“Below market value” is one of the most overused phrases in property. Every sourcing advert seems to promise 25% off. Some of those deals are real. Plenty are not, and the investor only finds out after the money has gone.
I have been sourcing, buying and developing property for close to 40 years. Here is how I judge whether a deal is truly below market value, and the checks I would expect any serious investor to make.
What below market value actually means
A below market value deal is one where you buy for less than the property would realistically sell for, today, in its current condition, on the open market. Not after a refurbishment. Not in two years’ time. Today.
That distinction matters. A house bought for £100,000 that needs £30,000 of work to be worth £150,000 is a refurbishment project. It might be a good one, but it is not the same as buying a £150,000 house for £100,000.
Why genuine below market value deals exist
Sellers accept less when speed and certainty matter more than price. That usually comes down to circumstance:
- Probate, where executors want to settle an estate
- Repossession pressure or mounting arrears
- Divorce or separation
- Relocation for work with a fixed start date
- Tired landlords leaving the sector
- Properties that cannot get a mortgage in their current state
These sellers are not being taken advantage of. They are choosing a fast, certain sale over a slower, uncertain one. That only works if the buyer treats them fairly, which is how I operate.
6 checks before you buy below market value
1. Check the real comparables
Look at what similar properties have actually sold for nearby, not what they were listed at. HM Land Registry’s price paid data lets you check sold prices for free.
2. Separate condition from discount
Price the work honestly, then compare. If the “discount” disappears once the roof, rewire and kitchen are costed, it was never below market value.
3. Test the end value with a surveyor
If you are using finance, the lender’s valuer will decide what the property is worth. A deal only works if a professional agrees with the numbers.
4. Understand why the seller is selling
A clear reason makes a deal more believable. A vague story is a warning sign.
5. Check the sourcer is compliant
Anyone introducing property deals for a fee should be registered for anti-money laundering supervision and belong to a redress scheme. Ask for proof before you pay anything.
6. Run the full costs
Stamp duty, legal fees, finance, insurance, void periods and sourcing fees all come off your profit. A deal that is below market value on paper can still lose money once these are added up.
Where I find genuine deals
Most of my deals come directly from sellers across the Wirral, Liverpool and Chester, through my website, word of mouth and professional contacts such as solicitors. Because I buy and develop myself, I see the condition and the numbers first hand.
When a deal suits an investor better than it suits me, I share it privately with the people on my investor list. You can register on the investor registration page.
How finance affects the numbers
Many investors buy with cash or bridging finance, then refinance once the property has been improved or revalued. That only works if the revaluation comes in where you expect. Lenders also have rules on how soon you can remortgage, so check before you buy.
If you are new to short-term lending, my guide to bridging finance explains how it works and when it makes sense.
Common mistakes investors make
- Trusting the sourcer’s valuation without checking it
- Ignoring the cost and time of works
- Paying large fees upfront before a deal is secured
- Buying in an area you do not understand
- Assuming rent figures without checking local demand
A simple way to stress-test a deal
Before I commit to any purchase, I run three versions of the numbers: the expected case, a worse case and a bad case. In the worse case, the works cost 20% more and take two months longer. In the bad case, the end value also comes in lower than hoped.
If the deal still makes sense in the bad case, it is a strong deal. If it only works when everything goes perfectly, it is not a deal, it is a hope. Property rarely goes perfectly, especially with older houses where you cannot see behind the plaster until the work starts.
It also pays to think about your exit before you buy. Will you sell, hold and rent, or refinance? Each route has different costs and timings, and a property that works as a rental may not work as a quick resale.
Why local knowledge matters
Two streets a few hundred metres apart can have very different values, rents and demand. A house that looks cheap compared with the town average may simply be on a street where homes always sell for less. Investors from outside the area often get caught by this.
That is one reason I focus on the Wirral, Liverpool and Chester. I know the streets, the builders and the agents, and I know what actually sells and rents.
FAQs about below market value property
How much below market value is a good deal?
There is no magic number. A smaller discount on a house in great condition can beat a big “discount” that needs heavy work. Focus on the total return.
Is buying below market value legal?
Yes, as long as the seller is treated fairly, gets independent legal advice and the process is transparent.
Can I get a mortgage on a below market value purchase?
Often, yes. Lenders will usually lend against the lower of the purchase price or the valuation, so plan your deposit accordingly.
Do you share deals with investors?
Yes. I share suitable opportunities privately with registered investors. Nobody sees who else is on the list.
If you want access to off-market deals across the Wirral, Liverpool and Chester, get in touch or register as an investor today.