Buying your home is undoubtedly one of the most important decisions you will ever make in your life. Therefore, buyers should always do their homework and think long and hard before taking this step. In this article, we highlight potential pitfalls associated with buying a house and provide tips on how to avoid them.
A house exterior looks freshly painted, a terrace on a plot of land seems to be bathed in glorious sunshine, the rooms in an apartment appear bright and spacious – too good to be true? Possibly! Properties advertised on posters, in brochures, and online are always shown in their best light. However, it is a well-known fact that printed images and electronic photos can be artificially enhanced. Of course, buyers can use advertisements or sales brochures to get a first impression, but they should always have some reservations. It is vitally important to view the property in person.
Buying off the plans is even more precarious as it essentially means that you are buying a property that doesn’t even exist yet. One major advantage here is the ability to have a say in terms of the interior design and choice of appliances. The huge disadvantage, however, is being unable to view your future home in advance. The buyer must rely solely on the actual plot of land, the architect’s plan, and computer animation. The building specification should therefore be as detailed as possible. It should also form part of the contract, thus giving you the right to complain about any aspect of the build not implemented as per the contract. Under certain circumstances, it may even be possible to visit the site regularly to monitor progress and to draw attention to potential construction defects early on, so that you never have to make a formal complaint.
If you are not only considering the purchase of an existing property, but you are also giving some thought to a new build, we strongly recommend that you engage closely with your future building contractor. Apply the principle of “trust, but verify” because, unfortunately, the property market is home to some rogue building contractors. There are numerous different ways to verify that your building contractor is trustworthy.
One of the most time-consuming tasks is examining all documents related to a house purchase. Buyers can feel overwhelmed by documents such as the purchase contract, land register documents, architect’s plans, and so on. However, that is not a good reason to blindly accept everything and sign on the dotted line. Quite the opposite, in fact! It takes a great deal of time to wade through this documentation, perhaps several weeks. If the seller or broker does not allow you this time, you should exercise some caution here. If in doubt, do not be intimidated. Be polite but firm when requesting a realistic amount of time to examine the documents in detail. To fully understand all of the documents, supporting documents and appendices, it may help to also seek external advice from reputable professional advisors.
When examining contracts, special attention should be paid to the liability for defects. Sometimes, in the fine print, building contractors attempt to transfer their guarantee obligation (Garantiepflicht) to subcontractors. The practical consequences of such are as follows: In the event that the buyer needs to complain about a construction defect, it is not possible to simply approach a single company or person. Rather, they must deal directly with several craftsmen and suppliers. This can be very tough.
The buyer should also ensure that the purchase contract does not contain a clause whereby the keys will not be handed over until all invoices have been paid. This may result in some nasty surprises, particularly in the case of disputes regarding the acceptance of invoices due to remedial works.
Before breaking ground, check whether you have the right insurance. This includes builder’s risk insurance (Bauwesenversicherung). A form of fully comprehensive insurance (Vollkasko-Versicherung) that covers costs incurred because of construction delays as well as any unexpected damage to the unfinished building. Builder’s risk insurance also applies to any hidden construction defects that only come to light once the building is complete.
When buying a house, viewing the property is an important step in the decision-making process. Of course, this is mainly to do with personal taste and satisfying your own expectations. Does the house have adequate floor space? Does it have enough rooms? Is there a garden? These questions can be easily answered without requiring any expert knowledge whatsoever. However, it is a little more difficult to properly assess the condition of the property in terms of its structure, walls and floors, plumbing, and appliances. Does the house have good insulation? Are the windows sealed? Is the heating satisfactory? Since a certain level of expertise is required to answer these questions, it is advisable to view the property with an expert who can point out any obvious defects and advise whether there is a need to modernize or even renovate soon.
Moreover, being fully informed about any past renovations will give you an overall impression of how the property has been maintained over the years and which guarantees are still in place.
Where is the nearest school? Where is the nearest supermarket? What public transport is available? All these questions can be easily answered with a quick check online, but does this properly inform you about the area in the vicinity of your potential purchase? Absolutely not! Numerous other questions may not immediately spring to mind.
What is the air quality like in the neighborhood? Are there factories and industrial estates nearby that could disrupt the seemingly idyllic environment in the long term? Are there any planned projects that will involve the construction of an expressway in the immediate vicinity? Is the area safe for the entire family? These questions can be answered by chatting to neighbors, checking the newspaper, and visiting the municipality. It also helps to explore the surrounding area at several different times on several different days.
The dream of owning your own home makes it tempting to consider buying a property even if the equity deposit (Eigenkapitaleinlage) is insufficient and your monthly income is too tight. Prospective buyers quickly forget about the need to satisfy the affordability criteria for obtaining mortgage approval. Essentially, your costs must not exceed 33% of the gross household income. To cushion the impact of any fluctuations, mortgage providers base their calculations on an annual mortgage interest rate of 5%.
In the same way as you might negotiate the price when purchasing a car, sofa or television, you can also negotiate the price when buying a house. Nevertheless, in the Swiss real estate market, this requires a touch of skill and expertise.
Often, the seller has factored in some room for negotiation. If, however, the property is clearly proving to be very popular with several interested parties, haggling over the price may give a negative impression that could result in you being crossed off the list of prospective buyers.
If the property has been on the market for quite some time, or if construction defects have come to light, it is definitely worth negotiating the price. Any savings made can go towards financing your renovations. A low price also reduces incidental costs (for example, registration in the land register and payment to a notary).
When buying a gift or an item of clothing, the “buy now” principle may save you a great deal of time and effort. However, when it comes to a large purchase such as your own home, you need to devote a great deal of time to conducting some careful research. Even if the first property is seemingly perfect at first glance, it may be too expensive. Even if the next property is at the right price, the location may not be ideal. It is worth taking the time to compare houses so that you can get an overall feel for the market and become very clear about your own particular needs.
It is quite common for the seller of a property to request a deposit from the potential buyer before the actual purchase contract is signed. Firstly, you should never pay a deposit directly to the seller. Always pay it into a blocked bank account (Sperrkonto) instead as, doing so, ensures that the seller will not receive this money until the purchase contract has been signed. Secondly, the deposit amount should not exceed CHF 20,000 or 5% of the purchase price.
