Hi all! I searched for a few hours and could not find these specific issues addressed, so if I missed them, please indulge me... I'd like to have a discussion on the practical differences between real estate transactions in the US (or any other country, feel free to chime in) and Germany. Specifically, differences in terminology which may be misleading or confusing when only translated and not defined. We suffered a few shocks in our real estate transaction (despite contracting a Notar, a professional translator and conscripting several friends with more time & experience in Germany).
I would appreciate input from lawyers (Notar) or real estate agents (Makler) licensed to practice here in Germany too!!
First, in the US, a real estate agent may either represent the seller or buyer (or sometimes both, but there are specific safeguards to ensure the agent acts fairly for both parties.) In this arrangement (individual buyer and seller agents), each agent has a fiduciary duty to act in the best possible interests of the client paying them. (Which means the buyer's agent asks a lot of questions first-time home buyers may not think of, processes all of the paperwork, works hand-in-hand with the Lawyer and the bank and basically keeps the whole process moving along in a timely manner.) The same concept of fiduciary duty goes for Lawyers in the US. When the buyer contracts a lawyer, the lawyer has the same responsibility to act in the client's best interests. This is not the same in Germany. I have been advised that the Notar in Germany is not there to act in anyone's best interest and is in effect a neutral party there simply to ensure that the contracts are legally binding. This means that (in effect) the only person looking out for the best interest of the buyer in Germany is the buyer. This means if you have a specific time frame (say you need to give 3 months notice at your apartment), the only person watching that timeline is YOU. The Notar will not act quickly even if you ask- they will process your sale as all others, no quicker (hopefully, no slower). This is important to note because most Americans do not necessarily realize how long some transactions can take here and may not budget a full 3 months rent into the equation. (Assuming you only have a 3-month "Kundigung" or notification period to the landlord... some people have longer ones, I know. I've since talked to several German friends who said they would never give notice at their apartment until the contract was signed, finalized, entered into the Grundbuch and the keys turned over- even though that means they could loose 3+ months rent or have to find a quick nachmieter themselves.) Additionally, if you do not speak German fluently, you must have a translator- but here again, be careful! I recently learned that there are some words which translate into perfectly understandable English words, but the actual MEANING may be different as the practices and conventions are different here. An example is "gemeinen Wertes", which was translated by our translator as "fair market value", but actually has two very different meanings in German "legalese"- one is fair value- the other is material cost. As the term was not defined further for me, I took it to mean exactly what I know as fair market value in the US. (Fair market value in the US is calculated- usually by a professional licensed, insured appraiser- based on 2 approaches: cost and comparison. The cost approach measures the quality of the construction, size and maintenance, deducts wear & tear and depreciation. The comparison approach uses houses of similar size, quality and location and adjusts the subject price based on the actual sale price of these comparisons. In the end, the two approaches should be equal and provide a solid estimate of the true market value of the subject property.) In Germany, apparently, this is not done and you must be careful to find out which method is being used to calculate the value of your subject property, if a valuation is included in your contract (as it was in our rather complicated one). Just having a translator at the contract reading did us no good in this case as no one could have told us there was a different approach used in Germany as no one in the room was familiar with US real estate, as we were unfamiliar with German rules and conventions.
There have already been a lot of other threads talking about the fact that in Germany, the process and timing is different than in the US, so I won't go into those details, but here is a summary as I've experienced it:
In Germany- All is done by the buyer: call makler to see house, tell makler you want to buy, find Notar & give name to Makler, find mortgage provider & give info to Makler and Notar, keep calling everyone until a date is set for the contract signing (including a court-certified translator if you are not fluent in German), sign contract, arrange handover process with owner, wait for Notar to process Grundschuld, wait for bills, pay all bills, etc.
In the US, all this is handled by your buyer's agent (who typically only gets 2-3% of the sale price as commission for all this- what a deal!)
This is an on-going saga, so we might still come up with more issues (I really, really hope not); and if we do, I'll add more to this thread. In the meantime, anyone know of other such things I or anyone else should look for in the future?