Do banks offer free property valuations?

The process: When the bank calculates and who pays

The principle of mixed costing

As a general rule, banks are not charities. Every property valuation by the bank costs the institution money – be it for software licenses or the working time of experts.

Nevertheless, most banks in Switzerland offer free property valuations to potential mortgage customers. Why? It's part of their customer acquisition process. When you apply for financing, the bank's property valuation is a necessary check. The bank covers these costs in the hope that you 'll take out a mortgage with them . Over the years, they earn enough from interest to cover the initial costs of the property valuation .

When costs can arise

However, there are exceptions where the property valuation by the bank is not free:

• No intention to finance: If you only want to know the value of your house without taking out a mortgage, the bank will rarely offer this service for free. A pure property valuation by the bank as a service often costs between 200 and 500 Swiss francs.
• Complex properties: For a standard single-family home, a computer-based (hedonic) valuation is usually sufficient. However, for a property of exceptional character, a luxury villa, or a commercial building, an on-site appraiser is often necessary. This costly property valuation by the bank is often passed on to the client, especially if the transaction falls through.
• Breakdown of negotiations: Read the fine print in the mortgage application. Some banks reserve the right to charge you for the property valuation if you choose a different lender after the review.

The method: How real estate valuation by the bank works

In 90% of cases, no one will come to your home. Modern property valuations by banks are digital.

The banks use so-called hedonic models (comparative valuation methods). They enter the address, year of construction, living space, and volume into a system. This system compares your property with thousands of property transactions in the region.

The result of this property valuation by the bank is statistically spot on. It's fast, efficient, and cost-effective for the bank. That's the main reason why they can often offer you this service for free.

But beware: Bank property valuations are conservative. The computer doesn't see that you've just installed a gold-plated bathtub. It assesses the standard. This often leads to a lower valuation than expected.

The risk: If the bank says "no" to the price

A common scenario: You buy a house for 1.5 million Swiss francs. However, the bank's property valuation only values it at 1.3 million Swiss francs.

Is the evaluation free? Monetarily, yes. But it will cost you dearly.

The bank finances according to the lower of cost or market principle. It always uses the lower value (here 1.3 million) as the basis. You must contribute the difference of 200,000 francs as additional equity .

This reveals the true nature of bank property valuations : they don't serve your information, but rather the bank's risk mitigation. A "free" valuation that is too low can derail your entire financing.

Independence vs. Bank Interests

Never rely solely on the bank's property valuation . The bank has an interest in setting the value rather conservatively to minimize its risk.

If you are looking for an objective second opinion without having to hire an expensive architect, independent digital solutions are a good option.

This is where heyloft.ch comes in.

Unlike real estate valuation by the bank , which is often a "black box", heyloft offers transparency with its digital assistant "Loft" .

• Independence: Loft does not need to hedge any credit risk. It assesses the market neutrally.
• Comparability: Loft helps you understand whether the bank's property valuation is realistic or whether the institution is being overly cautious.
• Argumentation aid: If the bank's property valuation is too low, you can use Loft's data to argue why the higher price is justified (e.g., due to specific micro-location factors that the bank computer overlooked).

Why "free" often means "priced in".

Some banks aggressively advertise "free appraisals." Keep in mind: banks are profit-making businesses. The cost of the property appraisal is already factored into your mortgage margin. A lender offering a free appraisal might have an interest rate that is 0.05% higher than one that charges a fee.

Therefore, the question should not only be "Is the property valuation by the bank free?", but "Is the overall financing package attractive?".

The process in practice

• Submit the dossier: You send the sales documentation and land registry extract to the bank.
• Internal review: The bank's property valuation runs in the background (mostly software-based).
• Feedback: The bank tells you: "We accept the purchase price" or "We see the value as lower".

You rarely get to see the detailed appraisal, only the result. Providing a detailed written property valuation from the bank is often not part of the free service.

Conclusion

The answer is nuanced: Yes, banks generally appraise properties free of charge, but only in the context of a specific mortgage application. The bank's property valuation is a risk assessment tool, not a gift to the customer. It is usually done digitally and conservatively. If no deal is reached, fees may apply – these vary depending on the institution.

It's important for you to understand that the bank's property valuation isn't the final word. It's often lower than the market value. To avoid being surprised by a financing gap, you should have the value independently verified before your appointment with the bank.

If you are looking for a neutral, data-driven assessment to help you understand the bank's valuation, you should use Loft 's analyses and go into financing discussions well prepared.

Glossary

• Bank property valuation: The process by which a financial institution determines the loan-to-value ratio of a property in order to assess credit risk.
• Hedonic valuation: A statistical comparison method that computers use to estimate value based on thousands of similar transactions – standard practice in real estate valuation by banks .
• Lower of cost or market principle: The rule that when providing financing, the bank chooses the lower value from the purchase price and its own appraisal.
• Loan-to-value ratio: The value of the property that the bank considers safe and on which it calculates the mortgage (usually max. 80%).
• Loft: The AI-powered assistant from heyloft.ch, offering an independent alternative to conservative real estate valuation by the bank .