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PROPERTY

How do you beat the stress of the Swedish property bidding war?

In Sweden, the process of buying a home often takes place over text. The bidding wars that result can be a huge cause of stress for would-be buyers, all the more so if you're relatively new to the country.

How do you beat the stress of the Swedish property bidding war?
Property buyers often only have around an hour to look round their prospective home before entering a high stakes bidding war via text. Photo: Henrik Montgomery/TT

As in most countries, a lot depends on where in Sweden you’re buying your property. In smaller towns, or when dealing with a property that’s less in-demand for whatever reason, buyers are more likely to be able to get it for the starting price or even less. 

But when there’s more than one interested buyer, it’s likely to go to bidding. This is very often the case in Sweden’s larger cities, where a well-documented housing shortage keeps the market competitive.

And things move fast.

Typically, there are two viewings of each apartment (usually one on a Sunday afternoon and one on a weekday evening). They’ll often last for just half an hour, which means you may well end up committing to one of the biggest financial decisions of your life after only spending a total of one hour there. During that time, you need to take a careful look around – after the sale is complete, the seller is only responsible for flaws which you could not be expected to have discovered during your inspection.

Preparing to buy:

Interested buyers give their details to the estate agent, who rings round after the viewings to ask buyers to place their bids. Once the first bid is made, everyone who’s expressed interest is notified of each following bid via a group text message, and they can raise the price by responding to the text with their own offer.

Buying property is never exactly a smooth process, and the different systems in different countries have their own pros and cons. In Sweden, the fast-moving nature of the housing market is considered a plus for buyers and makes annoying delays less likely. 

But there are several downsides, not least for Sweden’s foreign residents who navigate the whole process in a language that’s not their own. Many estate agents will speak English, but translation of technical terms and concepts related to property can be tricky even for professionals, and the contracts may well only be available in Swedish.

Bids aren’t legally binding, which means that you have a small window of time to change your mind or look into anything that’s worrying you without any liability. You may also agree with the seller that you will only buy the property if it passes a final and more thorough inspection for any damages to the property.

On the flipside, this has raised fears that prices may be artificially inflated by “fake” bids which could be submitted by the estate agent, friends of the seller, or speculators who aren’t totally serious. In neighbouring Denmark and Norway, bids on property are binding, and Sweden’s largest real estate agency Fastighetsbyrån has previously called for a similar system here.

What makes the process even more opaque is the anonymity of the bidding.

The Swedish Consumer Agency (Konsumentverket) has called for requirements that bidders confirm their ID before their bids are registered, and some estate agents now ask bidders to identify themselves, for example using mobile banking ID. When you sign your contract, it may be possible to get information showing the name and contact details of all bidders, along with the time and amount of each bid.

Even removing the risk of fake or fraudulent bids, the hot property market makes for a stressful bidding experience competing against other serious buyers.

The bidding war might be concluded within just a few days, or even hours, especially if the seller wants a quick deal. 

But even when you’ve ‘won’ the bidding war – you haven’t actually. Once all bidders but one have dropped out, the winner is invited to sign contracts, and this often takes place the very same day.

This isn’t when you buy the apartment, but you will commit to buying it (and potentially be liable to pay quite a lot of money if the sale then falls through). Until you’ve signed on the dotted line, it’s possible for one of the other bidders, or even someone new, to put in a higher offer. Any hold-up on your way to the estate agent could end up costing you a lot.

So is there anything you can do to mitigate the stress of the Swedish bidding war?

Ultimately, the only option is plenty of research.

Different people will have their own pet theories about the best way to ensure your offer is the winning one. Bid aggressively, outbidding every other person within minutes and by large amounts! Raise the stakes by going significantly over the starting price at the very beginning! Be petty, only raising the price by small amounts until you’ve annoyed the other bidders into dropping out! 

People don’t always act rationally so some of these tactics may have an effect, but realistically if another bidder has a higher budget than you, you’re unlikely to deter them just because you placed a bid ending in an odd number, or submitted your bid at a certain time.

And you never know what extra factors are at play; an apartment that’s only OK to you might be worth a much higher price to them, if it means an easy commute, living next door to their grandma, or so on.

It does pay to know the market, so you can act and react fast when that great apartment comes along – and walk away if the prices spiral beyond what’s right for you. 

You can at least slightly reduce the stress of the bidding by starting to look into the market at least six months before you plan to buy. Track how prices have changed over recent months and years and work out what a reasonable price per square metre is in your desired neighbourhood.

Analysing the financial situations of different housing associations isn’t a fun way to spend your weekends, but it could help you sleep at night rather than lying awake in anguish over whether you paid a fair price. Or if you’re buying a villa, learn how housing surveys work and the key things to look out for, since with detached houses you have more responsibilities than in an apartment or a house that’s part of an association.

Look carefully through the ads, go to several viewings, read up on the housing associations, and follow the bidding process.

Ideally, you want to get to a point where you’re confident that you can estimate not only the market value, but what each property is worth to you.

That way, you can try to bypass the entire bidding process by asking estate agents for an early viewing. Some estate agents start to advertise properties before they are officially on the market, and sellers are sometimes happy to skip the whole bidding process for the right price (if you see ads on Hemnet that are borttagen före visning or “removed before viewing”, this is likely what happened).

Even if that’s not possible, the bidding should be less stressful if you have a clear idea beforehand of the maximum price you’re willing to pay before you walk away.

Swedish vocabulary

starting price – (ett) utgångspris

estate agent – (en) mäklare

viewing – (en) visning

bidding process – (en) budgivning

housing market – (en) bostadsmarknad

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PROPERTY

These are our readers’ top tips for buying a property in Sweden

Buying an apartment or house in Sweden can be a daunting process, but with rentals so hard to get, many foreigners end up taking the plunge. Here are the top tips from readers who have done it.

These are our readers' top tips for buying a property in Sweden

Get prepared! 

Most of the respondents to our survey stressed the importance of preparation. 

“Spend time on defining your requirements properly, including visits to different locations to narrow down your search,” advised Julian, a Brit living in Malmö. 

As well as working out your requirements, other participants argued, you should also get to grips with the way the bidding system works in Sweden, with one British woman recommending buyers “speak to professionals about the buying procedure”. One respondent went so far as to recommend hiring a buyers’ agent, something international employers sometimes provide for senior executives moving to Sweden. 

Elizabeth, a 26-year-old charity worker from South America, recommended that all buyers “learn to read a bostadsrättsförening årsredovisning”, the finance report for a cooperative housing block. (You can find The Local’s guide here.) 

Get to know the market 

Maja, an anthropologist from Hungary, said it was important to take time to get a feel for the market, suggesting buyers visit different areas to find the one that they like. 

“It will take 6-12 months easily,” she predicts. “Don’t rush. Visit the neighborhoods where you are thinking of buying.”
 
Others recommended spending time surfing Sweden’s two main housing websites, Hemnet and Booli, to get a better feel for how much different types of housing in different areas typically sell for, before starting to look seriously yourself, with one even recommending going to viewings before you have any intention of buying.  
 
“Start visiting houses and monitoring bids. That will give you a sense of the process,” recommends Shubham, 31, a software engineer from India.
 

 
Think about your expectations
 
While house prices have soared in Sweden’s cities over the past decade, the same is not the case in all rural areas, something some respondents thought buyers should take advantage of. “To buy a house at a lesser price, look at areas as far from urban areas as is possible for you and your family,” wrote Simon, a 61-year-old living in rural Sweden. 
 
Julian warned bidders against areas and types of homes that “will attract tens of ‘barnfamiljer’ (families with children), meaning “bidding wars will result”, pushing up the price. 
 
On the other hand, one respondent warned people to “avoid buying apartments in vulnerable areas, even though prices will be lower there”. 
 
An Italian buyer recommended looking at newly built apartments coming up for sale. 
 
 
Get a mortgage offer before your first serious viewing 
 
Getting a lånelöfte, literally “loan promise”, can be tricky for foreigners in Sweden, as our recent survey of banks’ policies showed. 
 
Shubham warned against applying for a loan promise from multiple banks, arguing that this can affect your credit rating if your finances are not otherwise good. He suggested using an umbrella site like Ordna Bolån and Lånekoll, although he warned that the payment they take from the ultimate mortgage provider might ultimately be taken from borrowers.  
 
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Get to know the estate agents, but don’t necessarily trust them 
 
Gaurav, a sales manager based in Stockholm, recommended getting to know local estate agents in the area where you are planning to buy, as they might be able to direct you towards owners who are in a hurry to sell. “Those can be the best deals as you have greater chances to avoid bidding on such properties,” he argued. 
 
Maja, from Hungary, warned, however, against believing that the estate agent is on the buyer’s side. 
 
“You cannot really make friends with them, they work for commission and they will also try to raise the selling price,” she said. “It’s how they present you to the seller that matters. Seem like a serious buyer.” 

 
Should you try to make an offer before bidding starts? 
 
Morgan, a 33-year-old marketing manager from France, said it was worth studying the kommande (coming soon) section on Hemnet and Booli to spot houses and flats before they are formally put on the market. “Be alert. Book an appointment asap and get a private visit to reduce competition. If the apartment is what you’re looking for, make a reasonable offer with a condition to sign the contract in the next 24 hours,” he recommends. “You will cut the bidding frenzy and save money.”
 
Gaurav also recommended getting a private viewing and making an offer while the property was still off the market, as did Julian. 
 
“If you are lucky, you might find owners who are in a hurry to sell,” Julian said. “Those can be the best deals as you have greater chances to avoid bidding on such properties.” 
 
But other foreigners warned against bidding before a property is publicly put up for sale on housing websites, arguing that estate agents used this as a way of getting higher prices than they would expect to get at auction.  
 
“You are essentially negotiating directly with the owner, without finding out the actual market price via bidding,” argued a 31-year-old Indian business analyst. “Usually this will work only for an apartment not in top condition.” 
 
What to watch out for in the bidding process 
 
Morgan advised buyers to take what estate agents say about rival bidders with a pinch of salt. 
 
“Estate agents will play the competition card. Don’t fall for their trick and keep a cool head. Ask yourself if it really worth it before increasing a bid,” he wrote. 
 
In Sweden, it is possible to make a hidden bid, which is not disclosed to other bidders. One Indian software developer warned that estate agents would often claim that there was such a bid to pressure you. 
 
“The hidden bids are really confusing as you don’t know the bid placed,” he said. “It’s a trap to get higher bids. “
 
A 21-year-old Romanian agreed it was important to watch out for estate agents who try to rush or panic you. 
 
“[Look out for] those that try to rush you into it by saying stuff like ‘this will be gone by Monday, the owner wants to sell fast’, or if they don’t want to include a two-week period to have the property inspected as a clause in the contract,” she said. 
 
Maja recommended choosing an estate agency that required all bidders to supply their personal number, with all bids made public, “because other agencies might cheat that price rise”. 
 
“Don’t be the first bidder,” she added. “Keep your cool, and if the agent calls or messages, just hold on. There is no official end to the bidding. Only when you sign the contract. So the best game is to seem very serious but not stupid. You have a budget, and try to sign the contract the same day or the next if you are the highest bidder.” 
 
Is now a good time to buy? 
 
The respondents were, predictably, divided. 
 
“It’s risky for both sellers and buyers,” said Carl, a Swede who recently returned home from China. “The market seems to correlate pretty well with central banks raising interest rates. If that’s the case, then it’s still a sellers’ market since central bank [Riksbank] will continue to increase interest rates until 2024.” 
 
“It’s difficult to predict anything at the moment,” agreed Gaurav. “Prices should fall a bit but that’s not happening in all the areas. Avoid buying or selling if you can for a few months.” 
 
“I see there is no difference in buying in total cost. You can get a property at a lower price but end up paying more in interest and the price is the same in five to ten years,” said one Indian software engineer. “Buying is still better than renting.”

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