The basis for any property valuation is the market value. The market value is defined as the price that would have to be achieved for the property within twelve months under normal market conditions. How is this value estimated - and what methods are there?
The market value is made up of land value and building value. How high the share of these factors in the market value is depends mainly on the region. In and around cities such as Basel, Geneva or Zurich, the land value is comparatively high because land is scarce. On the other hand, the building value is comparatively higher in rural and less densely populated regions.
The location influences the land value:
The house or condominium influences the building value:
When it comes to determining the value of something, many people are not objective. Those who want to sell their house or flat tend to estimate the value too high, those who want to buy tend to estimate it too low. That is normal. That is why it is worthwhile to have the value estimated independently. For example, from a specialist or with an online valuation. Man and machine work with the same value-determining factors as a basis, but their methods differ.
Hedonic methods are becoming more and more common. For example, when you have opened a Houzy account and recorded all the information about your house or flat. The property is assessed according to its intrinsic (inner) and extrinsic (outer) values. The computer-assisted comparison method is based on a statistical procedure that takes into account the prices of comparable properties. All that is needed is a few details such as address, living space, year of construction and condition. The result is a good basis for price negotiations. Moreover, many banks rely on hedonic valuations when they finance home ownership. The free Houzy valuation also works according to this principle and calculates the market value of your house or flat on the basis of just a few details. In addition, you will automatically be informed on a quarterly basis whether your property has increased or decreased in value.
Sometimes it takes more than a hedonic estimation. For example, if no comparable houses or flats have been sold in the region in recent years. Then it is worth hiring a certified valuation expert to do the appraisal. This will cost you plus/minus 1,000 francs, but it is worth it because the appraiser knows the market and the local conditions, inspects the property, evaluates special features and may even know prospective buyers.
The market value does not always correspond to the purchase price. This happens when the buyer is willing to pay more because the mural in the living room or the secluded location on the edge of the forest is worth more to him than to others. If you buy a house or a condominium above market value and take out a mortgage, you need more equity capital: banks lend on the lower value, i.e. in this case the market value, and you have to come up with the difference in addition. For a property that is valued at 900,000 francs and for which you have paid 1 million francs, you need at least 280,000 francs of equity capital, i.e. 100,000 francs more.
The market value is made up of land value and building value, as explained at the beginning. The land value depends on supply and demand and is responsible for the fact that prices for residential property in Switzerland have risen sharply in the last 20 years. The building value usually decreases over the years because the house or flat is getting older. Unless you keep the property in good shape with value-preserving measures and replace components, appliances or installations according to the life table. With our free renovation calculator, you can estimate the renovation costs and plan all renovation measures for the long term.