Selling a plot of land: Valuing and selling building land correctly

The sale of building land proves particularly challenging – that is, not the traditional detached house, but undeveloped plots or properties with existing buildings and untapped development potential. This requires not only a keen sense of the market, but also sound knowledge of construction. It is precisely at this point that professional advice makes all the difference.

Sell or build on the land yourself?

If you are the sole owner, this decision is relatively straightforward. In the case of a community of heirs, however, the whole group must reach a consensus – a challenge that should not be underestimated.

In any case, the first step is to make a fundamental decision: Can I imagine living on this plot of land? Do I have the determination, the courage, the energy and the necessary resources – not just financially, but also in terms of time – to build a new home? Anyone who answers this question with a clear ‘no’ can move straight on to the selling process.

If the decision depends on financial circumstances, it is worth obtaining a professional property valuation. The residual value method, recommended by experts, kills two birds with one stone: A potential building project is outlined, and the property value is derived from this, taking into account the income value and construction costs. The result provides both a realistic estimate of the new-build costs and the current market value in the event of a sale – a solid basis for an informed decision.

The Swiss Landowners’ Association offers such a property valuation free of charge.

Step-by-step guide to selling a plot of land

The decision has been made: the property is to be sold. What is the best way to proceed?

Clarify your priorities
The first step is to ask yourself what your priorities are: what is really important to me as the seller? Possible answers might include:

• I want to get the highest possible price – I don’t mind who buys the property.
• It is important to me that the property remains in familiar hands and, if possible, goes to relatives or acquaintances.
• I want the property to continue to be used in much the same way as before – whether for emotional reasons, such as family history attached to it. Large-scaledevelopment is out of the question for me.

If the highest price isn’t the main priority, it may be sensible to initially discuss the forthcoming sale discreetly amongst friends and family. However, caution is advised: experience shows that such information spreads quickly, and suddenly you’ll be contacted not only by acquaintances but also by estate agents in droves. In this case, too, it may be worth engaging an estate agent who can specifically advocate for your preferences.

On the other hand, if you’re aiming for the best possible price – and this is usually the case – professional support is essential.

Assessing marketability
Before the actual sales process begins, it is important to establish whether the plot is even marketable. Several factors play a role here:

• The size of the plot – it is hardly possible to build a house on a plot of just 100 m².
• The type of zoning – building zone, core zone, agricultural zone, etc.
• Any entries in the land register, such as restrictions on sale or building.
• The current hazard map.

Much of this information can be found in the ÖREB cadastre. ÖREB stands for ‘public-law restrictions on ownership’ and is publicly accessible via Cadastre.ch, for example. The extract contains, amongst other things, details of the building zone, the plot size, hazard zones, any development plans and building lines.

In addition, it is advisable to check the land register extract, which is available from the relevant land registry office. If the land register contains, for example, a restriction on disposal, this must be removed before the sale – otherwise the property is legally considered non-transferable.

As many of these documents are difficult for laypeople to understand, it is advisable to seek professional assistance at this early stage.

Obtaining documents
Potential buyers absolutely must have the following documents to make their decision:

• Land registry extract
• ÖREB extract
• Municipal building regulations
• Wording of easements and encumbrances (restrictions on disposal, building restrictions such as rights to build adjacent to the property, etc.)
• Any applicable development plans
• Hazard map
• Depending on the plot, further plot-specific documents

Determining the sale price
A fair market value and plausible sale price can be determined on the basis of a professional property valuation. How such a valuation works is explained further down in the article.

When is the right time to sell?

Contrary to popular belief, there is no ideal time of year to sell a plot of land. In the competitive Swiss property market, there are prospective buyers ready to purchase in most locations throughout the year.
However, it makes sense to keep an eye on interest rate trends: low interest rates improve financing conditions for buyers and have a positive effect on the price you can achieve. If a rise in the base rate is expected in the foreseeable future, it may be worth not delaying the sale unnecessarily.

Sales strategy: on-market or off-market?

The priorities established earlier play a decisive role in determining the sales strategy. An off-market strategy – that is, foregoing a public listing in favour of discreet marketing within your existing network – can make sense in certain situations. However, anyone aiming for the highest possible price would be ill-advised to use this method: it simply does not reach all potential buyers.

Practical tip: Many estate agents claim to already know a suitable buyer within their network. However, the likelihood that this buyer is actually a good fit for the specific property is low. Such claims should always be viewed with a critical eye.

A listing within an internal network may, at best, make sense as a supplementary measure for a limited period. For price optimisation, however, a public listing with maximum visibility remains the superior tool: the more potential buyers are reached, the greater the variety of offers – and the higher the achievable sale price.

Attractive, professional sales documentation is essential for successful marketing. When it comes to plots of land, the aim is to demonstrate the potential of the plot to prospective buyers – ideally with a feasibility study drawn up by architects and appealing visualisations of a possible construction project. A single photograph of the undeveloped plot, by contrast, is not very convincing.

When it comes to pricing, there are also two approaches to choose from: the price is communicated transparently in the advert, or it is listed as ‘price on application’. The latter is often interpreted in professional circles as a sign of an inflated price. Those who opt for a professional valuation have a plausible, justifiable price – and therefore nothing to hide. Transparency builds trust among buyers and reinforces the credibility of the listing.

Start the sales process

Once the strategy, priorities and pricing have been clarified, the actual sales process can begin. Following the listing, you will hopefully receive enquiries from numerous interested parties.

It’s important to note that enquiries regarding plots of land are far more complex than those for flats or houses. Instead of questions about the flooring in the children’s bedroom, topics such as the cancellability of a water rights licence or detailed provisions from the building regulations suddenly come to the fore. Price negotiations are also more challenging, as you are often dealing with professional buyers who are tactically savvy – offers are deliberately made or withdrawn to exert pressure.

Anyone selling a plot of land on their own must be aware of this complexity. And that’s not all: there’s also the choice of the right notary’s office, the legal review of the contract of sale, ensuring the reservation process is carried out correctly, and dealing with tax issues.

How do I determine the ideal selling price?

As mentioned several times in this article, there is no getting round the need for a reputable, professional property valuation. The linked article on property valuation explains exactly how this works .

Common pitfalls when selling property

Mistakes when selling land can prove costly. The most common ones are:

Unprofessional sales documentation: Buyers are unable to form a clear picture of the plot’s potential – and banks lack a solid basis for their financing assessment.

Lack of market knowledge and negotiating skills: Land in sought-after locations is highly competitive. Professional property developers and institutional investors are on the lookout for bargains – and ill-informed private sellers are easy prey. Purchase offers should therefore always be reviewed by an independent expert.

Overly high asking prices: A plot of land that remains on the market for too long at an unrealistic price becomes a slow-moving property. Subsequent price reductions are then of little help – the property has been ‘burned’.

Overconfidence: Even well-informed and committed private individuals underestimate the effort involved in such a transaction. The flood of emails containing complex questions about buildability, encumbrances, hazard maps or financing details can quickly overwhelm even experienced sellers.

Failure to secure commitments: The building land market also attracts dubious prospective buyers. They submit supposedly binding offers – only to pull out shortly before the contract is signed. The seller is then left to foot the notary’s fees. Therefore, the rule is: always work with deposits, reservation agreements, financing confirmations and irrevocable payment undertakings.

Which buyer groups are suitable?

This depends heavily on the plot’s suitability for development. Smaller plots in single-family residential areas generally attract private households. Where plots are suitable for a block of flats, professional property developers and institutional investors – such as pension funds – quickly come onto the scene.

Given the political trend towards denser development, multi-family homes are now possible even on smaller plots. Even a standard detached house with an appealing footprint can thus become an attractive building plot – and appeal to a correspondingly broad range of buyers.

What costs are involved in selling a plot of land?

The following overview shows the main cost items:

Conclusion

Selling a plot of land is significantly more complex than selling a flat or a detached house. In addition to legal, tax and structural issues, the correct valuation, a well-thought-out sales strategy and professional sales documentation play a crucial role.

Anyone who sells their plot of land below its value or neglects important checks risks significant financial losses. Conversely, careful preparation pays off: it helps to achieve the best possible price and ensures the entire process is handled efficiently and in compliance with the law.

Particularly in the case of building land or plots with development potential, it is worth consulting experienced specialists at an early stage. Professional guidance provides certainty, reduces risks – and helps to realise a plot’s full potential.