives the following hypothetical example.
Recent sales within an apartment complex show that buyers have been willing to pay between $260,000 to $280,000 for a two-bedroom unit. An opportunity arises to purchase a two-bedroom unit in the same complex for $240,000. This is below market value.
WHY PURCHASE BELOW MARKET VALUE?
Nathan’s strategy is to pay less than retail price for everything he can. When he buys cars, he buys them cheap. When it comes to property, he only ever purchases below market value. This ensures that if things un-expectantly go wrong and he is forced to sell, he’s got an exit strategy and won’t lose money on the property deal.
HOW DO YOU GET PROPERTIES BELOW MARKET VALUE?
There are a number of scenarios under which Nathan is able to find properties below market value. Here are some:
- The selling agent wants to move properties without spending time on marketing and inspections. It’s a well-known fact that Real Estate Agents are paid a commission when they sell a property. While most agents would have the seller’s interest in mind, some will adopt a volume over value approach.
- The selling agent isn’t familiar with the market. Sometimes the agent selling the property is working outside their territory or new the area. In this instance, they are not familiar with the local market and can underestimate the property’s true value.
- The selling agent doesn’t compare all the sales data available. Sometimes they agent will just use their own recent sales results to assess the value of a property. They won’t take into account how much their competitors are selling the same types of properties for.
- A developer has gone bust and needs to sell their properties pronto. Nathan was seeing this a lot after the GFC and negotiated a lot of bulk deals.
- The seller is in duress and needs to sell quickly. For various reasons, sellers often find themselves in situations where they need to sell a property quickly and cannot afford to wait in order to get a higher price. For example, they may need to sell a property for a minimum cost before they can settle on another property, such as a dream home.
- Negotiating land in bulk off developers. If you have the right connections and buying power like Binvested.com.au, you can negotiate land below market value. Unlike heavily marketed off–the-plan purchases or house and land packages this means investors can purchase land wholesale and build with their choice of builder making money on the way in.
WHY ARE WE THE EXPERTS AT GETTING THESE DEALS?
Nathan Birch, the co-founder of Binvested.com.au has access to these sorts of deals because he has developed an extensive network of selling agents over the course of his investing.
We also have the experience and know how to determine what is genuinely a great investment opportunity, and what might just look like a sweet property deal at first but end up very sour.
HOW CAN WE HELP YOU?
Binvesed.com.au can help you locate, analyse, negotiate and settle below market value properties which are in line with your investment strategy and goals. Get in touch with us today to find out how we can help you get started with or improve your property investment journey.