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Old 18.09.2020, 22:42
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Another thread about buying a house

I've spent the last several hours reading dozens of threads on buying a house and since I didn't see my situation, I'm starting a new thread. Sorry!

The house we visited is currently split into two flats. We'd have to spend money to make it back into one house because we need all the space. I'm not sure how the "currently 2 flats" would impact any Eigenmietwert. We don't have any idea how much the conversion would cost. There are other renovations needed, but we could move in and deal with them over time.

I've read on EF that it's a good idea to get a professional such as a "bauleiter" out to inspect the property and tell us what we're getting into before we make an offer. However this is apparently a one-shot bid. The agent said that they'll take bids until X date and after that the seller will make the choice. There won't be a second round of bids. The visit we already made is the only visit we'll get, as there are "many interested parties".

The agent also said that we have to first meet with the owner's bank to discuss mortgages. Only after that can we go to other banks. Threads on EF say normally we'd get a packet of info from the seller's agent that we could then use to shop around for mortgages. Of course that didn't happen. We apparently can't meet with the owner's bank until after an offer is accepted.

Given those factors, we have no idea where to come in with an offer. The house is priced fairly given the amount of work that needs to be done, so it's no shock there are many interested parties. But should we offer more, and if so how much more? She said we can send an email with the initial offer. Based on what I've read here, even that is non-binding as it's not signed in front of a notary.

I hesitate with the fact we can't shop around to see what our monthly costs would be. How can I offer X if I don't know what that means on a month-to-month basis?

Has anyone else encountered such a scenario?
- one bidding round only
- no info packet
- must speak to owner's bank first

Thanks for any insight and advice!
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Old 18.09.2020, 23:15
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Re: Another thread about buying a house

Can't you approach other banks generally, without specific details of this house (if that's not allowed, which you seem to be saying)?

Your question would be: given our budget that looks like this (spreadsheet), if we were to buy a house in this area (name it) or this area (name another, similar one), what purchase price could we afford, what would the extra charges be, and what would our monthly costs be?
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Old 18.09.2020, 23:18
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Re: Another thread about buying a house

You should already have a good idea of what the banks can lend you and what the interest rates should be. If not, get this done.

Then just bid on that basis. I'm assuming that the bid is subject to mutual acceptance with the bank for a mortgage.

It's a bit of a stupid process as any buyer would normally want you to come with financing secured. So it raises a red flag for me. Are they expecting you to take over an existing mortgage at an unfavourable rate?
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Old 18.09.2020, 23:57
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Re: Another thread about buying a house

All I can add is in your specific situation I wouldn’t worry about the mortgage specifics right now. We worked with a third party to find the best deal (RealAdvisor), one large-but-not-mega Swiss bank could only offer us 1.4% interest whilst one mega Swiss bank could offer us 0.97%. If you know where you fall on the standard Swiss 5% calculation, you know where you can make an offer and you can be sure you will find a good mortgage after. ImmoScout24, UBS and other such places have online calculators if you need to look at what price range you can afford from the bank’s perspective.

I agree that it seems a bit shady. We were always asked to come with our offer already approved. I agree that it might be a situation where they want you to take over the mortgage. Or, simply they’re trying their luck to see how high someone is willing to go. That can backfire as any bid would be pending bank agreement, so if the prospective buyer can’t get approved, the seller has lost possibly weeks.
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Old 19.09.2020, 00:03
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Re: Another thread about buying a house

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Can't you approach other banks generally, without specific details of this house (if that's not allowed, which you seem to be saying)?

Your question would be: given our budget that looks like this (spreadsheet), if we were to buy a house in this area (name it) or this area (name another, similar one), what purchase price could we afford, what would the extra charges be, and what would our monthly costs be?
Thanks, I guess we could take what we got from the website, which we luckily saved before they took down the listing due to so much interest. That might be enough info for the banks.

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You should already have a good idea of what the banks can lend you and what the interest rates should be. If not, get this done.

Then just bid on that basis. I'm assuming that the bid is subject to mutual acceptance with the bank for a mortgage.

It's a bit of a stupid process as any buyer would normally want you to come with financing secured. So it raises a red flag for me. Are they expecting you to take over an existing mortgage at an unfavourable rate?
Thanks, we also thought they'd want financing secured. The agent didn't mention taking over a mortgage, she said it had been in the family for years and the last son standing wants a quick sale. But that might make sense.

We can afford both the down payment and a mortgage at the current interest rates so I don't think qualifying is a problem. My bigger concerns are over additional costs, particularly renovations over time, and not having any clue how much those would be without having an inspection. Maybe the financial hit from renovations means it's NOT such a great deal after all.

I'd like to make a realistic budget, and from all the posts I've seen the "nebenkosten" after you buy an older house can add up well past the estimates you find online.

And of course since it's a one-shot bid, I don't want to overbid and get it only to find we should have bid far less! Of course the agent says there's lots of interest. It's his job!

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All I can add is in your specific situation I wouldn’t worry about the mortgage specifics right now. We worked with a third party to find the best deal (RealAdvisor), one large-but-not-mega Swiss bank could only offer us 1.4% interest whilst one mega Swiss bank could offer us 0.97%. If you know where you fall on the standard Swiss 5% calculation, you know where you can make an offer and you can be sure you will find a good mortgage after. ImmoScout24, UBS and other such places have online calculators if you need to look at what price range you can afford from the bank’s perspective.

I agree that it seems a bit shady. We were always asked to come with our offer already approved. I agree that it might be a situation where they want you to take over the mortgage. Or, simply they’re trying their luck to see how high someone is willing to go. That can backfire as any bid would be pending bank agreement, so if the prospective buyer can’t get approved, the seller has lost possibly weeks.
Thanks, I know we can meet the 5% rule but maybe dialing it down further will help when approaching banks. Do banks charge for making a mortgage calculation offer?

I suspected it was the latter scenario when the agent said "it's a one-time bid, so think carefully at what price you would say 'I could have afforded that and would have paid it but I missed out!'"
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Old 19.09.2020, 01:20
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Re: Another thread about buying a house

Is it possible (and if so, would it be wise, or not) to make an offer subject to a building inspection?
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Old 19.09.2020, 08:11
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Re: Another thread about buying a house

There are a few red flags in this situation but it is for you to analyse the risk vs return scenario. Some of the flags just sounds like another lazy real estate agent with a desirable property.

There is not a lot of consumer protection here especially in real estate so anything goes if you can get some punter to agree to your terms. However two can play this game, in any offer on property there are two 'get out of jail free 'clauses you should include in your offer. First, who is making the offer, 3Wishes and/or nominees, this allows you to change the purchaser before transfer without cost (providing you can find someone in time for the agreed purchase price). Second, subject to finance, I would always include this (the seller may not accept this which is another matter) , it is not that hard to 'fail to get finance' if you need to get out of the contract. For example, offering the bank only 19% deposit normally works so you escape the contract with failed finance!

One other rare and unique thing here is some sellers want their property to go to the right family rather than the highest offer so including a letter and family photo can help. We were lucky to buy our house here quite reasonably because this was a critical part of the sale.
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