June 13, 2025
The hammer falls, the audience applauds, and you seem to have made a great deal. However, behind the lowest winning bid, hidden costs can linger that turn a seemingly cheap deal into an expensive adventure. In this article, we will illuminate step by step the most common unexpected costs associated with foreclosure auctions in Switzerland and show how savvy investors can factor these in or avoid them altogether before placing a bid.
The price paradox explains why the lowest bid is rarely the most economical:
Cost Block | Typical Share of the Project* | Can it be overlooked? |
---|---|---|
Hammer Price | 60-70 % | No |
Additional Costs & Taxes | 3-5 % | Yes, transfer tax varies significantly by canton |
Renovation & Modernization | 15-40 % | Yes, often inadequately estimated |
Financing & Bridge Loans | 1-4 % | Yes, 20-day deadline forces expensive bridge loans |
Risk Buffer (Unexpected Events) | 5-10 % | Often omitted to remain "cheap" |
*Ranges for single-family and multi-family homes, as of 2025
“The lowest winning bid is only a victory if all follow-up costs are transparently presented upfront.”
• Green (Cosmetic): 100-150 CHF / m²
• Orange (Partial Renovation): 250-450 CHF / m²
• Red (Core Renovation): 600-1,100 CHF / m²
The 20-day period between the winning bid and payment of the purchase price often requires a short-term bridge loan.
A "cheap" bid in a high-tax canton may end up being more expensive than a moderate bid in a canton with 0 % transfer tax.
Bidder A | Bidder B | |
---|---|---|
Hammer Price | CHF 800,000 | CHF 860,000 |
Additional Costs* | CHF 32,000 | CHF 34,400 |
Renovation (Estimate) | CHF 180,000 | CHF 120,000 |
Financing & Buffer | CHF 58,000 | CHF 54,000 |
Total Investment | CHF 1,070,000 | CHF 1,068,400 |
*Additional costs in the canton of Fribourg (3.3 % transfer tax).
Conclusion: Although Bidder A nominally won by being CHF 60,000 cheaper, his total budget is slightly above that of Bidder B because he had estimated an unrealistic renovation calculation. Bidder B paid more at the auction, but correctly identified that the roof and heating still have 10 years of remaining lifespan.
No. In foreclosure auctions, the principle of "bought as seen" applies. Warranty is excluded.
Experience shows 10-15 % of the total investment, and with unknown structural conditions, rather 20 %.
For multi-family houses or luxury properties, yes, the additional costs of the inspection are small in relation to possible miscalculations.
A low winning bid is tempting, but not automatically cheap. Additional costs, renovation, financing, and buffers can dramatically alter the cost picture. Those who calculate systematically, perform stress tests, and avoid emotional exaggerations bid economically, and can win even when they are not the lowest bidder.