We are in the process of evaluating a few properties for purchase and to live in, we are looking for something below our means in order to quickly pay back the 1/3rd property value (i.e. remaining ~15% after the 20% downpayment) in 5 years max. In this price range most properties are used/old-ish.
Now, it is understood that banks will only finance renovations that they determine suitable, and even then they may finance at less than the 80% mortgage coverage, meaning it is fundamental to know the estimated renovation costs before obtaining the go-ahead, and know how much is due outside the mortgage and thus your expected cash-out in the next 5 years (hopefully only the 20%). Also it affects the offer value.
The market in ZH and nearby AG is ruthless, and frankly over-hyped, most properties are sold within 2-3 weeks or less.
I am puzzled and curious as to how do you or other prospective buyers approach the evaluation of a house. For non-recent properties, how do you estimate in reasonable time the cost of renovation to arrive at a suitable offer and/or negotiating with the bank conditions for their financing?
I see the purchase funnel like this:
- First screening online
- Request for documents, review of floor plans, etc.
- First visit, questionnaire
- Post-visit analysis of issues seen, pictures taken, renovation documents, testing of commute time, area check with maps.zh.ch, etc.
- Further visits, estimation of renovation costs and/or additional work to be done
- Discussion with the bank and obtaining a Finanzierungsbestetigung
- Offer sent (with or without conditions)
- Offer accepted and/or negotiation
I’d really like to understand how in this limited time other people are able to perform the second visit with the needed architect / construction specialist, to evaluate the soundness of the building and entity of any work to be done on top (and perhaps get offers to estimate the costs). Also, what would be a fair amount to pay for such an estimation (have been quoted 800-1000fr per visit and waiting lines are long).
Everyone has an uncle who works in construction? Do they just guesstimate or ignore the problem? People have cash to burn and want to reduce their taxes with renovation costs? They just send an offer and block the house and then do the estimation, quitting if they don’t like the results?
Feel free to highlight what we may be doing wrong in our process, I welcome constructive criticism