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Old 17.10.2014, 22:38
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Making an offer on a house

Hi all,

Im sure if I dug deep I would find a similar thread but with rates and prices changing all the time I hope you don't mind me starting again.

We've seen a house we love in one of the most desirable areas of Geneva and want to make an offer. The bank has advised us a lot of houses are going for 20% below the asking price but I don't see a vendor accepting that in this part of town. Or maybe Im wrong.

Can someone tell me what is the current norm for offers and reasons we could justify a lower offer to the vendor?

Many thanks
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Old 25.10.2014, 22:53
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Re: Making an offer on a house

Even in these days of falling market and all 20% seems too much to ask for. Any way no harm in making an offer at 20% less. Most likely you will get a counter offer.
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Old 25.10.2014, 22:56
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Re: Making an offer on a house

Falling market?! Where?
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Old 25.10.2014, 23:54
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Re: Making an offer on a house

Comparis data seems to indicate at least 10% decline in asking price from 2012.
http://en.comparis.ch/immobilien/preisentwicklung
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Old 26.10.2014, 07:21
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Re: Making an offer on a house

You have nothing to loose making a lower offer. Either you get a counter offer or you make a second offer if the first is rejected.
The only time you might loose, is if there are further potential buyers who offer the asked price or more. have you made any inquiries in that?
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Old 26.10.2014, 11:45
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Re: Making an offer on a house

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and reasons we could justify a lower offer to the vendor?
No need to justify your lower offer, just make it. In fact, you could be opening yourself up to creating unnecessary bad feeling by trying to justify your price wrt to the seller's. The value of a property always includes a subjective component, that is understood.

Just make the offer you feel is fair. Don't complicate things unnecessarily at this point.
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Old 26.10.2014, 11:51
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Re: Making an offer on a house

Just depends who is selling and why, and the circumstances. If they have to sell or can wait for th right offer, as is often the case here. As someone who sold a wonderful house which had been so loved by our family over practically a lifetime- the couple of very low offers we got not only annoyed us, but made us determined we would not sell to those people either. BTW, when we bought the house, the sellers accepted a lower offer from us than some they'd already received and turned down- because they loved the house and wanted to sell to us- because they knew we would love it too. Selling a house can be very emotional for some of us, and just a financial transaction for others.

One prospective 'buyer' came along and was rude about the house, the decor, etc, etc- and then said he really wanted a house with a large conservatory, and it would cost him xyz to build one, so he wanted to deduct from price. We told him to go and look for a house he liked with a conservatory.... we sold to someone else a bit later for less- but they loved the house and the garden I'd taken 30+ years designing (which illustrates Meloncollies point, that justifying your low offer can turn against you).

So just make the offer you think is fair- but be prepared to walk away and lose the house if it does not work.

Ricard seems to have disappeared anyhow. If you come back Ricard, tell us what happened.

Last edited by Odile; 26.10.2014 at 12:09.
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Old 26.10.2014, 12:08
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Re: Making an offer on a house

One option is to have a professional property valuation made on which you can base your offer.

Here is an example of an article about having property valued (German)
http://www.beobachter.ch/wohnen/eige...ch-altes-haus/

You can also approach your bank and ask who they use for valuations with a view to getting such a valuation. In the process of obtaining a mortgage, a property valuation will be made anyway to ensure that the loan does not exceed the allowed proportion of the property value.
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Old 27.10.2014, 07:25
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Re: Making an offer on a house

We made a lower-offer on a house that we didn't really like deco-wise and we would have to change if we had kids. They weren't happy with our offer but needed to sell and we negioted for 6 months and we finally agreed on a price. We threw their expensive but ugly and a waste of space bathroom into a skip last year and gained an extra bedroom.
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Old 29.10.2014, 13:35
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Re: Making an offer on a house

Hi,

We decided not to make an offer on this house, but we're currently still searching! The bank has told us many houses around the 2 million mark are going for 1.7. The more we visit the more the agents seem to support this although they're clear with us when the owners are not willing to negotiate. It seems 10-15% less is ok where there is work involved although thanks to your feedback we've been careful not to state this as a reason
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Old 26.11.2014, 10:59
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Re: Making an offer on a house

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Falling market?! Where?
I recently spoke to someone with one of the big property consultancies and they are expecting a significant price fall in and around Geneva for the following reasons:

The multinationals are taking a much more conservative approach and many are reducing staff as the EU migrant cap vote has spooked them, and there are pressures on both them and Switzerland to be more transparent on corporate tax which obviously reduces the attractions of Switzerland.

At the moment the banks are maintaining workforce numbers but that is to develop structures and procedures to manage legislation and the various countries demands. Once in place they will more than likely reduce numbers.

The International Organisations are under financial pressures which is restricting recruitment.

The population fell for the first time this year in over a decade despite an influx of Frontaliers escaping the health tax changes in France.

Demand for commercial property is reducing - there are many empty offices at the moment - and the foreign owners will likely begin selling in greater numbers which then impacts the entire property market.

The sanctions on Russia.

Their view was that at the moment there is a rearguard action by the cantonal authorities and vested interests to talk down the situation hoping for a soft landing but they cant do that indefinitely.
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Old 26.11.2014, 12:49
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Re: Making an offer on a house

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I recently spoke to someone with one of the big property consultancies and they are expecting a significant price fall in and around Geneva for the following reasons:

The multinationals are taking a much more conservative approach and many are reducing staff as the EU migrant cap vote has spooked them, and there are pressures on both them and Switzerland to be more transparent on corporate tax which obviously reduces the attractions of Switzerland.

At the moment the banks are maintaining workforce numbers but that is to develop structures and procedures to manage legislation and the various countries demands. Once in place they will more than likely reduce numbers.

The International Organisations are under financial pressures which is restricting recruitment.

The population fell for the first time this year in over a decade despite an influx of Frontaliers escaping the health tax changes in France.

Demand for commercial property is reducing - there are many empty offices at the moment - and the foreign owners will likely begin selling in greater numbers which then impacts the entire property market.

The sanctions on Russia.

Their view was that at the moment there is a rearguard action by the cantonal authorities and vested interests to talk down the situation hoping for a soft landing but they cant do that indefinitely.
Wow, that is a great first post! Lots of well reasoned arguments. The Forum needs more people like you!
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Old 26.11.2014, 16:07
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Re: Making an offer on a house

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Wow, that is a great first post! Lots of well reasoned arguments. The Forum needs more people like you!
As much as I would like to claim it as all my own work - sadly, as I mentioned, it was a conversation with a property consultant. The outcome was a recommendation not to buy at the moment.

I also noticed in the latest UBSmagazine, that they send out quarterly, that there is an article that notes that in the first half of 2014 prices dropped 4.9% - a big hit on a typical property here.
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Old 26.11.2014, 16:47
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Re: Making an offer on a house

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As much as I would like to claim it as all my own work - sadly, as I mentioned, it was a conversation with a property consultant. The outcome was a recommendation not to buy at the moment.

I also noticed in the latest UBSmagazine, that they send out quarterly, that there is an article that notes that in the first half of 2014 prices dropped 4.9% - a big hit on a typical property here.
while a drop in prices wouldn't surprise me, you should be sceptical about statistics.

i see schoolboy errors being made with respect to property stats all the time, with basic adjustments such as seasonal-adjustment or mix-adjustment not being properly considered.

in any case, the swiss market is so small, fragmented and illiquid that summary statistics are of very little value and you need to look at the underlying data with a critical eye.
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Old 26.11.2014, 20:57
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Re: Making an offer on a house

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while a drop in prices wouldn't surprise me, you should be sceptical about statistics.

i see schoolboy errors being made with respect to property stats all the time, with basic adjustments such as seasonal-adjustment or mix-adjustment not being properly considered.

in any case, the swiss market is so small, fragmented and illiquid that summary statistics are of very little value and you need to look at the underlying data with a critical eye.
I would need to check the article again but i am sure it compared 1st half 2014 to 1st half 2013 - hence no seasonal impact. I also think it was comparing 1 family houses. In any case there is plenty of evidence of the market cooling - this thread is about offering below asking price which was unheard of 2-3 years ago.
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Old 26.11.2014, 21:51
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Re: Making an offer on a house

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I would need to check the article again but i am sure it compared 1st half 2014 to 1st half 2013 - hence no seasonal impact. I also think it was comparing 1 family houses. In any case there is plenty of evidence of the market cooling - this thread is about offering below asking price which was unheard of 2-3 years ago.
They have come down a bit but I don't think there will be some major correction. Switzerland is a very stable country and still attractive to business. Plus the shortage is acute so there will still be demand even if there is a reduction in people.
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Old 26.11.2014, 22:09
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Re: Making an offer on a house

The yield on 10 year Swiss bond just hit 0.44%. Rates falling like this will only lift demand.
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Old 26.11.2014, 22:14
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Re: Making an offer on a house

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I recently spoke to someone with one of the big property consultancies and they are expecting a significant price fall in and around Geneva for the following reasons:

The multinationals are taking a much more conservative approach and many are reducing staff as the EU migrant cap vote has spooked them, and there are pressures on both them and Switzerland to be more transparent on corporate tax which obviously reduces the attractions of Switzerland.

At the moment the banks are maintaining workforce numbers but that is to develop structures and procedures to manage legislation and the various countries demands. Once in place they will more than likely reduce numbers.

The International Organisations are under financial pressures which is restricting recruitment.

The population fell for the first time this year in over a decade despite an influx of Frontaliers escaping the health tax changes in France.

Demand for commercial property is reducing - there are many empty offices at the moment - and the foreign owners will likely begin selling in greater numbers which then impacts the entire property market.

The sanctions on Russia.

Their view was that at the moment there is a rearguard action by the cantonal authorities and vested interests to talk down the situation hoping for a soft landing but they cant do that indefinitely.
The Swiss were rich long before us expats came here, so don't worry, they will manage very well without us

What sort of price change do you expect? If you expect a major one, like 1M apartments to become 500k in the cities, those are only dreams, for now and the very distant future.

A decision not to buy can also be a wrong one, depending how long you stay here, if you rent you are 100% sure to lose lots of money, buying gives you, let's say 33% chances of making money, 33% to break even or 33% to lose money. So probability is that 70% chances are you will do better and 30% worse if you buy. When you buy and hold for few years even the 10-20% price drop will not affect you, remember the money you saved each month by not renting and having a very cheap mortgage.

Market corrections have been in the mouths of almost everybody I know in the last 5 years...And guess what, the good apartments and houses are still selling very quick! What doesn't are the overpriced properties at wrong locations
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Old 26.11.2014, 22:19
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Re: Making an offer on a house

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One option is to have a professional property valuation made on which you can base your offer.

Here is an example of an article about having property valued (German)
http://www.beobachter.ch/wohnen/eige...ch-altes-haus/

You can also approach your bank and ask who they use for valuations with a view to getting such a valuation. In the process of obtaining a mortgage, a property valuation will be made anyway to ensure that the loan does not exceed the allowed proportion of the property value.
About "One option is to have a professional property valuation made on which you can base your offer." Problem is that surprisingly Switzerland is not a "mature" property market.
I once employed the services of two different professional property valuers and the price difference was around 0.5 million.
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Old 26.11.2014, 23:03
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Re: Making an offer on a house

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The Swiss were rich long before us expats came here, so don't worry, they will manage very well without us

What sort of price change do you expect? If you expect a major one, like 1M apartments to become 500k in the cities, those are only dreams, for now and the very distant future.

A decision not to buy can also be a wrong one, depending how long you stay here, if you rent you are 100% sure to lose lots of money, buying gives you, let's say 33% chances of making money, 33% to break even or 33% to lose money. So probability is that 70% chances are you will do better and 30% worse if you buy. When you buy and hold for few years even the 10-20% price drop will not affect you, remember the money you saved each month by not renting and having a very cheap mortgage.

Market corrections have been in the mouths of almost everybody I know in the last 5 years...And guess what, the good apartments and houses are still selling very quick! What doesn't are the overpriced properties at wrong locations
Actually until fairly recent history Switzerland wasnt a rich country.
The adjustment in the 90's - when Switzerland was a rich country - was around 40%.
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