What Does FSV Stand For In Property Finance?

The term FSV is an abbreviation, the acronym stands for “Forced Sale Value“.

It is a term used in relation to property finance such as Buy to Let Mortgages or more commonly in Bridging Loans.

What it means is the FSV is the value a property may sell for in a quick sale, usually at auction. This value can sometime effect the level of lending a bank is willing to offer.

The Forced Sale Value (FSV) could be as low as 70% of the full Open Market Value (OMV).

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The phrase Forced Liquidation Value may also be used when referring to a FSV.

If a property has to be repossessed by a bank or other lender due to the loan not being repaid. They usually have to arrange a quick sale, via auction. They don’t have the luxury of advertising the property on the open market for 6 to 12 months.

Therefore a Forced Sale Value (FSV) is expected to be lower than the value on the open market.

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Why Forced Sale Value Matters When You Are Borrowing

Forced sale value is the lender’s downside figure rather than yours. It tells them what they would recover if they had to sell quickly after a default, which is why it shapes how cautious the offer is rather than appearing in the headline loan to value you are quoted.

Where the gap between open market value and forced sale value is wide, expect a lower advance, a shorter term, or a request for additional security. Specialist and industrial buildings, and anything with a thin resale market, show the widest gap. A standard shop, office or house shows the narrowest.

This is one of the main reasons a valuation can come back at the figure you expected and the loan offer still falls short. See our bridging loan broker page for how lenders size an advance, or our commercial mortgage broker page for the loan to value bands by property type.

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