Estimating renovation costs before property purchase offer

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
  • Deposit

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 :grimacing:

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If it is a simple case, I look at what needs to be done and I look at previous offers / bills I have for previous jobs.

Need to change an inside door, including the frame? It will be 1800 CHF + 1400 CHF for any extra door.

Need some new tiles ? Let’s say 200 CHF / m2 + 600 CHF.

Need a new toilet ? It will be 850 CHF.

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we faced a similar situation and “lost” 3 properties as we delayed quite a bit (over here, delay means more than 1-2 weeks). Thereafter, we adapted our approach and re-arranged the purchase funnel in the following order:

I see the purchase funnel like this:

  • Discussion with the bank and obtaining a Finanzierungsbestetigung - This can be done way before even any prospective options come up.
  • First screening online
  • First visit, questionnaire - preferably the same day or the next day - Take an architect with you for the 1st visit. Best is to pre-align with an architect/bau-leiter and take him/her along. It will cost a bit. For our inspection, we paid around CHF 520/- for the architect/bau-leiter coming along with us
  • Request for documents, review of floor plans, etc. - this can be done in the 1st phone call on the 1st day and the documents in hard copy can be collected at the time of the visit (preferably the same day or next)
  • Post-visit analysis of issues seen, pictures taken, renovation documents, testing of commute time, area check with maps.zh.ch, etc. - do this on the same day as the visit or better still, do this in advance for the area that you want to explore
  • Offer sent (with or without conditions) - the email offer can be sent on the next day. Contrary to what people say, it is not binding. It just gets your foot in the door and gives you some breathing space.
  • Offer accepted and/or negotiation - If you are offering the list price, you can mention in your offer that this is conditional to the agent taking the offer off the market on the same day or next day.
  • Deposit - this can be done within a week

I know the above sounds quite accelerated but it really is the only way to get a leg-up in the “Normal” competitive housing market. Of course if you have some built in advantages (for eg like a contractor in the family or someone who works in a bank), then that can even shorten the lead time.

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I would approach it a bit simpler. Let’s say new kitchen: 25k CHF, new Bathroom: 15k CHF, new Floors: square meters * 120.- Fr.
You can get some estimates from the “Verkaufsbroschüre” of new houses where people still can choose over the finish of an apartment. Not sure how much the differences in prices is between renovation and freshly built is tho.

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Check well

  • the cellar: humidity?
  • the roof: leaks? when is the next renovation due? at which cost?
  • the heating (if there is one…) : when does it need to be changed?
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Thanks a lot for all the answers, I’ll try to reply here.

@REandSTOCK, we have been renting our entire life so we are unfortunately lacking a baseline, for example I thought (without data nor experience) the toilet would be much more and the tiling much less :pensive:

@MrCheese, that’s a very good suggestion, thank you. I have no evidence but have the feeling that those prices are inflated (on the other hand renovation may stumble upon unforeseen issues once you open the walls, etc.)

@Zerte2, thanks for the tip, we always check that, I’m in fact more concerned about hidden issues that a professional may be more qualified to assess (e.g. also as you suggest future problems for which I need to prorate)… and in any case need someone to estimate so I can go to the bank :moneybag:.

@Sirob very helpful, thank you kindly!

We did our preliminary discussion several months ago (to understand our budget cap), and I may be in the wrong hands but our bank(s) will - and have in the past - only issue a Finanzierungsbestetigung for a specific offer on a specific property, meaning every time I want to send an offer I need to send all the property documents to them and they evaluate if the listed price is appropriate and issue the document according to the address and exact offer amount we want to send.

You are saying it’s possible to get an “unrestriced” one?

That’s what I thought would be needed… now the problem I have to solve is only to conciliate expert availability (they usually give me two weeks in the future) with visits that may need to be concluded in a shorter period. I guess that’s also why prices went up for these fellas :roll_eyes:

Market is quite different than what I am familiar with (in other EU countries you offer lower or same, here you go for a race to the highest bidder)… in fact nobody seem to assume the property will go for as low as listed price anymore, perhaps we are doing it all wrong but I don’t see any RE agent accepting to take the listing offline when they can get more people to bid each other for the same object.
Since the bank won’t ever give you any mortgage coverage above listed price (when they match it, even), and the point here is to deploy as least cash as possible, we have been “outbid” every single time we offered the list price. New buildings are an exception of course.

Do you think there is something I’m missing, perhaps?

Quite aggressive, yes, especially when working full time, but that’s the same for everyone I guess :grin:

P.S.: current property I’m after was on the market before, the owners after a while changed the agency to a new one, slashed the list price by 7%, and RE agent seems to have difficulty even now to get visits (I’m surprised she would say that - perhaps inverse psychology tactic “you found a hidden gem”).

It’s not a recent building, but given the market high demand and slow sales cycle for this one I’m quite concerned that either there is a lot of hidden cost in renovations, or that I’m completely missing some other crucial disadvantage of the property (which worries me much more)…

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I saw an ad of a free real estate evaluation website, including renovation costs. I put a few flats & houses, including my own, and found the evaluations reasonable. Maybe worth a try.

www.houzy.ch

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Thanks @Bojack, yes we used it a lot, it is a good guesstimate but their calculator uses only an amortization principle (i.e. component X lasts Y years and costs Z).

Good to know the general cost of major structural work, still need a professional for appraisal of the current situation though, that component may be needing repairs much sooner :wink:

Nevertheless recommended.

That was probably just the price of the toilet bowl. :grin:

What did you mean here? Is in your area of interest possible to go down with the listed price of new buildings?

You can expect 1000-1500 CHF per square meter (material and manpower) for a somehow qualitative renovation, but not luxury

This estimate shall include electricity, floors, painting, kitchen, bathroom, eventually tailor-made wardrobes, windows

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omg again a f…ing site with the login trick. First you fill it and then you discover you have to login. bastards.

This thread is scary. It’s a lot of work for purchasing a house and renovating it. I still don’t get how a kitchen can cost 25k if all the main components costs less than 2k.

@baldur I was referring to the fact that all properties here go for 1-2 rounds of bidding (i.e. higher, sometimes much higher, prices than listed), while for new buildings they are thankfully honest enough to go for a first-come-first-serve basis at the listed price only.

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Thanks @babyjag, this is indeed a very useful rule of thumb!

In Switzerland purchasing power for “things” is comparatively cheap, but manpower is the killer (rightly so, wouldn’t anyone want a good salary?).

I can give a real example for the exterior if anyone else finds it useful: 68sqm wooden facade restoration and in some parts replacement (w/o additional insulation) for 23k.

I agree. I have no idea how much time it takes to build a kitchen from an empty space. Maybe 2 days for 2 persons if there is an easy way to transport stuff there (say ground floor with big entrance) ?

Indeed minimum 2 days to install a kitchen + quite some days to elaborate the kitchen design, ordering material and household appliances etc

That houzy page claims my 3.5 room apartment is now worth 1.6 Mio. I doubt that doubling in valuation in just 3 years a lot.

Can you find a similar flat near you for less money? Did you really buy it for 800k?

There are 5 results for 4.5 and 5.5 room apartments in the same City available all between 1.3 and 1.75Mio. The 1.25Mio CHF for 4.5 room apartments with around 110-120sqm is however very accurate (seen several at that price before). But I still doubt somebody would pay 1.68Mio for 100sqm.

EDIT: The price was 810k for the appartment and 40k for the parking spot. Ok if I scale down the building state and qualty a bit I get a more realistic 1.35Mio, was still a good investment decision I guess.

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