Friday, May 18, 2012

Buying a house in Sweden - the bidding process

So we decided we both loved the house and it was within our price range, so we decided to venture out into the land of the bidding war.

How do you bid on a house in Sweden?

via text message. Yes, you send amounts like '3,000,000' via SMS and then the others interested in bidding see your message and decide if they want to place a bid.

You are not legally bound to actually fulfilling your bid. The agent does not need to check to see if you have any capacity to pay the sum you have bid. You can just bid. We were actually really close to purchasing a place a few years ago when the top/most aggressive bidder decided at the last minute they didn't want it and they offered it to us. At our highest bid. Based on the aggressive bidders tactics. The Swede says I am nuts, but I am convinced the top bidder was a close friend of the sellers. Because seriously what is stopping anyone from doing that? Absolutely nothing.

Someone mentioned in a previous post about the US system in which the buyer has a broker and how that can be a pain. Maybe. But sometimes I just wish there was someone looking out for MY best interest in the largest purchase I will probably make in my lifetime. The Swedish real estate agent is supposed to represent both buyer and seller, but since their salary is based on commission and paid by the seller, I cannot see how this can conceivably work. Especially when they are too busy to answer questions or take a personal interest.

Let's take our dream house as an example. Even when we said we wanted to place a bid, the agent never responded to me personally. Never answered any questions via email. Only sent out mass mailings.

OK, so there were that many people interested in the house. In 8 hours, the price went up 500,000 SEK or just under 100,000. For a house that needed some serious renovation that we had a hard time estimating the cost of, things went over our limit pretty quickly.

I'm sad to walk away, but you can only do so much.


8 comments:

  1. I saw you previous post on the subject and have to agree it's a very weird system with so many blind spots, like the agent working for both sides, that I'm not surprised it's a mess.

    I got mine a couple of years ago and every time I'm reminded of how much I owe the bank and how little protection (zero I guess) I have against mass devaluation I get a little nervous. I would basically be stuck with the same apartment for decades paying inaginary interest over an imaginary inflated price.

    What are the options really? Well intentioned overregulation created this uncomfortable patchwork of a monster and now rent is not an option even more so to a brown male single immigrant like myself. And I have a considerably above the average salary.

    Regarding the price going up fast on the bidding what I do is I just add 20 to 30% over the "start bid" and pretend that's what I'm reading. They are not supposed to start much lower but they do it anyways.

    One thing I have to admit was a very pleasant surprise was that once I closed the deal there was absolutely nothing I had to do besides showing up one day and sign a few papers. Being from Brazil this sounds like science fiction.

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  2. When it comes to housing Stockholm has to be the most corrupt place on earth. Some years ago a friend of mine was offered a raise if her boyfriend agreed to call in bids. 1.25% for every 100.000 the price went up. And I've heard of so many buyers having second thoughts after having won an apartment, my younger colleagues looking for small apartments say they see it all the time. Of course people could be placing bids on more than one apartment at the same time but I think it's crazy that no one checks and that it's ok to do it. Easier than trying to stop all the illegal money involved when people trade first hand renting contracts...

    I'm so happy I bought in 97 when prices were still very low as a result of the banking crisis (15.000/m2 - my same-floor neighbour sold for 78.000/m2 a couple of years ago). I paid less than what the seller wanted, the market was still half-dead and many of the apartments I looked at had negative equity. I was in college and wanted to move out of the student housing but there was nothing I could rent so my parents decided to get me an apartment - they saw a business opportunity and Sweden was very cheap for us southern South Americans at the time. Not anymore.

    As a foreigner I would never dare to buy now if I had to borrow - too much talk of a housing bubble. My building is quite restrictive with rentals and I'd be scared to death of being stuck here in Sweden for the rest of my life (married to a Swede now). Prices in downtown Stockholm are crazy compared to what people earn and I have seen first hand how housing determines your life here. Feel very sorry for colleagues my age with 3-4 million in loans 2 salaries).

    Good luck with your house! Villor are probably a safer bet than bostadsrätter.

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  3. Scary isn't much like on eBay, but then again you don't have to listen to the agents bull about what they will and won't accept, good luck bidding, I am about text a bid in myself

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  4. Fredrik AnderssonMay 20, 2012 at 2:29 PM

    Maybe you should wait for a couple of years and bet on a significant drop in prices. Den enes död är den andres bröd.

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  5. Sorry to hear that, it has happened to us too. I agree, the whole text bidding thing is totally sus!!! either friends of the seller or real estate agent for more comission... better luck on the next one?

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  6. @Marco - We used to add 20-30%, but reports say prices are stabilizing or coming in under lately, so had lowered our estimates a bit. Bad call, since the realtors seem to have caught up with the pricing change.

    @anon - interesting, I have always suspect this was the case, but never heard of anyone who knew anyone who actually did it (only because I think it is the kind of secret you take to the grave)

    @Realsocialdad - True, but then the agents don't seem to do much of anything but make nice ads and brochures and answer simple questions that are in the material. And then take a hefty sum. At least not from me.

    @Fredrik - Sadly, I have been saying that for years. I am pretty sure the fall will come two weeks after I make my purchase, whenever in time that may be.

    @loulou - Thanks!

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  7. Hi, why do you call yourself an ''ex-pat''??? You are a foreigner, an immigrant in Sweden. It's so nice to call yourself ex-pat, but back in England you label an EU residents of UK as immigrats. It's divoid of logic.

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    1. I wouldn't go so far as to say it is devoid of logic, perhaps it is more me not willing to admit to myself that I am here for the long haul….
      I came here as an ex-pat, but that was a long time ago…. so yes, maybe now I am an immigrant, but that has a degree of permanence to it that, while it might be true, is hard for me to get my head around. What about you?

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