The Zug property market is hot.
Winter 23/24: Many estate agents scent the big and fast money here. The temptation is not insignificant for agents under acquisition pressure to offer exaggerated sales prices (i.e. hedonic market value with an incomprehensible price increase) in order to obtain the sales mandate.
It is important to emphasise that the actual market value of a property is always the result of a voluntary transaction (purchase agreement) between the seller and buyer and does not necessarily correspond to the sale price stated in the advertisement. These actual market transactions often remain hidden from the public, but are taken into account in the hedonic valuations (comparative value method).
Risks of unrealistic sales prices
- Lower demand and longer sales timesPotential buyers are well informed about the market. The number of potential buyers is reduced. This prolongs the sales process considerably. Sellers have to finance their property for longer.
- Negative perception of price reductionsIf sellers/agents are forced to reduce the price, potential buyers often interpret this as a sign of problems with the property. This can lead to an image problem for the property and provoke further price reductions. The result is a massive loss in value.
- Difficult financing solutionsBanks tend to value property conservatively and naturally do not take artificial price adjustments into account. As a consequence, the buyer has a higher equity requirement and financing becomes more difficult.
- Artificially high expectations on the property marketExcessive sales prices listed in property advertisements can lead to general market expectations being artificially inflated, even though the actual transactions take place at a lower level. This creates hopes which then turn into disappointment in reality.
The Hegglin Group avoids such pied piper methods. As a matter of principle, we want to publish sales prices that reflect the actual market value. That is why we will still be around for the next 40 years.
