If you’re looking for a place to call home in Switzerland, it can be challenging to know where to start. With so many gorgeous areas and properties to choose from, how can you be sure that you’re getting the best deal? This blog post will give you some tips and tricks on finding the undervalued property in Switzerland for your need. Keep reading for more information!

Recently we purchased a property in Switzerland that was sold at 15% – 20% below the market valuation. With that experience, I have so much to share. It was not an easy task for us because we wanted to buy a property that meets our needs, not just for living but also for investment. In 2018, I searched online for an apartment to buy, and we even visited a new-built project in a village that I had not even heard of. But we decided not to buy that one even though we were very tempted to do so. The idea of buying a property in Switzerland has been put off till 2020-2021 when the interest rate dropped below 1%, and property prices rose rapidly.

Why buy a property

According to my calculation, buying a property is a better option than renting if we were to live here long-term. Here are the reasons:

1. With such a low-interest rate, the monthly payment for the mortgage and all other fees is lower than if we were to rent the same type of apartment.
2. It is a better investment choice. Even the cash was used for the down payment, the average property price in Switzerland has been around 2%-3% per year in the last ten years, according to SNB data. This means, for a 20% cash down payment, the equity increase is 10%-15% per year. The average annualized return of the ETFs that we invest in would be around 7 . So the cash is better used in the property, thanks to the mortgage.
3. If we were to move abroad for a few years or not live in this apartment for whatever reason, the rental income could cover the mortgage and all the other fees with a surplus. So the apartment is paying for itself.

You can see, financially, it makes more sense to buy a property in Switzerland than renting if you compare the same type of properties in similar locations.

So this time around, I spent more time studying different areas and offers online and collected a lot more information which helped me find a below-market price apartment that was only four years old in a sellers’ market.

When the interest rate drops, the mortgage is getting cheaper, more and more people want to buy property. In Switzerland, the property price has been rising rapidly. As a result, an apartment can be sold in mere few days or even reserved before it goes on to the market. You can imagine it is tough to find an ideal property with the right price.

But it is not impossible, as long as you do the homework. Here are some tips and tricks to help you spot good deals that most do not know.

Re-examine your search criteria

You need first to find out your hard criteria – the must-haves. Again I used the concept we teach in the Fast Track Money Course – Needs vs. Wants. Everyone wants their dream home, but the list can go on forever. But most of the people also have a budget. Therefore, if you want to find the perfect property for you, you first need to identify your NEEDs and WANTs. Only use the criteria in your NEEDs for the search. Then use the criteria in WANTs for selection.

For example, I did not choose to compete with the big crowd in Zurich or Zug; as long as there is an excellent public transportation connection or highway, the location is also suitable for me. Because the public transportation system very well connects the villages and cities in Switzerland, we are open to living somewhere further from major cities as long as we can reach there by train or by car within a reasonable amount of time.

The housing price can vary largely by location. For example, the same apartment in canton Aargau can cost only one-third of the same apartment in Zurich. But they are maybe just 30 minutes apartment by train. Not only the price but also the level of competition is much higher in those areas. As a result, the chance of getting an undervalued property is very low. It is pretty common that you have to pay a premium for a property in hot locations. This means your purchase price will be higher than the banks’ lending institutions’ valuation.

I know most people will buy up to the maximum amount they can afford for the budget. We did not do that. We set the budget based on one person’s income. So even only one of us is earning, we can still easily afford the property. If both of us are earning, we have extra savings for other investments. Buying the right property is an important stepping stone to help us achieve more freedom in life. We don’t want to be tied up to a big mortgage.

You need to know what your budget is, and you can easily calculate your affordability with the link included in my previous article. Before starting your search, you have to identify your hard criteria and ask yourself, is it non-negotiable? Once you have clarity in mind, you can go to step 2: search.

Find information where an average person cannot find

When I found our apartment online, it was not even listed on all the common real estate websites. It was only listed on the agent’s website and homegate. I’ve also found other properties that were not sold after quite some time because they could not be found online or the agent put the wrong location by mistake.

Therefore I recommend you do in-depth research to find the ‘gems’ ignored by the majority.

Start your search with the available real estate portals and set notification:

• Homegate
• Immoscout24
• Newhome
• Comparis

You might notice that many of the properties are posted by real estate agencies, and they also post those on their website. Most agencies specialize in a specific area or segment, and you can go to their websites and check out the offers there. Soon you will find out that few agencies meet your need. Because their target location or segment is what you are looking for.

I suggest you sign-up for the newsletter on their homepage and contact the agent who has the potential property for you. Arrange for viewing and keep their contact. If you don’t want to view the property after reviewing the sales document, you can tell the agent to send you similar offers in the future.

Here are some real estate companies that I come across in my search:

• Remax
• Engel und Völkers
• Properti
• Passio
• Home visit
• AgentSelly

Many other small real estate agencies can get objects from their local area. You don’t want to miss that out if you want to find good deals.

Unofficial channels

• Tell your friends and families what you are looking for. Maybe they hear about a property that will be on sale, and they can inform you before it goes to the open market.
• Pay attention to the neighborhood; maybe someone is selling

We visited a house for sale in our targeted location before the house was put on the market . Because my father-in-law heard from his neighbor that someone’s house was for sale, he then went there and talked to the people there. We made an appointment to visit the house. At that time, this property was not even on the market. In the end, we did not buy it because the asking price was too high. This example shows you that information from unofficial channels can give you a huge advantage.

Finding new projects

If you want to buy a new-built, you probably can find those on the usual real estate platform. But there might be few left-over apartments that most don’t want. So how can you get firsthand information on new projects?

You can subscribe to the platform Neubauprojekte.ch, a paid platform that consolidates new projects in Switzerland. Additionally, through your research, you will notice that few real estate development companies build apartments all over Switzerland. A similar method to finding real estate agencies is to see which companies post the apartment for sale on the platform, then go to their website and subscribe to their newsletter. That way, you get updates directly from the real estate developer.

Evaluating the price

This step determines if you can find a property at a fair market price or even below market price. Ideally, I plan to buy something below the market price, which means I could make a profit even if I sell it right away. And a good buy is determined by the purchase price, not the expected appreciation in the coming year. Therefore for each property, I am interested in, I double-check the valuation with online platforms and my banks.

If you have all the information about the property, you can check yourself online with tools such as Houzy and Real Advisor to evaluate the price. After putting in all the information and following the steps, you will see the suggested evaluation range for this property. It is 100% accurate because it depends on how much data there is for a similar property in the chosen location. But it gives you an indication of what is the estimated market value.

If you have talked with a few banks about financing already, you can send the sales document to your banker. I know that UBS will generate a comprehensive report which contains information on the city/village, real estate prices, population, and so o. They will also tell you what their valuation range in the report is. So that you know if you can get the maximum financing with this property. For this part, please read my other article to understand how the bank determines the mortgage amount.

Some banks will not give you their valuation; they will just tell you if the price is reasonable or above their valuation. Most banks and mortgage brokers use the same tools to evaluate property prices. From my personal experience, USB’s valuation is a bit higher than the other banks.

Besides banks’ online tools and information, you can compare if the per square meter price is above or below the average. Real Advisor will show you the per square meter price from all online listings in one area. But be aware that some of the listing prices include garage, some don’. Therefore you need to exclude the garage price from the listing price and compare the real per square meter price.

Another factor affecting the per square meter price is the living space. In Switzerland, some listings use net living space; some use gross. The gross area is the property area that consists of interior and exterior walls. The net living area is the interior living spaces of the rooms, the space that you can use. In Switzerland, secondary living spaces, such as loggia, balcony, or basement, are not considered living space for selling price calculation. But given the additional spaces, the property’s per square meter price will be higher than those without secondary living space.

With those tools and resources, even if you don’t subscribe to a valuation software, you can easily estimate the property’s market value. In my case, I have reviewed so many apartments when I see a listing, I kind of know immediately if the price is too high or below the market price. That is how I was one of the first to contact the agent and view the apartment. In the end, when we were looking for mortgages, every bank and mortgage broker told us our purchase price was more than 15% to 20% below their valuation.

Recommendation

If you don’t want to treat your home as an investment and just want to have your dream home and live there forever, this approach is not suitable.

If you want to buy a property in Switzerland and treat it as an investment simultaneously, finding a property with the right price is the determining factor of a good investment. I prefer to buy at a reasonable price now than hoping for appreciation in the income year. When you buy below the market price, you immediately make a good investment decision. If the real estate market price continues to rise, you will gain more from this asset.

In short, I highly recommend that you do the research, not just like most people who search on the popular sites, but also visit the websites of each real estate agency, real estate developers, and even the auction website where foreclosure properties are listed.

Once you find a potential property for you, check with your banks or use online tools to evaluate the property. Over time, you will have a pretty good sense of the market, and you can act quickly when a good deal shows up.

Good luck!