The biggest risks of buying before foreclosure and how to avoid them

Forced auctions in Switzerland are a proven tool for acquiring real estate at attractive prices. At the same time, there are pitfalls that can quickly turn the expected bargain into a financial burden. This article explores the most important areas of risk, legally, technically, financially, and emotionally, and provides you with tested best practice strategies on how to neutralize them even before the gavel falls.

1 Hidden Liabilities in the Land Register

The greatest danger lies in easements, land charges, or liens that continue to exist after the auction. Typical examples include usufructs, right of way, or overdue infrastructure contributions.

Risk: Value and usage restrictions that can depress market prices in the long term.
Prevention: Obtain a complete land register excerpt, analyze easements with a notary, and incorporate their value impact into your price ceiling.
Pro Tip: Right of way or building restrictions can sometimes be settled afterwards, negotiate a price reduction before bidding.

2 Technical Defects, the "Blind Date" Problem

2.1 Limited Viewing Time

A single short viewing is rarely sufficient to detect hidden construction damage.

Risk: Moisture, end-of-life building technology, soil contamination.
Prevention: Mini-expertise: borrow a moisture meter, thermal imaging camera, create a series of photos, and analyze with experts later.

2.2 Contaminated Sites & Asbestos

Risk: Remediation obligation under Art. 32 of the Environmental Protection Act, costs can reach six figures.
Prevention: Check the "Contaminated Sites" register, construction year ≤ 1990 ⇒ account for asbestos pre-investigation costs (≈ CHF 3,000).

3 Liquidity Trap “20-Day Deadline”

According to Swiss law, the remaining purchase price must usually be paid within 20 calendar days.

Risk: Interim financing fails → contract becomes void, 10% security deposit is forfeited.
Prevention: Written interim credit agreement from the bank, “Same-Day-Draw” clause, reserve ≥ 5% for ancillary costs.

4 Unwanted Co-Residents

Risk: Rented properties come with existing rental contracts that transfer to you (Art. 261 of the Swiss Code of Obligations).
Prevention: Review rental and ancillary cost documents, factor in any arrears into the purchase price, check notice periods.
Special Case of Own Use: Termination for own use is only possible after the transfer of ownership, plus legal deadlines.

5 Emotional Price Overestimation


Symptom: Pulse 160, last call, panic "Now or never!"
Risk: Bidding over the budget
Solution: Written limit + Stop-buddy

6 60-Second Risk Checklist

Land register A-Z checked?
Viewing + mini-expertise done?
Interim financing signed?
Rental relationships clarified?
Price limit confirmed in writing?

7 Case Study: Risk Identified, Risk Mitigated

Investor S. acquired an apartment building in Baden AG at auction in 2023. Risks: Asbestos in preliminary investigation, expired heating boiler, rental arrears of CHF 18,000. Measures: Price limit set 15% below appraised value, appraiser present on the day of viewing, interim credit fixed. Result: Including renovation, 22% below market value, positive cash flow from month 7.

8 FAQ

Can I withdraw after the gavel falls?

Only in cases of serious procedural errors (Art. 134 et seq. of the Debt Enforcement and Bankruptcy Act). Material defects are not grounds for withdrawal, so check beforehand.

How can I prevent bid rings?

Report any suspicion immediately to the debt enforcement office, the auctioneer can exclude individuals and annul bids afterwards.

9 Conclusion: Risk Management Makes the Bargain Truly Real

A forced auction is not a lottery but a calculable investment, provided you know the risks and have strategies to tame them. With land register analysis, technical quick audits, solid liquidity, and iron bidder discipline, you can turn every pitfall into a competitive advantage and secure sustainable returns.