I have read a few threads about reservation fees and while they were useful did not cover a possible issue I may be facing.
My Swiss wife and I are on the verge of making an offer on a property. The agent has sent us a "Reservation Agreement" form which we must sign to proceed. The Agent is requesting 60 thousand CHF to close the advertising of the house before we can proceed to contractual negotiation although there is another clause in the piece of paper which says we accept the property at the price listed (Just under 1.2 million).
Question 1. 60K seems very high since, from what I have read, 30K is standard. Is this likely to be negotiable (is it legal?)?
Q 2. Would signing this affect our statuatory rights to negotiate on terms with the owner of the property? (We are effectively accepting the sum on the form in writing which sounds crazy to me)
Q 3.Can we adjust the amount of the offer? or rewrite our terms into the reservation agreement and then sign an adjusted copy?
Q 4. This seems to be put in place by the agent. Is there any legal block on us contacting the owner directly to agree Ts&Cs?
There are many more questions but these will give me an idea as I am slightly frazzled by this part of the house buying thing and definately do not want to sign anything which will cost a fortune (the document mentions charges of 35% of the amount in the event of the negotiation breaking down to cover the agents costs... 21K CHF for taking a house advert off a website???)
From what has been written on other threads, the amount of earnest money to be put down in a reservation contract varies widely.
Here in SZ, the usual amount is 10%. So in contrast, your 60K looks like a bargain.
Are you signing a Vorverkauf contract? If so, be aware that you should have all eventualities spelled out in the document... And be aware that most everything can be at negotiating point. As in any negotiation, you need to gauge your risk in opening a point against the possibility of the seller walking away.
If you have question about usual practice wrt the contract, you might consider making an appointment with either the Gemeinde notary or your own lawyer. Yes, I know that the Swiss are reluctant to bring in lawyers, but you are disadvantaged in not knowing the legal system here... So a discussion with a professional might be money well spent. It's a 1.2 million transaction after all.
As for contacting the owners directly... Tread carefully. We're I the seller, the whole reason for hiring an agent would have been to keep buyers at arm's length, I would not look favorably on a buyer who tried to circumvent the agent. But that's me... And lawd knows, I certainly don't 'think Swiss'. So take my advice with a grain or three of salt.
If the contract doesn't fit you - tell them what you want to have changed.
If they say it's non-negotiable, just tell them you'll walk away.
Property-purchases with non-negotiable contracts usually don't have happy ends...
It's a 1.2m property - likely buyers are not hawking to get in it unless it's the deal of the lifetime - but if actually it was, you wouldn't be complaining about the purchase-price, right?
The "Reservation fee" I refer to is the Vorverkauf (My wife translated it into English as pre-reservation fee). 60K with an implicit penalty cost of 35% for withdrawl from negotiation, before commencing any negotiation is the main part which seems strange.
We are going to contact a lawyer before continuing as tieing up 60K liquid cash before a negotiation is not something we can afford to do lightly
I would not go down this route. The agent represents the owner. Some owners are clueless and it is far better if an agent is involved. Many buyers don't trust owners selling their own property, at least this is what we were told when we sold a house here. I actually prefer to deal with the owners directly. Is the deposit to be paid to the agent's bank or the owner's?
Actually, it is more than just the cost of a cancelled ad. Other interested buyers may have been turned away and there is no telling how long it may take to sell the house if you were to back out.
Often the ad is not pulled until the sale is completed. Some agents will amend the ad to indicate that the property is reserved. Sometimes this generates more interest. It can stay reserved for months depending on the official handover date. Other agents will not amend it at all which I feel just wastes people's time.
Buying property for the first time here is a complex process. Unlike other countries, you don't have an agent in your corner. The agent represents the seller, end of story.
I second the advice to seek out the assistance of someone who knows the process. The HEV offers excellent advice, though if you are not a homeowner yet you are likely not a member, but I don't think that should stop you from contacting them.
There are specialist consultants who can evaluate the property (if it's already been built) beforehand to see if it's actually worth 1.2m (or really how much overpriced it is) - your bank will also tell you their own valuation (which you can more or less deduct from the amount of money they will lend you).
We have already had a building engineer view the property and that has exposed some minor structural issues which we would like the current owner to attend to. The remedial action would cost in the region of 50K. We would like to get the owner to attend to these details and then we would be happy to pay the asking price, otherwise we would make a lower offer. The way the 'Vorverkauf' is worded it says we accept the house as is at the current price. The agent, to date, has been intransigent at best (withholding information because he did not think we needed it, 4 year old grundbuch entry plus many more.) and does not seem to want to enter any form of negotiation before the vorverkauf is signed. This just seems, to my wife and I, a strange situation.
I would walk away. We looked at a house with structural issues. We paid chf 500 for a professional assessment (written report) and then we backed out.
I recall there was another property a few years back which had structural issues and the agent was quite open with me and said the opinions of the experts varied from repairing to knocking it down. So sometimes even the experts don't agree.
If this is really your dream house, my advice is do not sign anything until you get at least a second expert opinion and at least two repair estimates from companies who specialize in this kind of work.
If the home has been professional appraised, then these necessary structural repairs should be noted.
An agent who is not being upfront is wasting your time.
(If it's listed on comparis, you can even see if it has been deleted and then re-listed as "new ad" a couple of weeks later - a common trick - by checking "historical prices at this location" or whatever the function is called in English).
Rainer_D : Thanks for the tip on the comparis history. Unfortunately they only classify objects with their full address in the advert. In this case only the street and postcode are listed. (I am going to spend the evening looking round for webcrawlers that may have picked something up on this although with search and listings sites they can be a bit hit and miss.
That said, I believe the house sale may have been in process for close to 3 years. The agent showed us a valuation document from a bank (according to the bank for internal use only) with a 2011 date on it valuing the property at 1.6 million. I first saw the house on homegate around April or May this year at 1.25 million and it has dropped to 1.2 in July. The agent told us offers had been placed around the 1 million mark which he considered unacceptable.
Mrs. Doolittle: The annoying agent thing is a concern but we really like the property and the level of the structural problem is not insurmountable (It is actually a series of minor things which need to be sorted over the next 10 years in some cases and 50 in others (Would only affect resale value as there is very little chance of me seeing that out) while other parts are niceties which should be done immediately to minimise hassle). Plus... thinking anything like this coming close to our budget anywhere we want to live is slim from the past year or so of my wife's investigations.
We have a few irons in the fire over this from a pro-property buyer to a legal advice insurance line and have sent questions to the banks too. We will have a look at the HEV as well to see whether any other ideas open up.
To me, that says you accept the house as-is at the current price...so whatever structural issues or anything else will be your expense and are not negotiable.
It sound like you really like this house, but the fact you've posted here shows that your gut thinks something is wrong. Listen to your gut. Do not sign this Vorverkauf as-is, or you will probably lock yourself in legally. If they are motivated to sell, they can change the wording to something you're comfortable signing.
"The only times a house is really "up for sale" is:
- a "bad" divorce
- bankruptcy / waiving of rights in a succession -> goes to auction
- emigration of the owner, house has to be sold at some fixed point in time"
Sorry, cannot work out how to do quotes quotes here yet (I will learn)...
I think the owner is not a national and around retirement age so thinking he may be cashing up and retiring to the sun.
I get the impression from the other houses I have looked at that quite a few of the sales are due to death and the family splitting the house is the only working option. Upsizing seems rare here compared to the UK
3 years on the market is a long time in my opinion.
If the property were three times that price, then I understand it can take years to sell. I know of a few properties which fall into this category.
There are owners who are just not under any pressure to sell. They have the luxury of refusing offers and in situations like that there is often very little room for negotiation.
Having refused offers can make some owners even greedier and willing to wait for the asking price or very close to it. If they didn't have a single offer, or had very low offers, they might lower their expectations. It is difficult for an agent to convince an owner to take less, particularly if the agent set the asking price in the first place.
Different agents have different commission structures, and while this should not influence the sale ultimately it can.
Good luck with this. It sounds like you have your work cut out for you here.
I would discuss any outstanding issues before signing anything and carefully read the reservation contract. I would also recomend speaking to a lawyer for your contracts.
We saw a house like this in Würenlos; nice house, nice location, self-contained (i.e. no communal anything). But it was overpriced - and the agent knew it. When we pointed out such-and-such things that detracted from the asking price, the look on her face and minimal comments said it all. It seemed like she'd been in the same position also with other potential buyers, which gave us the impression the vendor (who had already moved out) had his own arrogant ideas how much the house was worth, and she couldn't do much about it.
I think we ended up putting three lower offers in (with justification), but the vendor wouldn't budge an inch, so we dropped out. It was eventually sold, but I don't know how much for.
For me you are doing one thing wrong, you are agreeing the asking price on the condition that the owner spends 50k in repairs, that is not a good idea, if you know it will cost 50k, just offer the asking price - 50k and do it yourself, it will be much simpler and easier.
If you really want this house, make a written offer of 1.15M and say you will take the house as is and if you are given a new contract for this price you will sign it. This way the owner needs to act.
3 years not sold could be nothing could be anything with a given house, I don't agree a slow sale means a bad house, it all depends, there are gems to be had all around Switzerland even if they have been on the market for long, each person has different taste and sometimes there is work involved in a place and no Swiss person wants to buy and renovate, so keep your eyes open for place that need TLC, these are the best deals out there for expats