In the world of property investment, the phrase ‘Below Market Value’ (BMV) is heavily marketed as a golden opportunity. You may have heard it on various podcasts or seen it widely advertised via social media. Many companies push the idea that investors are gaining exclusive access to discounted properties, often claiming these discounts are due to bulk buying or special agreements with developers. But how true are these claims and what should investors really be questioning?
The Reality of BMV Deals
Bulk Buying Myths
Many companies claim they receive a discount because they purchase in bulk. However, in most cases, they don’t actually buy the properties themselves. Instead, they act as intermediaries, selling the properties to investors before securing the supposed “bulk discount”. If they fail to meet their sales targets, what happens to investors who have already committed? Often, the risk is passed down the chain.
Off-Plan Pricing vs. Discounts
The vast majority of so-called BMV deals are simply early-access prices for off-plan properties. This is standard industry practice: investors purchasing early are offered a lower price because they are committing to the project well before completion. The discount is not necessarily an exclusive deal; it’s simply today’s price rather than the expected value upon completion. Developers may implement staged price increases as the project progresses, creating the illusion of a discount when in reality, it reflects natural market appreciation.
Questioning the Opportunity
A key question every investor should ask is: Why is this property being sold at a supposed discount? If a development is in a prime location with strong fundamentals, why would the developer need to offer a steep discount? High-quality developments in strong locations rarely require such incentives. If heavy discounts are being advertised, it raises red flags: are the fundamentals as strong as they claim? Is demand genuinely there, or are these properties being offloaded due to a lack of buyers?
Understanding True Market Value
Many companies promoting BMV deals use their own ‘market valuation’ figures rather than independent assessments. If a property is being sold at a discount, investors must ask: Discounted from what? If the initial price is inflated, then the advertised discount is merely a marketing tactic rather than a genuine bargain.
When Can Genuine Discounts Be Achieved?
While many BMV deals are exaggerated marketing tactics, genuine discounts do exist but are usually secured through strategic negotiation and specific circumstances, such as:
- Buying Multiple Units: Developers may offer preferential pricing for investors purchasing several units directly.
- Cash Purchases: Buyers who can complete quickly with cash may negotiate better terms.
- Motivated Sellers: Distressed sales or motivated sellers looking to offload properties quickly may provide opportunities for genuine discounts.
These scenarios provide real value to investors, rather than relying on artificially inflated pricing and misleading discount claims.
Key Questions Investors Should Ask
Before committing to any property deal claiming to be BMV, investors should dig deeper and ask:
- Who is actually purchasing the property? Is it the company itself, or are they merely reselling units they haven’t yet secured?
- Is this discount truly exclusive? Or is it just an early-offer price typical for off-plan developments?
- What are the fundamentals of the location? If the opportunity is so strong, why is a significant discount required?
- Has the property been independently valued? Or is the market price determined by the company marketing it?
- What happens if the company doesn’t reach its bulk purchase target?
A Smarter Approach to Property Investment
Rather than chasing supposed discounts, investors should focus on acquiring high-quality properties in strong locations with solid fundamentals. Genuine capital appreciation and rental yield growth come from well-researched investment choices, not artificial discounts.
By conducting due diligence and questioning marketing claims, investors can avoid deals that appear too good to be true. The key to successful property investment lies in selecting assets that offer long-term growth potential, sustainable rental demand, and strong market fundamentals, rather than being lured by aggressive sales tactics.
