Real Estate Brokers

In Switzerland real estate brokers are subject to a great deal of criticism in their role as intermediaries. The number of real estate brokers has risen throughout Switzerland as the result of immigration of foreign real estate brokers and the globalisation of the property sector. There are “good and bad people” as there are in any other profession.

The property investor would nevertheless be wise to engage the service of professional agents to handle the purchase or sale of real estate, for the following reasons:

  • Professional preparation of the sales offer
  • No risk or negligible risk that acceptance of the instructions will mark the beginning of a patient wait for the anticipated stroke of luck
  • Knowledge and experience in preventing pirated copies of the portfolio being made by dubious brokers who order the property documentation and then proceed to ruin the image of the property on the market (multiple offers / sales documentation discarded by potential investors)

A property investor with scant knowledge of the market cannot usually avoid engaging the services of a real estate broker to deal with finding or selling a property.

Membership of a professional body, an established market presence and references usually indicate that the prospective real estate broker is reputable.

Real Estate Brokerage Practices in Switzerland

The following applies to the Swiss real estate brokerage market:

  • Exclusive agency
  • Inadmissibility or disapproval of dual agency
  • Low commission rates of real estate brokers

Advantages of Appointing a Broker

The appointment of a real estate broker is justified for the following (economic) reasons:

  • Reduced information and search costs or complete saving
  • Broker produces a stock market effect (he received offers and enquiries simultaneously)
  • Efficiency (knowledge of the procedures of both parties)
  • Effectiveness (experience in combining the requirements of vendor and buyer)
  • Chance of obtaining a better price (in contrast to own attempts at making a sale)

Disadvantages of Appointing a Broker

There are of course disadvantages as well as advantages, in particular:

  • Moral Hazard
    • Broker uses property that has been found for another client
    • Broker misuses enquiry to enter into sales agreements with owners of the target property
    • and so on
  • Lack of transparency with regard to the approach and conduct of the broker
  • Dubious quality
  • Dependence on outcome (in terms of the objective (for an enquiry), time and price)
  • “Lemon” properties (all the properties that owners are unable to sell bilaterally or through their connections)

Legal Classification

The real estate brokerage agreement is a specific agreement with a success-based fee as a rule. There are two types of contract with a real estate broker:

  • Disclosure agency
    • Broker is only required to name prospective property buyers
    • He only needs to disclose an opportunity for a transaction to earn his commission
  • Conclusion agency
    • Broker is also responsible for buying or selling the property
    • The broker does not earn his commission until the property purchase is publicly registered (it is advantageous to agree with him that he is not entitled to his commission until the property is entered in the land register).


Convergence of the prices asked and offered by vendor and buyer on the basis of a property valuation (commissioned by the broker)

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