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PROPERTY

Buyer’s market: a step-by-step guide to bidding on an apartment in Sweden

It's now a buyer's market for property in Sweden, with one fifth of sales taking place below the offer price in the first two weeks of June. In Sweden the apartment-buying process often moves fast and has fewer additional fees than in many countries. We've outlined the steps you need to take and the pitfalls to look out for in this guide for potential buyers.

Buyer's market: a step-by-step guide to bidding on an apartment in Sweden
How to get your dream Swedish apartment in six steps. Photo: Photo: Fredrik Sandberg/TT

Buying a property abroad can be daunting, but in Sweden the apartment-buying process often moves fast and has fewer additional fees than in many countries, meaning it can be an appealing option compared to the precarious rental market. Here are some things to know before you step in and buy. 

1. Decide if buying is right for you and set your budget

Historically, buying property has been a good investment in Sweden but with interest rates on the rise and property prices falling in recent months, this may not be the case over the next few years. 

Whether or not you should buy depends on a range of factors including how long you expect to stay in Sweden, whether or not you have access to a stable first-hand rental contract, your budget, and of course your personal preference.

New arrivals may find it harder to buy; although there are no rules stopping non-residents from buying, it can be hard to get a mortgage without a history of income in Sweden. We’ve outlined the pros and cons in detail in the following article:

If you decide buying is the route for you, you’ll want to begin researching properties available in your preferred area to decide on your budget and which features are must-haves. 

2. Get a loan promise

Once you know how much the properties you are interested in cost and how much you think you can afford, it’s time to talk to the bank. 

A loan promise (lånelöfte) isn’t a necessity when you attend viewings, but because the market tends to move fast it is generally a good idea to speak to your bank before you start the process. Make sure to shop around and speak to different banks, as some may offer better deals, although you don’t have to take out a mortgage with the one that gives you a loan promise.

When you buy a house in Sweden, you’ll usually need to pay a minimum of 15 percent of the total price as a deposit (kontantinsats), so the remaining amount will be covered by the mortgage. You’ll pay back a certain amount each month over a fixed length of time, often 25 or 50 years. If your deposit is less than 15 percent, then your mortgage will be split into two different loans, including one that covers the cost up to 15 percent of the total price which will typically have a higher interest rate and a shorter term. 

Find out more about how the system works and how to choose your mortgage wisely in this article:

3. Go to viewings

Now the fun part begins as you can start your search in earnest. Most apartments in Sweden are advertised on property site Hemnet, but you can also speak directly to estate agents. Researching as early as possible will help you get a feel for typical prices per square metre, and what type of place and location you can afford.

On Hemnet you can refine your search to show properties which have been on the market a long time, which may help identify sellers who can be persuaded to sell below the list price.  

Once you have found a few places that pique your interest, it’s time to start going to viewings. Usually these take place on Sunday afternoons and Monday or Tuesday evenings, with two initial viewings per apartment, but this may vary. Viewings are often just 30 minutes long and as a buyer, you cannot later claim compensation for any flaws in the property that you could reasonably be expected to have identified at the viewing, so use the time wisely. You should be on the lookout for things like damp, mould or pests, but also whether the layout suits your lifestyle and whether any renovations are needed. The more viewings you go to, the more you will get a feel for exactly what you want from your Swedish home.

A tip: it’s sometimes possible to skip the bidding process (see step 7) if you can arrange a pre-viewing and put in the right offer before anyone else is given a chance to see the apartment. You can do this either by contacting estate agents directly and sharing your requirements (many agents will advertise apartments before they go on the market described as kommande försäljningar or “upcoming sales”), or by acting fast and asking for an early showing as soon as an apartment you like is published on Hemnet (usually Fridays).

People viewing an apartment in Sweden. Photo: Janerik Henriksson/TT

4. Analyse the association’s finances

Doing your homework on the housing association (bostadsrättsföreningen) and its finances and making sure they are in good shape is at least as important as a careful viewing of the actual apartment, possibly even more so. You can find most of the information you need in its annual reports (årsredovisningar), which will usually be available online as well as in paper copies at the viewings.

Key things to look for include the level of debts the association has; any planned renovations and how much money has been set aside to pay for them; income sources; and how vulnerable the association would be to future changes in the interest rate. These figures can seem intimidating, especially in a second language, but we have explained how to make these calculations in the article below:

5. Start bidding

When you know you want to bid on an apartment, let the estate agent know, and they will tell you when you can put in an offer. 

You might get lucky and be the only bidder, but in the larger cities it’s more common that there will be a bidding war, carried out over text. 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.

Bids aren’t legally binding, so you have a small window of time to change your mind or look into anything that’s worrying you without any liability, but once you’ve won a bidding war, it will usually only be a day or two before you need to sign contracts.

In Sweden, bidding is usually done by text message. Photo: Tomas Oneborg/SvD/TT

6. Write the contract

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 is when you commit to buying the apartment, signing a transfer of ownership agreement (överlåtelseavtal) and agreeing to pay the agreed amount, usually beginning with a ten percent deposit (handpenning) within one week. Until this agreement is signed, it’s possible for someone else to outbid you by putting in a new offer, and it’s also possible for you to back out or even change your own offer. Once these agreements are signed, however, you cannot back out and would be liable to pay compensation if you do (typically this would cover the cost of putting the property back on the market, plus any difference in price between what you agree to pay and what the property eventually sells for). 

The överlåtelseavtal will be conditional on your acceptance into the bostadsrättsföreningen. Once that happens, you (and your bank, assuming you have a mortgage) pay the rest of the money for the purchase and take over ownership of the apartment on the move-in date (tillträdesdag) agreed with the seller.

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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.  
 
READ ALSO: 
 
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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