Key facts:
- Banks calculate with a 5% affordability interest rate – excessive prices often lead to financing collapses.
- The sales price must match the bank’s estimated market value – not the personal asking price.
- Realistic prices generate more demand, faster deals and minimize sales risks.
When selling a property, many owners aim to achieve the highest possible selling price. An understandable strategy – after all, in many cases the property represents a significant part of the assets. However, this is precisely where one of the biggest challenges in the sales process begins: the assessment of the realizable market value often deviates from the actual demand and financing options of potential buyers. This discrepancy can lead to long marketing times, financing gaps and ultimately to the failure of the sale.
Times of exaggerated price increases are over
In recent years, the Swiss real estate market has been characterized by steadily rising prices. However, this momentum has slowed noticeably. In 2023, prices for condominiums rose by around +3% and for single-family homes by +1.5% – a clear indication of normalization. In 2024, growth was only +1-2%. The market is currently moving sideways – at a high but stabilized level.
At the same time, supply is increasing, although hardly any new construction is taking place. Why? Because many sellers and buyers no longer find each other in terms of price. A significant proportion of listings remain online for much longer because the asking price does not match the willingness to pay. For sellers, this means that the higher the selling price, the higher the risk of being lost in the mass of advertisements. And even more importantly, the purchasing power of many households is limited. Wüest Partner writes that the median asking price is 27 percent above the level that an average household can afford. In this environment, realistic prices count double – they significantly increase the chances of a sale.
What is a realistic selling price?
A realistic price is not based on wishful thinking, but on objective factors: the condition, location, furnishings and current market demand. It reflects the value that buyers are willing and able to pay – and that banks classify as plausible as part of their valuation. It is crucial that the sales price is based on comprehensible, data-based principles. This includes hedonic valuation models that take into account the sales prices of comparable properties, as well as regional market analyses that compare supply and demand.
A realistic, market-driven price has a direct influence on the number of serious potential buyers. The more accurately the price is matched to the current market situation, the larger the target group that can afford the property – and the more likely it is that several offers will be received. This in turn strengthens your negotiating position and leads to a targeted sale.
Excessive prices, on the other hand, act as a deterrent. It has been shown that properties with an overly ambitious pricing strategy are often listed on portals for months, receive hardly any inquiries and are ultimately sold at a discount – if at all. This not only lowers the final sales proceeds, but also damages the perception of the property. Potential buyers ask themselves: “Why is this property still available?” or suspect defects where there are none. If, on the other hand, you set a realistic price from the outset, you gain trust – and valuable time.
Sales price in the bank’s reality check
Many owners assume that a prospective buyer with the intention to purchase will pay the price when they are ready. But the actual process is more complex: buyers who are reliant on borrowed capital – i.e. the vast majority – have to justify the purchase price to their bank. And this is where the bank’s internal real estate valuation comes into play.
This valuation is not based on the owner’s ideas or even on asking prices on online portals, but on objective comparative values and hedonic models. Only if the purchase price is within an acceptable range around the determined market value(typically ±10-15%) is the amount accepted as the basis for financing. However, if a higher price is agreed, a financing gap arises: The buyer must raise the difference from their own funds – which is rarely feasible in reality. An unrealistically high price therefore automatically becomes an exclusion criterion for the majority of buyers.
In short: the sales price must match the assessment of the financing bank.
The financing decides
At first glance, mortgages currently appear cheap: 10-year fixed-rate mortgages are between 1.50% and 2.30%. However, banks use a completely different calculation basis when assessing loans. They calculate with a so-called “affordability interest rate” – currently around 4.5-5%. This means that a buyer must be able to prove that they can afford the property even with a notionally higher interest rate. There is also the rule that the total annual housing costs (interest, amortization, maintenance) must not exceed one third of gross income.
In practice, this conservative calculation practice means that even buyers with a solid income and sufficient equity quickly reach their financial limits – especially if the sales price is above the usual market level. This is exacerbated by regulatory requirements such as Basel III, which oblige banks to be more restrictive in their lending . Owners who set a price that is above the financially feasible range run the risk of even serious potential buyers failing to obtain financing – an often underestimated stumbling block.
Checklist: How to determine the fair market selling price of your property
- Obtain a professional valuation
Have your property valued objectively – ideally using modern valuation models (hedonic) combined with local market knowledge. - Consider affordability
When setting the price, take into account the affordability limits of potential buyers – including the 5% interest rate and equity requirements. - Choose a bankable price
Aim for an offer price that is close to the market value accepted by the bank – for smooth financing. - Observe market signals
Analyze comparable offers in your region and pay attention to marketing duration and price development. - Market strategically
A fair price increases visibility, attracts more viewings and enables genuine competitive situations – instead of tough individual negotiations. - Emotion out, objectivity in
Avoid price mark-ups that are based on emotional attachment. The market pays for location, condition and size – not for personal memories.
Conclusion: Realistic price is not a compromise
A fair market price is not a sign of undervaluation, but a sales tool. It generates more demand, better financing options and a much quicker closing. In an environment in which banks are acting cautiously and buyers are comparing more critically, an objective price is the basis for success. If you set the price too high, you not only postpone the sale – you jeopardize it.
Therefore: Price realistically. Market soundly. Sell successfully.
$Tip: Use our free valuation tool or let our experts support you in valuing your property in line with the market – neutrally, based on facts and with a view to the financing prospects of potential buyers.