How to participate in a bidding for an apartment or house in Sweden

Many things in Sweden take their good time. Probation period? Half a year. Notice for moving out of a rental? Three full calendar months and whatever is left of the current one. Getting people together for dinner in November? Better start planning in March. Okay now I'm exaggerating with that last one, but you know, life in Sweden goes on in a calm, relaxed, and predictable — pre-planned — manner.

Except when it’s time to bid for an apartment. No slowness here. Hectic SMS. Intimidation tactics. The thrill of betting added to one of the biggest purchases in most people’s lives — what could possibly go wrong? :)

The bidding process

Budgivning (placing the bids) can start right after the viewing and from what I’ve seen usually ends within a few days for any interesting property. Most sellers need the money for their next place and are in a hurry to sell here and buy there. Brokers are also in a hurry, they want to sell as many properties in a month as possible.

The price in the apartment listing is the suggested starting point for the bidding. Sometimes the first bid is lower than that, showing that the buyer does not perceive the apartment worth so much (or at least wants to send that signal). Sometimes, on the contrary, the suggested price is intentionally set too low, possibly generating more interest, pitting multiple bidders against each other, and ending up with a price 20% higher than the starting point.

The broker’s fee is usually a percentage of the final price, so their incentive is clear. Sometimes it can also be a percentage of the price increase during the bidding. While it’s important to have a lånelöfte (see the mortgage post) or money ready, it’s completely unnecessary to share the information on your maximum budget with the broker.

The technicalities

Bids are given to the broker by way of sending them a text. Whenever there’s a new bid, all the people who expressed interest get a text from the broker like “Bidder #2: 2 000 000 SEK”. The bidders are only identified by their number — #1, #2, and so on. The person who ends up buying the apartment gets a printout with the full names and phone numbers of all the bidders.

Bidding is non-binding for both sides: if your bid is the highest, it doesn’t mean you must buy the apartment; likewise, if your bid is the highest, the seller doesn’t have to sell it to you. They can accept another person’s bid without any explanation, or they can change their mind and not sell at all.

At certain moments in the process the broker might call the bidders trying to encourage those who seemingly dropped out of the race to still participate or gauging the strength of the intention of those who are still bidding. The call might also be the offer to buy, and if the bidder doesn’t pick up, the broker moves on to the next in line.

Different strategies

• take it or leave it: some people prefer not to get into the whole thing with sending text messages and only place one bid which is their maximum budget for the given apartment, especially if there were many people at the viewing.
• going in big: making big leaps with every bid — no tiny 5000 SEK increments but rather tens of thousands at a time, potentially creating an impression of a big budget available. Can scare off mildly interested competition in the beginning of the bidding (which otherwise would make tons of small raises and then drop out), can also drive the price higher than necessary if there was nobody else seriously interested.
• tiring people out: bidding just slightly higher than the previous bidder, often within minutes. Can lead to the price spiraling upwards if done in a crowded part of a bidding process.

There’s a number of other things people do with particular intentions, like sending a bid very early or very late, asking the broker to only share the bid with the seller and not the other bidders, bidding a number which is not round, etc.

It’s also possible to offer the seller something in addition — they might be interested in the buyer who can move in very fast or the one that would waive the flytstädning (‘moving out cleaning’, pretty expensive) or the besiktning (the property inspection that would tell you the bathroom is built all wrong and you'll get problems with moisture). Sometimes the highest bidder just looks like they'd call the seller every five minutes asking how to turn on the lights, and the seller chooses someone else. It can be anything.

If many bidders drop out at a particular price point, it might be a sign that the bidding has reached the real market price of the apartment and it’s not a good idea to stay in the auction for much longer (let alone end up in a long duel after everyone else left).

Avoiding the bidding process

To avoid all the fun with the auction, there are two ways: making a great offer to the seller before the bidding even begins (usually involves a private viewing before the one scheduled for the public and a time limit for the bid) or buying a newly built apartment nobody lived in yet.

After the bidding is won

The winner of the bidding process gets to sign a contract and transfer 10% of the agreed price to the broker as a deposit. The owners association has to approve the new member (which sometimes includes paying a registration fee of a couple hundred SEK). The keys are handed over on the day when the buyer’s and the seller’s bank make a money transfer with the help of the broker. From that moment, the deal is officially done, and the apartment has a new owner.

Make sure you have both electricity contracts, one with an internet provider, and a home insurance.