Bidding strategies for beginners: How to set your limit cleverly

Entering the world of Swiss foreclosure auctions can seem intimidating: unfamiliar rituals, unusual processes, and the risk of getting swept away by auction fever. The good news is: With a clear limit strategy, you stand on solid ground from the very beginning. In this guide, you will learn how to scientifically derive your personal maximum bid, place it wisely, and stay calm even when the competition gets nervous.

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1 Why a Limit is Indispensable

• Protection Against Overbidding: Stress, crowds, and time pressure can lead to costly spontaneous decisions.
• Bank Requirement: Financing approval is only valid up to the approved amount, every franc beyond that must be in cash.
• Return Assurance: A fixed limit ensures that your target return won't be "outbid."

“A clearly defined limit is not a straightjacket, but your airbag when the bidding pulse rises.”

2 The 70-20-10 Formula for Beginners

Component	Calculation Method	Result
70% Estimated Value	Official market value × 0.70	Target Hammer Price
+20% Additional Costs & Taxes	Purchase Price × 0.20	Total Investment A
+10% Buffer	Total Investment A × 0.10	Total Investment B (Stress Scenario)

With this conservative rule of thumb, you will almost always remain below the bank's lending limit while also building a safety cushion for hidden costs or unexpected interest shocks.

2.1 Sample Calculation

Official Estimate:        1,000,000 CHF
Hammer Price (70%):            700,000 CHF
Additional Costs (20%):        140,000 CHF
Buffer (10%):                  84,000 CHF
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Maximum Total Budget:        924,000 CHF

3 Tactical Limit-Setting in Three Steps

1. Write it Down: Note your maximum bid including odd francs (e.g., 701,300 CHF), so it stays present and unique.
2. Choose a “Stop Buddy”: Bring a trusted person whose only job is to stop you at the limit.
3. Lay Down Bidding Signals: Once you have placed your bid, keep the paddle down and cross your arms, a clear signal to both yourself and the auctioneer.

4 Psychological Tricks of the Pros and Your Counters

4.1 Jump Bid

Pro Tactic: A large bid jump is meant to intimidate other bidders.
Your Counter: Stay calm. As long as the jump bid is below your limit, do not rush to respond.

4.2 “Shill Gaze”

Pro Tactic: Long eye contact with you to trigger nervousness.
Your Counter: Focus on the auctioneer or your own notes, staring contests only drain energy.

4.3 Stalling

Pro Tactic: Wait a long time before each bid to draw you out of your comfort zone.
Your Counter: Mentally set a timer for 10 seconds. If no one else is bidding, you either place your bid within that time frame or let it go.

5 Limit Reality Check: Three Quick Tests

1. Interest Rate Stress Test

If the mortgage interest rises by 2%, does your cash flow remain ≥ 0? If not, lower your limit or increase your equity.

2. Vacancy Test

Can your reserves cover half a year without rental income? If not, double the buffer or switch properties.

3. Exit Test

Could you resell at any time without a loss? Check market price × 0.90 ⇒ > Total Investment B.

6 Practical Example: Laura Wins with a 327 Franc Lead

Laura, a beginner from St. Gallen, set her limit using the 70-20-10 formula at exactly 768,327 CHF. After 18 rounds of bidding, the highest bid was 767,500 CHF. A developer bid 768,000 CHF. Laura countered with her odd remainder: 768,327 CHF, her limit. The developer hesitated, calculated in his head, withdrew. Awarded to Laura, 327 CHF below her limit, 14% below market value.

7 Quick Checklist: Set Your Limit Smartly

1. Check the official estimate.
2. Apply the 70-20-10 formula ⇒ Note the limit.
3. Secure financing approval + buffer.
4. Choose an odd number as your maximum bid.
5. Brief the stop buddy.
6. After bidding your limit: paddle down, stay calm.

8 FAQ

What if I accidentally "click" and go over my limit?

The award is binding. Therefore: stop buddy and clear written note, this protects you from "click errors."

Can I spontaneously increase my limit on the spot?

Possible, but risky. Only do so if financing and returns have been calculated in advance for the higher amount.

Does the 70-20-10 formula also apply to commercial properties?

In principle, yes, but adjust "70%" to the local vacancy and yield factor (often 60%-65%).

9 Conclusion: A Clear Limit is Your Strongest Shield

Setting your limit smartly and realistically transforms the seemingly uncertain foreclosure auction into a controlled investment opportunity. The 70-20-10 formula, a written maximum bid, and a disciplined presence protect you from emotional missteps and secure the foundation for sustainable returns. Enter the room prepared, and leave it as a happy winner.