Hello,

I'm about to buy a house in Lausanne for about CHF1M, but have just had it valued by UBS. They have placed a value on it of about CHF900,000, but have also said that its not uncommon for the bank valuation to be below the market level.

Now given the tight supply/demand situation I can just about understand this, but am wondering if anyone else has encountered this or has a view.

Of course I know the value is what someone is willing to pay on a particular day, but would prefer to stay renting if it will be tough for me to break even when I come to sell. The estate agent is adament there is no room to adjust the price, and I can understand this given that the only 2 other houses that have come on the market in this specific area have sold within days, apparently for the full asking price.

Patrious

Valuing below market rate = lower mortgage advance = lower risk for the bank's books.

In short I believe the answer to be yes. We bought 18 months ago and spent 2 years looking during which we'd a couple of failed purchase attempts. Every house we bidded on the bank valued lower than the asking price. They come up with their value based on an algorithm:

(Area) X (Cubic volume) X (desirability of area) X (last date renovated) X (year built) X (age of dog next door)

or something like that they will share with you if you ask.

It means less risk for them - and the swiss are famous for being conservative in this area (on another point I was very surprised how few mortgage packages they offer here compared to home - ie no current account mortgage etc).

What I did learn was that you can ask for the bank to view the property to revisit their value if you feel there is a value that is missed by the algorithm and you'd like them to value it higher.


I hope this is some help.

Yes. I actually asked for more mortgage than needed as I had been told that the lender would take 10 - 15% off the value and then offer a loan based on their valuation and so offer 75% (or whatever) of their valuation. So don't worry it seems quite common...

Thanks for the replies, that gives me more confidence to proceed on what is quite a scary transaction in terms of the size of house you get for the cash .... still I guess its all about location.

We were in the same situation, we found a house that was priced at 1,100,000 and the agent told us that the price was based on a UBS valuation. However, Credit Suisse valued the same house at 1,035,000 CHF, but told us that the asking price was not totally unreasonable and that we should try to negotiate to bring it somewhere between the two.

To make a long story short, in the middle of negotiations another buyer came in, offered the asking price and we lost the house. So I would say if you like it and you think there is nothing wrong with it and the price is reasonable, go for it.

Thanks ljm, if its any consolation I have already lost 2 or 3 houses/flats by making a offer, only for someone to come along and offer the full asking price. Hence this time no messing about, and I went in with the full asking price. First time in my life I've paid the full asking price for a property, and of course there's always that nagging suspicion that I could have got away with an offer - still I console myself that I would only be saving small change in any case given the asking price ....

Patrious

bear in mind that they might be factoring-in the base price of the house - they do this by location and the building definition. It could well be that 100 grand was spent on extras.

I know UBS valued my new build bang on the base price. I did indeed dig deep for another 100 grand or so

The Banks use software to generate valuations. That software cannot capture the value of certain unique features, which a particular property may have. Hence, the software may undervalue. That is also safer for the lender.

It took us two years to find this one house we liked enough to bid for and then we lost it because we were not fast enough, but it actually is a consolation, knowing that this happens but that other houses come along.

"age of dog next door"? is it a joke?

Of course not. And if there isn't a dog, they take the cat and divide its age by 2...

We found two places we were interested in buying and got both valued. Both were valued by the banks at less than the asking price by around 15%.

We ended up getting the place we really wanted independently valued (not cheap, cost CHF 1,300) and then used this to negotiate with the seller.

We went to about 6 banks to then ask for a mortgage offer and their valuations varied considerably - so did their repayments. UBS wanted us to repay the 2nd mortgage in 11 years, so our yearly repayments were over 60k per year!

No offense but it's still very unbelievable. for my better understanding of switzerland, could you tell me the rationale/assumption behind? and is it a general practice or just on certain specific bank? thanks

Truly, you don't belive Abfab

I believe it was a policy started by the ZTB (Zurcher Tierbank = Zurich Pet Bank) but has been adopted by other banks in an attempt to promote better treatment of pets in Switzerland. As you will have read in other threads, pet furs have been used for fashion clothing in Switzerland...

It's not about believing 'who' says that. It's about the fact being unbelievable. Abfab has just provided me a clear explanation that it's a fact. To me, it's still unbelievable that you count the pet into the valuation of an apartment. I have a cat so might be my apartment /my neighbour apartment could sell higher price --this might only happen in switzerland, i guess.

lol!!!! :-)