Finding Those Below Market value (BMV) Property Deals, Hiding In Plain Sight
In a rising property market, finding BMV property deals can seem like hunting for a needle in a haystack. But take it from me, it doesn't have to be that way. When you know what to look for you'll come to realise that finding bargain property is simple. Follow these steps and you'll be finding them on your doorstep.
In today's video, we are going to walk through 4 simple tips and techniques you can use (with free tools) to find a below-market-value property on the market, hiding in plain sight.
Hello, welcome and thank you for taking a moment of your time today to check out this quick training video. Today I'm going to show you four very simple tricks to help you spot bargain BMV property deals using the search tools of Zoopla.
These tricks are great whether you're just starting out in property or building a property portfolio, or even if you're more established in property, already with a couple under your belt. If this is the case you are probably looking for ways to find the next suitable property or deal and you are probably thinking in terms of a BMV property which might be, for instance, a repossession.
Using Zoopla to Create a Shortlist
So, what we're going to look at are some nice, simple ways to use Zoopla to maximum effect. A lot of property investors out there already use Zoopla (Rightmove as well - as these are the two main property portals) but they don't know how to get the most out of the search functions.
The end goal is to try and create a nice, shortlist of potential deals so you don't have to rely on estate agents to pass you the opportunities that they THINK might be the most appropriate deals.
We want to take matters into our own hands, get this shortlist drafted and then get out there and start doing some viewings.
So the idea is:
- Use search to maximum effect
- Create a shortlist
- Get out there and view the property
- Secure the best possible bargain buy-to-lets
So let's get started with Zoopla.
Picking a Local Estate Agent
If you've been looking at any properties recently you probably know that Zoopla and Rightmove are the two main search portals for both property listings and estate agents. So, in Zoopla go to 'find agents', click on 'UK estate agents' and then narrow it down to the specific location you're interested in.
Now, for my property investments, I mainly cover locations in the North West. You'll obviously want to be putting your preferred area in there. So as an example, I'll do a search for Chester, an area I cover.
So, a search for estate agents in the Chester area gives us thirty-four agencies.
What we want to do now is to do the same search in Rightmove. So searching for estate agents in Chester again. This is to see whether or not the number of agencies that comes up is different on this platform to our original search.
And it is...
In this example, Rightmove has got thirty-six agents listed. Zoopla, as we said before has thirty-four. Granted this is only a small difference but it serves as an example of the fact that not all agents advertise on both portals.
The larger brands will be on Zoopla and Rightmove. Some of the smaller agencies will only advertise on one or the other as it can be quite pricey. As things stand at the moment Rightmove is the more costly of the two to post listings but the take-home message is this: smaller agents may only be listed on one of the sites and this is important to understand as you want to get a full picture of all the properties listed in your location of interest.
When you're using Rightmove, the best way to get access to an extra level of information is by using Property Bee.
What Property Bee will give you...
- When the property was put on the market
- Price changes (up and down) since the property was listed
- Whether the property has gone STC and come back onto the market
- Any changes to the details that have happened since the property was listed
Read more about Property Bee, here
There is a downside to Property Bee though and that is that it can be a little bit temperamental. It doesn't work %100 of the time.
With that in mind what I'd like to do here is show you how to use Zoopla properly as, in my opinion, it will be by using Zoopla's native filters that you are going to have the best chance of reliably getting the data you need.
Optimising Your Searches Using Zoopla
So back in Zoopla, we'll carry on with our example. So we're looking at the Chester area. We've got a maximum price of a hundred and thirty thousand. We've set it so we're just looking at houses with a minimum of two bedrooms.
This is where you're going to be setting your particular search criteria based on the type of property you're interested in. If you're looking for a property that will work as a straightforward rental that has a good rental yield, then two or three-bedroom houses are probably going to be your best option.
If you're looking for properties that are going to be more suitable as multi-lets, room lets or HMOs then you're going to want to be looking at four or five bedrooms plus and obviously, this is going to require a higher price range for your search.
Narrowing Your Filters
The next step is to try and narrow things down using filters. We need to start getting into the specifics of what we're looking for and drilling down into our investment criteria.
In Zoopla, if you look on the left-hand side of the screen you'll see a few filter options that you can use to narrow down your search. Now, in the example, we're working with (Chester, set to a maximum price of a hundred and thirty thousand, two-bedroom houses) we're coming up with about seventy-four results, which isn't a great deal.
There's going to be obviously going to be a lot more two-bedroom properties in Chester than that if we increase the price, but seventy-four results is a sufficient number to use for the purposes of illustrating the different tools and techniques we use to try and find the best deals.
Motivated Sellers (1)
Now, when it comes to spotting deals that are on the market in this data age the main thing to know is whether we're looking at what are called motivated sellers.
The idea is to try and find properties and potential deals that have been put up for sale by vendors who need to sell their property as opposed to those who want to sell.
This distinction might sound inconsequential but it's not. Finding motivated sellers is of paramount importance.
So, back to our example. We have seventy-four property listings. All of these are on the market via estate agents. The owners of these properties have all decided at some point that they want to sell their properties.
So, they all have that in common. They all want to sell. They will all be ambitious to sell. Now, it's our job as property investors and buyers (interested in good deals) to find out the why of it all. We need to know what the motivation is behind a vendor/homeowner wanting to sell. If we can work out why the property is on the market then it is going to be much easier, later down the line, when it comes to negotiating the deal.
Motivated sellers are usually under pressure by issues relating to space in time. The vendor may need to sell the property by a certain date (maybe a couple of weeks, or a month, or whatever it might be). This could be because of financial reasons. It could be because of personal reasons. Maybe the property has been left in probate. Maybe there's been a divorce. Maybe the homeowner is looking to emigrate for work or otherwise.
There are a whole host of reasons why a homeowner might need to sell a property quickly and what we're trying to do in this search is to ascertain what those reasons might be.
Back to the Shortlist
So by looking at a few factors we're going to try and create a very tight, shortlist of potential deals that are worth going out to view where we think we are dealing with motivated sellers and by doing this, we're going to save a heck of a lot of time.
Remember we don't want to rely on estate agents to send us the listings that they THINK will make a good deal. We want to be selecting the properties that we want to view.
This will save us time and make it easier when it comes to the negotiation process but it's motivated sellers and their need to sell that we're particularly looking out for.
Property on the Market for a Long Time
So, the first thing that we want to look for are properties that have been on the market for a long period of time.
Typically, in a buoyant market, there are sales happening. There is activity. House prices might be increasing. In a market like this, there should be very few properties that aren't sold within, say, a couple of months,
Even so, there will be a few properties where it is obvious that the owner is struggling to sell. It could be that the house has been priced incorrectly or that the marketing behind the property hasn't been sufficient to generate interest. There can be many reasons for a house not to sell even if the market is buoyant. In most cases, it is safe to assume that the seller is becoming more of a motivated seller as more time passes.
To put it simply. If you have a property that's been on the market for many months and hasn't sold or had much interest, it's a good sign that the vendor might be a motivated seller.
To find properties like these we need again to be using Zoopla and some of the search tools and filters provided on the site. Again, these tools and filters tend to be overlooked or underutilised by property investors and potential buyers.
So you've got a list view, a grid view and a map view. Personally, I tend to use list view and map view to spot potential deals. Using a list view, it's simple. Set your filters to show you properties that have been on the market for a long time relative to the way that the market in the area in which you're interested tends to behave.
Using the Most Recent Listings (Backwards)
So, let's start with the most recent listings. All the properties that are new to the market will be at the top and all the properties that have been on the market for a longer time will be at the bottom.
Zoopla also has a date section that says when the property listing was added. There are some things that Zoopla shows that Rightmove doesn't. That's why when using Rightmove you should have Property Been installed. Rightmove, on its own, doesn't show that much detail in the listings, but using Property Bee alongside it will give you that extra information.
So as I've said, If we scroll down to the bottom of this list in Zoopla we'll be able to see the properties that have been on the market for a very long period of time. You'll see in this example that there are properties here that were added in March 2012. We are now in mid-2014, so there are a few properties here that have been on the market for quite a while.
Coming back up towards the top of the list we'll see the date get closer to today's date but we should have a really good look at those properties at the bottom because they've been on the market for such a long time. We need to consider what effect the property being on the market for a length of time like that has had on the seller and whether or not we are looking at a motivated seller.
We also want to have a look at the description in the listing to see what it can tell us. For example, if it says there is no chain, that means that the seller doesn't need to sell that property in order to move into their next property. This might mean that the property we're looking at is, in fact, vacant. This, in turn, could mean that it is costing the homeowner money. There might be mortgage payments, council tax, and utility bills. All the things that someone isn't going to want to pay on a property that they are not living in.
Factors to Consider
The longer a property is on the market the more it will cost the homeowner to keep hold of it. Also the longer the period of time the greater the chances of a change in circumstance for the vendor which might create a need to make a quick sale.
So properties that have been on the market for a long time are well worth keeping an eye on. What I usually do when I come across them is put them in my favourites and continue my search.
Motivated Sellers (2)
The second thing we're going to look at is using Zoopla to find properties that have had very little interest. Again, maybe they've been overseen by people in the local area, or maybe they've been on the market for a while now, or maybe they've just been advertised at the same price for a while now. They've just generally not had much interest or potential viewings on them.
If we go to this listing first, again, stay on the list view. Go to this and we'll go to the most popular. What this will do is, again it will re-populate the searches. At the top of the list, you're going to have all of the properties that are kind of the most popular. That's by how many times that description and that listing have been viewed and looked at a little bit further.
1) Knowing The Signs
As you can see here this particular listing has been viewed a number of times over the last thirty days, six hundred and thirty-two. That's a lot. This is showing a lot of popularity.
As an investor, we might have a lot of competition if it goes to actually going to do a viewing and placing offers on these particular types of deals because there's been a lot of interest. Probably, there will be a lot of viewings, and certainly, if it's priced right, there will be a lot of offers when it comes to moving forward with that deal.
Again, what we just want to do is scroll right down to the bottom. We're going to be looking at some of the deals that have potentially not had a lot of interest over the last thirty days and see how they're listing.
These are the ones that we want to be adding to our list.
The reason for that, as we said earlier on, is we're specifically looking out for properties, opportunities, and situations where the homeowner has a need to sell that property.
It has to be sold within a certain space of time, or they have a genuine need to get that property sold. There will be other things they might be looking for as part of the deal as opposed to just getting the highest price that might make it worthwhile for them.
A quick sale. Someone who will purchase with cash. Things like that that just kind of offer extra benefits. Things that, as an investor, we can bring to the table that will allow us to get the best kind of possible deals at the best possible prices. What we're going to be doing here is adding a couple of properties to our shortlist.
2) Are They Really Motivated?
We're really looking at properties, as we said, that have been on the market but haven't had that much interest. This particular property has only been viewed thirty-two times in the last thirty days. Perfect. We'll add that one to our favourites. This one again, forty-seven times in the last thirty days. We'll add that one to our favourites.
The likelihood is that when it comes to doing viewings on the property when it comes to putting offers in on the property, and buying below-market-value properties, the estate agent and the sellers are going to be much more responsive to that interest because they probably haven't had many viewings recently and they certainly probably haven't had many offers recently.
It comes to a point in time when they need to consider what opportunities and offers they've had put forward. This is where you can put yourself in that best opportunity and potential really. It's just simply a case of adding some of these deals. Again, look at the ones that maybe match the criteria you set out for a bit more directly. Maybe in the right sort of streets. Maybe in the right sort of postcode that we are specifically looking for. Then add those to our favourites.
Things like no chain as well are always good to look out for in the descriptions.
Then what we're going to be looking at here is, after we've used these couple of different tools that we're going through now, we should have a short list that we can then eventually narrow it down.
I'm not too worried about adding too many properties to the shortlist at this stage. We can improve the quality and we can chop that down in a little bit. We just want to get all the potentials on that list for us first.
That's the second one. That's the second way how to use Zoopla and some of the filters and the options that it provides over and above let's say Rightmove or some of the other search portals.
That gives us a chance, as investors, to get the information that we need to see, really, the motivation behind the vendors selling.
3) Unearthing BMV Discounts
The third one we're going to be looking out for is simply what's going to be looking for potential signs of a motivated seller. One of those is most reduced.
Certainly, if a seller's maybe had a change in circumstances or they're getting a little bit pushed for time and they need to achieve a sale may be quicker than what they had when they first set out. Or there's been another reason why they're maybe not generating interest and they want to try and get that sale over the line so they drop the price.
Listing properties by most reduced to give us a chance to see which properties in our particular target area have had the highest reductions recently, but also, which is quite important when they were last reduced. This particular property has dropped thirty-three per cent since it first came on the market.
This is a time when property sales are generally quite buoyant. There's usually quite a lot of interest in properties, quite a lot of viewings, and certainly, a lot of offers and sales happening. So for a property to have that level of reduction it certainly makes it interesting to have a look at further. Maybe there's a reason why the sale has, or the vendors have dropped that price recently.
4) Large and/or Recent Price Reductions
It's also a relatively recent price reduction as well. That's an important thing to note because the more recent and the higher price reductions are the ones that are going to be the most interesting. I'll add that one to my favourites as well. These ones, price reductions happened a little while back so they may be worth keeping an eye on, just to see if there's any recent change, but the price reductions have been quite high as well.
It's certainly worth adding to your favourites.
There's no rule of thumb here that says you have to look at properties that have an 'x' amount of price reduction or are reduced on a certain date in time or anything like that. It's just simply a case of trying to spot the ones that stand out. The ones that may look like a potential opportunity, and may have a motivated seller based on the detail and the extra descriptions that we can spot here.
It all depends, certainly, on your area. London's going to be completely different to Liverpool and Cardiff is going to be completely different to say, Cambridge, if it were.
There are going to be lots of different varieties depending on your local town. That's why it's important to do the search and just see which ones are at the top and bottom of the list because they're the ones that are going to stand out and be most suitable for you.
5) Percentage Price Reductions
Again, another recent price reduction. Eight per cent. It's not massive, but it's decent enough to add it to the shortlist and look at it as a potential opportunity. There are three that we've looked at so far.
The first one, just to recap, was properties that have been on the market for a long time. That's looking at the lower end of properties that are showing as most recent. Then we're looking at properties that have had little interest or viewings. That's looking at the most popular and, again, the lowest end of the list.
Thirdly we're going to be looking at motivated sellers that have had a price reduction recently. That's using the criteria of most reduced and looking at the properties at the top.
6) Below Market Value Deals
The fourth method that we're going to use to spot these motivated sellers is using this map view section here. What that will do is it will bring all of the properties listed up into a map version of the area. If we scroll in, we'll have a little bit more control as to how we can spot these potential properties.
If you hover over a property, all the ones starred are the ones we've already saved to our list. All of the ones obviously with the Zoopla icon over them are the ones we could potentially have a look at. Then what we're looking to try and spot here is any price difference between properties that are in a very close area.
Maybe properties that are on the same street, or maybe properties that are similar postcodes, or certainly close by to each other. We don't want to try and compare properties here, compared to maybe properties over here or down here. We want properties that are close by together.
Then we're simply going to click on each one and try and spot something that's going to stand out and show us the different prices.
This very first one that we typed on was three bedrooms for a hundred and twenty thousand. The one below it is only on for ninety thousand.
That's like a thirty thousand price difference. It's only a two-bedroom so there's maybe a difference there in terms of the size of the property but it's still quite a difference in terms of the price. A potential below-market-value deal right there.
That one's a hundred thousand. Hundred thousand again. Ninety thousand.
You can see it here. We've got one that's on the market for a hundred and twenty thousand. It's a three-bedroom. We've got another one here that's on the market for only ninety thousand that's a three bedroom.
As a buy-to-let investor or a buy-to-let landlord, you probably achieve a similar rental to both of these properties, but this one's going to be a lot lower in terms of the potential purchase price.
There might be reasons why that price is different. It could be the condition of the property. It could be because the house is in a particularly bad neighbourhood, or street, or whatever it might be, but it's certainly interesting enough to have a little bit of a further look at it if you were. We'll save that to the shortlist.
Then we'll have a look at some of the other listings in the area. These two are on the same road. Similar styles in terms of houses. This one's on the market for a hundred and seven and this one for a hundred thousand. Now, there's a seven thousand price difference. It's not massive so it's probably not one that would catch my eye at this stage, but it's something to consider price ranges and differences, which is why it's important to consider the right property fundamentals.
Stand Out Deals
We're looking at ones that try and stand out. If you've got a very narrow shortlist and you haven't added many to your property list at the moment, then sure it's worth maybe adding some of these to it because there's a price difference there that makes it worth pursuing a little bit further if we're short on potentials.
But if we've got a lot of opportunities to go at, then I'd look for the ones with the largest price discrepancies. Again, this is a three-bedroom for eighty-five thousand. The other three bedrooms in the area are going for a hundred and twenty-five, hundred and twenty-seven. That one's eighty-four. That one's a hundred and fifteen.
Again, this one that's on for eighty-four thousand is worth adding. It's worth adding to the list. Again, it might be because of the condition of the property. It could be a whole host of things as to why that price difference is there, but there are opportunities that happen like that.
Whether properties are differently priced even though they're very similar in terms of style, location, and maybe even in the same street. But the reason for that change in price is that maybe they have a motivated seller. The person that's selling one particular property needs to sell by a certain date. They're happy to sell for a certain price. They're going to list it at a slightly different price to generate that interest.
Estate Agent Mistakes
It's worth, certainly, having a look at. It may also be because it's been marketed incorrectly. The estate agent that's marketed those properties in those areas maybe hasn't advertised it at the correct price.
Maybe they've undervalued it. It could be a whole host of different reasons. What we're looking at here is simply adding more properties to our shortlist.
Again, we do that across the whole area. We go to each of these different listings across the map and just really check out the prices and see which ones have that price discrepancy in them. That's the fourth tip.
That's the fourth technique, if it were, to look at potential deals that may be on the market, kind of hiding in plain sight really, that are worth having a look at further on.
Narrowing Your Shortlist
If we go to My Zoopla, and My Favourites, what it will show us here is the list of all of these potential deals we just added. Now, if you're short on time and have a very large shortlist then you can certainly narrow that down. You can look at each of these descriptions a little bit further. You can look at some of the properties in a little bit more detail and see if they really fit the criteria you set out for and if they do really match what you're looking to achieve.
If you've got a little bit more time to play with, you want to go out there viewing properties, you want to go out there seeing what potentials there are in your local area, then certainly it's worth booking and arranging these potential viewings. But you can also prioritise them.
For example, we've got a couple here on the market with Kent County, a couple with Reeds Rains so maybe if you're short on time. You just want to build up that relationship with one or two agents in the local area then you'd focus on the agents that tend to have the most properties in that particular investment area.
You're Ready To View!
Hopefully, as you can see here, this is just a very quick video or insight into how you can spot some cracking property deals in your local area. As we said, they may be hiding in plain sight. You might have missed it before if you were just using the general search tool without knowing the detail of what you can try and spot if you understand a little bit more about the reasons why a vendor might be selling a property, and the motivations behind selling the property.
Looking really for that need and for that time frame and the reasons why somebody might want to sell quickly, might change the price, and might be motivated to accept offers because they've not had much interest—that type of thing.
Now, as we said earlier on, there's a whole host of different ways, there are about ten-plus different opportunities that we've spotted on how to find motivated sellers using Rightmove and Zoopla as the leading property tools.
There are also ways that you can spot particular properties that require refurbishments and that may be suitable for a buy refurbishment and sell, or maybe a buy-refurbish-and-refinance type property strategy.
Every one of these particular techniques and tips we go through within our online property investment and developer training course if this is something you want to learn a little bit more about. Hopefully, you found this video helpful. You can certainly go out there straight away and start using some of these tactics in your property sourcing if you're looking to buy property at the moment or you're looking to add to your property portfolio.