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Germany: Preparing the Purchase

Many expats who move to Germany for good sooner or later decide on buying property in Germany. But buying property in Germany is a long-term investment and there is a lot you need to keep in mind. Read our guide and learn all about preparations, signing the contract, and financing your purchase.
Making the decision to purchase property and seeking legal support is an important part of the process.

Collecting Information on a Particular Property

You should have a very clear impression of what is for sale before wasting time and money on preparations and negotiations. So, when you pick a property out of the classified section of German newspapers or from real estate sites on the internet in Germany, make sure to do a thorough background check. Normally, a house is sold with a piece of land (Grundstück). In some cases, however, you can only buy the house and must lease the property. This is called Erbpacht.

You should especially collect lots of information about the current condition of the house. Claiming pre-existing defects in case of major repairs can be very difficult, tedious and expensive. Renovation costs can sometimes exceed the purchase price: The costs of new roofing, new windows, heating system or water pipers quickly ruins your dreams. Information on the object also proves helpful if you try to negotiate the price. Of course, this can be a risky strategy if there are other potential buyers.

You should ask an official surveyor (amtlich vereidigter Sachverständiger) from the building office (Bauamt) or a professional architect to make an estimate of a building’s market value as well as possible renovation costs. This should be a worthwhile investment. You could also ask the real-estate agent who is offering the house for sale. However, they are not responsible for a correct description of the property.

Making the Decision to Buy a House

When approaching a real-estate agent, do not sign an exclusive contract with that agent. This practice isn’t common in Germany at all. It would limit the selection of objects considerably because German real-estate agencies do not share listings with each others. You would then have to rely on that one agency alone and their few offers.

Unfortunately, commissions for real-estate agents are quite high in Germany. Unlike commissions for rental apartments, commissions on housing sales are not regulated and you can expect to pay between 3-6 % on top of the actual purchase price.

However, since both price and payment terms can be freely arranged between buyer and seller, it is finally up to the owner of the property to determine the price. Make sure you can finance the purchase before agreeing to it. If you are interested in buying the property, ask the seller for a reservation. Contacting a notary (Notar) is inevitable to finalize the purchase. A priority notice in the register of real estate which protects you from other potential buyers is usually included in the services. The notary is impartial, but may be selected by the buyer. For your purposes, finding one who speaks fluent English (or maybe another foreign language) is highly recommended.

Signing the Contract  

The same notary is also responsible for officially signing the contract. This slightly overregulated procedure is necessary to make a sale legally binding, but it also helps to avoid unnecessary risks. The notary oversees the transfer of payment and titles and checks whether there are any restrictions on the sale or use of the property. The notary prepares the contract and answers any questions you may have.

Please remember that negotiations concerning the price or terms of payment should be concluded when the property changes hands. After all, signing the contract is a mere but necessary formality. All buyers and sellers must be present to witness the sale. To do so, both parties need to present their IDs or passports for the notary to properly identify them. The law requires the official reading of the contract to be conducted in German. If you feel uncomfortable with the language, you should bring an interpreter as notaries only accept the sale if they are sure that both parties fully understand the contract. The contract must then be signed in the notary’s presence.

The sales contract states the names and addresses of both parties, as well as the purchase price and the terms of payment. You will receive a copy, although the original contract is stored by the notary. They also send a copy of the contract to the local tax office (Finanzamt). After that, you are required to pay property acquisition tax (Grunderwerbsteuer) within one month of the tax assessment notice. If the seller does not have any outstanding taxes or mortgages, the notary submits the change of ownership to the land register (Grundbuch), thereby finalizing the sale. Notaries can be found through the German Real Estate Association.


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