Bidding process How to buy your home by bidding process

People are more and more often buying their dream home via bidding process. Read on for tips and advice.

by UBS Insights 24 Aug 2021
Image: UBS

In Switzerland, a lot of real estate is changing hands via what is known as the “bidding process”. Ideally, this begins as follows: The seller advertises their real estate, specifying the minimum purchase price and all relevant information about the property, e.g., its location, size, year of construction and floor plan. They also specify a date by which interested parties can come and view the property.

Now it's the turn of potential buyers: after the viewing, they generally have two to three weeks to submit their initial bids. The seller then informs them of the highest bid. Assuming this price is not too high, a potential purchaser can then submit a new bid until the agreed number of bidder rounds – usually two to four – is reached. This is followed by subsequent negotiations, additional questions about construction guarantees or further viewings, as necessary. Unlike in a conventional auction, bids by interested parties are not binding.

A fair bidding process is transparent

In the bidding process, sellers are not obliged to specify a minimum purchase price for their property. In addition – and for investment properties this is generally the rule – a viewing before making your first bid may not be an option. For the bidding process to be fair, it must above all be transparent. Information about the process and the time frames must also be clear from the start. If this is not the case, you would be ill-advised to take part in the process.

House auctions: a special case

Anyone selling their house or apartment is aiming to achieve the highest possible price for it. The situation is different when the owner of a property becomes insolvent and a forced sale takes place. House auctions are virtually a daily occurrence in Switzerland, and represent an opportunity for bargain hunters. This is because the sales price of the auctioned property can be significantly lower than the standard market prices.

Professional advice, speed, and keeping a cool head

If you want to acquire a property via bidding process, you should pay particular attention to the following three points:

  • Obtain expert advice from your bank. We will work with you to determine your financing strategy and budget, ideally before the viewing date. We’ll also clarify with you the second decisive point: what is a fair price for the property in question? This is often very difficult for the layman to judge. We will value the property you’re interested in and help you to decide on your bid.
  • Act quickly. If you really believe you’ve found your dream home, it’s important you come to us right away with all of the sales documentation. The most important thing will now be confirmation of finance, i.e., the mortgage decision or financing agreement that proves you can afford your bid. We’ll make sure that the documents you need are made available quickly and carefully checked.
  • Keep your cool. Depending on the competition, bidding on a house is stressful and could cause you to make rash decisions. In your excitement, you could be tempted to put in an additional 20,000 francs from your reserve savings. That’s why it's best to stick to a budget that the bidders and our experts have agreed upon.

Important: the highest bid doesn’t always win

It’s not always just about the money: some sellers would much rather see their home go to a family with children than to a group of wealthy investors. Personal contact can also be key: a letter to the seller or a chat with them during the viewing can be worth its weight in gold. So there’s no need to despair if you don’t have an enormous budget. In a transparent process, the seller's goal and the length of the bidding process will both be clear from the beginning.

Bidding process? We can help you

Our experts can provide the following:

  • Comprehensive advice on financing: Together we’ll find the right financing strategy for you – tailored to your individual financial situation and needs.
  • Professional real estate advice: Is the price fair and realistic? We’ll value your dream home.
  • Confirmation of finance: We’ll focus on the thorough verification of your request and issue the necessary documents as quickly as possible.

Specific advantages for buyers

Although the bidding process mainly favors the seller, there are also specific advantages for potential buyers. For example, it can be a much faster process than buying a home via a real estate agent, especially if the bidding is online. In addition, the fact that there are other bidders means there is not just competition but also security, because you are not the only person considering buying the property.

Get in touch