Bidding process for property in Switzerland: how it works
The bidding process differs from the conventional way of selling property. Comparis explains how the process works and shares some useful tips.
16.05.2023
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1. What is the bidding process for real estate?
The bidding process is an approach to selling real estate. There’s no fixed price for the property. Instead, potential buyers make bids.
Sellers do not have to set a minimum price or guarantee the sale to the highest bidder. In contrast to foreclosure auctions, prospective buyers can withdraw their bid.
Good to know: the property listing usually informs you about whether a bidding process applies. The sale process should be explained by the time of the viewing at the latest.
How common are bidding processes?
In Switzerland, the bidding process is becoming increasingly popular. In central locations, commercial properties and larger rental properties change hands almost exclusively by means of a bidding process. This is what the Swiss Association of the Real Estate Industry (SVIT) says. However: there are no official statistics or studies on the frequency of the bidding process in Switzerland.
2. Bidding process for buying a house: what steps are involved?
The bidding process differs from the conventional way of selling property. The procedure is usually as follows:
The dossier is prepared
Viewings are held
Several bidding rounds are conducted
The contract is signed and administrative matters are handled
Determine the market value of your property, for instance by using the Comparis property valuation tool. Put together compelling sales documentation for the property and list the property for sale.
Include a reference to the bidding process in the listing. You don’t have to indicate a minimum price. However, keep in mind: for those interested in buying, a guideline price can be very helpful.
If you want to arrange open-house or group viewings for the property, then specify the date in the dossier.
The property viewing is essential for all parties. Check out our property viewing checklist for all the details on how to prepare.
Normally, there are between two and four rounds of bidding. The exact number of bidding rounds should be defined and communicated from the beginning.
Buyers submit their initial bids in the first round. They usually have between two and three weeks to do so. In the second round, all bidders are informed of the current highest bid and can, if they wish, place another bid. The bids should always be accompanied by a financing confirmation from the bank.
At the end of the bidding rounds, the seller can decide on an offer. Usually, rejections only come after the purchase agreement is signed. The reason: the sale could still fall through before the contract is signed.
Has the bidding process been completed? This is followed by the usual final steps in selling property. Draw up a purchase agreement with a notary and enter the new legal owners into the land register to transfer the property to them.
3. When does it make sense for property sellers to use the bidding process?
Generally, you are only advised to use the bidding process if there is a very large number of well-funded interested buyers. The selling price could be higher than the market value of the property due to competitive pressure. In short: if the current situation on the property market is good, a bidding process makes sense.
This approach can be worthwhile, especially in the following cases:
Investment properties
Building land or properties in a good location
Properties that meet the taste of the broad market
4. What are the pros and cons of the bidding process?
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5. Bidding process: tactics for buyers
Are you interested in a property that is to be sold using the bidding process? In this case, the following tips may help you:
Look for transparency: legitimate bidding processes are transparent and well organized. There should be clear details about the procedure and timeframe. Steer clear if that’s not the case.
Consult experts: if necessary, get support from an estate agent or a bank. They can help you reduce your risk of paying an unfair price.
Act fast: arrange your mortgage approval early on in the process. This way, you can quickly submit your first bid.
Show enthusiasm: it’s not always the highest bid that gets the property. Having a friendly and pleasant manner can often influence a seller’s decision significantly. Have you found your dream home? Don’t keep it a secret!
Keep your cool: get an expert to help you define a budget. Be sure to stick to it, and avoid making emotionally driven decisions under pressure.
Which mortgage is best for me?
Mortgage rates vary significantly depending on the type of mortgage, term, lender, canton, loan-to-value ratio and affordability. It pays to compare.
This article was first published on 17.06.2021
