"25% below market value" is one of the most eye-catching lines in a property deal pack. It is also one of the easiest to get wrong. The discount is calculated against a market value figure, and that figure is often an estimate rather than a proven number. If the market value is overstated, the discount shrinks or disappears entirely.
This guide shows how to check a below market value (BMV) claim yourself before you pay a sourcing fee or instruct a solicitor.
This article is general information, not legal, financial, tax or investment advice. Always carry out your own due diligence and take professional advice where needed.
What "BMV" actually means
A BMV deal is a property you can buy for less than it would realistically sell for on the open market today. The discount is usually shown as a percentage:
BMV % = (market value − purchase price) ÷ market value × 100
So a property with a market value of £150,000 offered at £130,000 is described as 13.3% BMV. The purchase price is a fact. The market value is the part you need to test.
Where the "market value" in a deal pack usually comes from
Before trusting the percentage, ask how the market value was arrived at. Common sources, from weakest to strongest:
- The sourcer's own estimate. Sometimes reasonable, sometimes optimistic. On its own, it proves nothing.
- Asking prices of nearby properties. Asking prices are what sellers hope to get, not what buyers paid. They tend to run higher than sold prices.
- An online valuation tool. Automated estimates are a useful starting point but can be well out for unusual properties, properties needing work, or areas with few recent sales.
- Recent sold prices of genuinely comparable properties. Much better evidence, provided the comparables really are comparable.
- A valuation by a RICS-registered valuer. The strongest evidence, and the closest thing to what a lender will accept.
If a deal pack doesn't say where its market value comes from, ask. A sourcer confident in the number will show their workings.
How to check the market value yourself
1. Look up sold prices, not asking prices
HM Land Registry publishes the price paid for residential sales in England and Wales, searchable free on GOV.UK. Portals such as Rightmove and Zoopla also show sold prices. In Scotland, sold price data comes from Registers of Scotland. Focus on sales from roughly the last 6–12 months; older sales may not reflect today's market.
2. Compare like with like
A comparable should match the deal on as many of these as possible:
- Same street, or at least the same postcode district and type of neighbourhood
- Same property type (terraced, semi-detached, flat) and number of bedrooms
- Similar size
- Similar condition — a renovated house is not a fair comparison for one that needs a full refurb
- Same tenure — a flat with a short lease is worth less than one with a long lease
One sale on a better street a mile away is not evidence. Three or four close matches are.
3. Compare price per square foot
Bedroom counts can hide big differences in size. The government's EPC register lists the floor area of most homes that have been sold or let. Divide each comparable's sold price by its floor area, then do the same for the deal. If the deal's "market value" implies a much higher price per square foot than nearby sales achieved, the value is probably stretched.
4. Ask why it's cheap
Genuine discounts usually have a reason: a seller who needs speed because of probate, relocation, divorce, debt or a failed sale. That is the motivated-seller story a good BMV deal rests on, and you should be able to hear it.
Sometimes, though, the low price reflects a problem rather than an opportunity. Properties can sell for less because of:
- A short lease or onerous ground rent and service charges
- Non-standard construction that many lenders won't lend on
- Structural issues such as subsidence, or invasive plants like Japanese knotweed
- Cladding or fire-safety issues in a block of flats
- Flood risk
- A sitting tenant or occupier
None of these automatically rules a deal out, but each one means the true market value may be lower than the headline, and some make the property hard to mortgage or resell. Your solicitor and surveyor are there to find them.
5. Get an independent valuation
Before you are committed, have the property valued independently, ideally by a RICS-registered valuer or through your mortgage lender's valuation. If you are buying with a mortgage, the lender's valuation is the figure that really matters: if it comes in below the price, the loan amount usually falls with it.
Work out the real discount, after costs
The headline BMV ignores what it costs to buy. Take the example above — a £150,000 market value and a £130,000 price — and add typical costs for an investor buying in England:
- Sourcing fee: £3,000
- Stamp Duty Land Tax: about £6,600 at the higher rates for additional properties (5% on the first £125,000 and 7% on the remaining £5,000)
- Legal fees and survey: around £2,500
That is roughly £12,100 of costs, so the real headroom is about £7,900 — around 5%, not 13%. And if your own comparables suggest the property is worth £140,000 rather than £150,000, the "discount" has gone.
Stamp duty works differently in Scotland (LBTT and the Additional Dwelling Supplement) and Wales (Land Transaction Tax), and rates change, so check the current rules for your purchase. Refurbishment costs, mortgage fees and holding costs reduce the headroom further.
Don't count on refinancing at the "real" value straight away
Part of the appeal of a BMV purchase is releasing equity by refinancing at the higher value. Be careful with timelines: many lenders won't remortgage on a higher valuation within six months of purchase, and the new valuation has to be justified by the same comparable evidence you should be checking now. If the refinance is essential to your plan, read our guide to checking BRR deals before trusting the numbers.
Red flags in BMV deals
- The market value is based on asking prices, a single sale, or "valued at" with no evidence
- Comparables are a different property type, size, condition or street
- The sourcer won't explain why the seller is accepting less
- Pressure to pay a fee before you've been able to check sold prices or arrange a valuation
- The discount only works if you ignore stamp duty, fees and refurbishment
- The deal is described as BMV but would be hard to mortgage
BMV checklist
- Ask where the market value figure came from
- Find 3–4 sold comparables from the last 6–12 months: same street or area, type, size, condition and tenure
- Compare price per square foot using EPC floor areas
- Understand why the seller is selling below value
- Check for lease, construction, structural, cladding, flood and occupancy issues
- Get an independent or lender valuation before you're committed
- Recalculate the discount after sourcing fee, stamp duty, legal and survey costs
- Don't rely on refinancing at a higher value within the first six months
In short
A BMV percentage is a calculation, not a guarantee. The purchase price is fixed, so everything depends on whether the market value is real. Check it against recent like-for-like sold prices, understand why the property is cheap, get an independent valuation, and work out the discount after costs. If the numbers still stack up, you have a genuine opportunity. If they only work on the sourcer's figure, keep looking.
On PropertyInvestor.Deals, BMV percentages on listings are based on the market value the sourcer enters, and sourcers can set their own figure, so the checks above still apply. Browse current off-market and BMV property deals, read what to check before paying a sourcing fee, and see how to compare deals without relying on headline ROI.