When is the purchase worthwhile and when should you rather keep your hands off it?

Foreclosures have a reputation for offering favorable starting prices, but a low hammer price guarantees neither returns nor peace of mind. Whether an investment actually pays off depends on a number of objective and subjective factors. This guide helps you assess the most important ones before you raise your hand and clearly shows you when the risk outweighs the opportunities.

---

1 Liquidity & Financing: Basic Criterion "Cash + Buffer"

“Anyone who cannot finance the 20-day countdown should not bid at all.”

Deadline	Cash Requirement	Risk of Non-Compliance
Date of Award	10% security deposit (estimated value)	Forfeiture + procedural costs
+ 20 calendar days	Remaining purchase price + ancillary costs ≈ 3-5%	Award revoked, penalty
+ 6 months	Renovation buffer ≥ 15%	Interim financing, stagnant capital

Is the purchase worth it? Yes, if
• Interim loan signed
• Equity ratio ≥ 20% (FINMA)
• Reserves for interest rate hikes + surprise costs are available.

---

2 Condition of the Property: From "Cosmetic" to "Cost Explosive"

2.1 Quick Indicator for Viewing

• Green: Year of construction > 1995, no moisture, technology < 15 years.
• Yellow: Year of construction 1975-1995, partial renovation need (250-450 CHF/m²).
• Red: Year of construction < 1975, asbestos suspicion, core renovation (600-1100 CHF/m²).

Are red cases worth it? Only if
• Hammer price is at least 40% below market value and
• you have extensive construction and time resources.

---

3 Location, Vacancy & Demand: Local Market Mechanics

1. Vacancy rate < 1.5% → Rental risk low.
2. Population growth > 0.5% per annum → Value increase likely.
3. Infrastructure upgrade in planning → focus on early stages.

Avoid Purchase: High vacancy rate + stagnant labor market → difficult exit, shaky cash flow.

---

4 Early Identification of Legal Pitfalls

• Existing Rental Agreements: Takeover or cancellable term?
• Easements: Rights of way, building rights, usufructs?
• Contaminated Sites Register: Entry = costly remediation obligation.

Stay away if …
• Usufruct is lifetime
• Building right 1st rank ≤ 40 years remaining term
• Contaminated sites “requiring remediation” without cost estimate.

---

5 Personal Profile & Property Type

Investor Profile	Suitable Properties	Better Avoid
“Flipper” (short-term)	Apartments with cosmetic needs	Core renovation + long-term tenants
Cashflow Hunter	Multi-family homes 3-8 units, growth community	Single-family home in fringe location
DIY Renovator	Single-family homes from the 70s, good substance	Listed buildings

---

6 Decision Flow: Go or No-Go in 5 Questions

Click to open checklist

1. Does the project meet your minimum return even in the “+15% Costs” scenario?
2. Can you be liquid within 20 days?
3. Is the renovation technically and temporally manageable?
4. Does the property match your strategy & time capacity?
5. Are all legal risks (encumbrances, rental agreements) transparent?

---

7 Case Study: Two Similar Houses, Two Decisions

House A (ZH-Suburbs): Year of construction 2002, minor cosmetic work, vacancy 0.7%. → Award of 1.05 million → Return 4.2% per annum. House B (FR-Countryside): Year of construction 1965, suspected contamination, vacancy 3%. → Award of 0.85 million → Renovation 0.35 million = Return 1.1% per annum. Outcome: House A is more profitable despite a higher price, House B rejected by the professional.

---

8 Conclusion: Key Figures Outweigh Emotions

Whether a foreclosure is worthwhile is not determined by the lowest price, but rather the overall concept of liquidity, renovation, location, and legal clarity. Those who assess soberly, calculate realistically, and know their own strategy will seize the opportunity, all others would rather let the hammer fall before it becomes a costs' bludgeon.