Buying a Property
Information about the property purchase process in Germany including property surveys, financing your purchase, contracts and much more…
The process of buying property in Germany starts with the housing listings. Property sections can be found in most daily newspapers on a weekly or bi-weekly basis as well as online and through specialist property publications. Offers may be made by private parties (von Privat), however, most transactions are made through estate agents (Immobilienmakler). In Germany, there is no requirement to work exclusively with any given agent.
After deciding on an area, find a property agency (Immobilienmakler). or go through a professional association. The German Real Estate Association (Immobilien Verband Deutschland, IVD) is an association of estate agents, property officials, and real estate tax advisors. The IVD is a clearing house for information on buying and selling property in Germany.
As in most countries, purchasing a property through a third party costs money. Commissions are negotiable and with the exception of rental contracts, non-regulated. Either the buyer or the seller pays the commission in full, or it is split between them.
Surveys and regulations
By law, houses older than 25 years must have new roofing, new windows and a new heating system. A professional survey on the standard of the property in question will help avoid unforeseen costs. An official surveyor (amtlich vereidigter Sachverständiger) from the local building office (Bauamt) can be engaged for this task. The process of having a property surveyed may differ from state to state within Germany. It is also possible, and often cheaper, to hire an architect privately to survey the property.
A public notary will then check whether there are any restrictions on the sale and use of the property. If both parties agree to the terms of the contract, the notary submits the change of ownership to the government books and the transaction is noted in the land register.
Means of financing a property purchase
Real estate in Germany can either be financed through a mortgage bank (Kreditbank) or most other banking and financial institutions. In order to qualify for financing by a German bank or financial institution, it is (usually) necessary to show a history of regular monthly savings (up to six years). The maximum term on any finance is usually 30 years at a fixed interest rate.
Fees are high in Germany. As a buyer, one can expect to pay up to 12 percent of the purchase price in fees. This includes estate agent's fees of up to 7 percent, though these are negotiable. Fixed costs include variable estate agent commission fees, 1 percent for the notary, 0.5 percent for the housing registry office and 3.5 percent for purchase tax.
Note: For foreigners not residing or working in Germany, financing is possible, but the expected mortgage loan would not be as high and therefore cover less of the buying price of the property.
Signing the contract
At the signing of the contract, the terms are read aloud in German. All parties must be present at the reading of the contract. The buyer has the right to interrupt the proceedings in order to clarify any part of the contract and a foreign buyer also has the right to have an interpreter present.
All buyers and sellers must be present at the signing of the contract. Official identification papers are also required and the property changes hands as soon as a notary submits the contract to the land register (Grundbuch) of the buyer.
If a company is the purchaser of the property, it must show the relevant documentation from the Chamber of Commerce, which proves the legality of the company.
The contractual agreement
The rules governing the creation and execution of property contracts are covered by the federal property acquisition tax law (Grunderwerbsteuergesetzes). On the notarisation date, the seller agrees to transfer the property title and the buyer agrees to pay. All agreements concerning property must be notarised by a public notary in the land title registry (Grundbuch). The public notary oversees the transfer of the payments and titles so that neither party is exposed to any risk.
Between the finalisation of the contractual process and the exchange of property for payment, the public notary can secure the position of both buyer and seller by registering a notice of future property transfer in the land title registry. It is important to stipulate in the contract who precisely is responsible for any potential encumbrances (Belastungen) connected to the property. The public notary is required to send a copy of the contract to the Finance Office (Finanzamt) and as soon as this has been done the buyer will be asked to pay the property purchase tax (Grunderwerbssteuer).
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