How to value a house for purchase?

13 posts in this topic

We're looking at buying a home here in Germany. We're getting a feel for some of the ins and outs. One question I still have is how to estimate the value of a home based in an area

 

My question is - am I understanding all of the following correctly? 

 

I've found two items that seem to be the majority of the valuation...

  1. The land price. For example, there is the Bodenrichtwerte (Standard land values.) So, for instance, if a house had a Grundstuck of 600 m2, and a std. land value of €290, the land cost would be a simple calculation of 600*290 =  €174,000 (correct?)
  2. Next is the house value, based on meters squared (m2.) I.e. if an area had a home value of €2000/m2, then a 100m2 house would be worth €200,000
  3. To get the "sales price" you just add them together, and get roughly $374,000

 

IN this, I assume the house cost per m2 is for a house in average condition (true?) If it were just newly refurbished, the price would be higher (but by how much higher?) If the house needed a lot of refurbishment, the price per m2 would be lower (but, ,again, by how much?)

 

Would it be reasonable just to make an offer like... 

"You list the house at €400,000; the the land and house/m2 value adds up to €374,000, and it needs at least €20,000 in repair. So, our offer is €354,000."

...or would we be cutting our own throats? :D

0

Share this post


Link to post
Share on other sites
8 minutes ago, burningkrome said:

 

Would it be reasonable just to make an offer like... 

"You list the house at €400,000; the the land and house/m2 value adds up to €374,000, and it needs at least €20,000 in repair. So, our offer is €354,000."

...or would we be cutting our own throats? :D

 

It's completely reasonable, but: 

- The Bodenrichtwert is usually some years behind current prices.

- Demand in desirable places is currently high and the offer is low.

 

I prefer to compare the asking price with similar offers in the area, and to check the location carefully: it's easier to judge the location than the state of the house, and a lot of repairs can be postponed or done over time, anyway. Also, I personally avoid anything built earlier than the eighties.

 

 

2

Share this post


Link to post
Share on other sites
Just now, mtbiking said:

I prefer to compare the asking price with similar offers in the area...

Sound advice. In the U.S. I would have used public records to find out how much houses in the area were actually selling for. But this does not seem to be possible in Germany. 

 

Is there a database of actual house sales somewhere, or do you mean just compare the listed asking price of similar houses in the area? 

0

Share this post


Link to post
Share on other sites
2 minutes ago, burningkrome said:

Sound advice. In the U.S. I would have used public records to find out how much houses in the area were actually selling for. But this does not seem to be possible in Germany. 

 

Is there a database of actual house sales somewhere, or do you mean just compare the listed asking price of similar houses in the area? 

 

Immoscout has a historical database, for example. You just need to dig into their website:

 

Immobilienpreise: Mietpreise & Kaufpreise bei ImmobilienScout24

1

Share this post


Link to post
Share on other sites

Judging from experience, currently at least around Hamburg, everyone selling is asking as much as they want and if the house is half decent they usually get it :D 

3

Share this post


Link to post
Share on other sites

I agree with all of the above. If you think the house is really for you and you have good knowledge of potential repair costs, don’t lose out. We bought our house 10 years ago when there was hardly anything for sale. Likely even less choice these days.  The house was perfect for us, great location, only 5 years old etc.  You could ask how flexible the price is.  We did and were told the price absolutely isn’t negotiable.  Ok, we bought it.  It was a fair price and we’ve since been told that we’d just gotten ahead of several neighbours that would have bought it.  If you are in anyway unsure of any structural/repair issues, definitely get a Gutachter (surveyor) to check.  We paid around 500€ for a Gutachter to check another older house we were interested in before we found ours.  Money well spent as it saved us from a potential disaster.

 

Just to add, on immoscout24.de, there is a house price calculator. It used to cost something though I don’t  know if it still does.  It was only about 20€ . Not all too accurate though can give you a guide. 

 

Good luck

2

Share this post


Link to post
Share on other sites
21 hours ago, burningkrome said:
  1. The land price. For example, there is the Bodenrichtwerte (Standard land values.) So, for instance, if a house had a Grundstuck of 600 m2, and a std. land value of €290, the land cost would be a simple calculation of 600*290 =  €174,000 (correct?)
  2. Next is the house value, based on meters squared (m2.) I.e. if an area had a home value of €2000/m2, then a 100m2 house would be worth €200,000
  3. To get the "sales price" you just add them together, and get roughly $374,000

It will not bring you very far, in my opinion.

Two issues:

1) As emkay already pointed out, prices in eur/m2 are, at best, from the past, so today things are different. How different? Nobody knows.

2) The value of anything does not come from data/math like you did, comes from how much buyer are wiling and able to pay, and this keeps changing. So you conclude the value is 600k, offer 600k to the vendor and give the explanation. Could it be the next guy who offered earlier 580k is richer and/or want it more badly, so when the vendor gets back to him after letting him wait for an answer, he ups from 580k to 610k?

 

A guy I know was selling. Agent said: let's ask X, it's its value, it won't sell for more. Guy said: I'm greedy, don't care about "its value", let's ask X + 30k. Agent: ok, but it won't sell for X + 30k. It sold fast for X + 30k.

Fazit: you don't know the value before it sells, you know it only after it sold.

 

Been there done that. I know it's a pain.

Good luck.

1

Share this post


Link to post
Share on other sites

Theres no actual comps here like in the states. Its based on random german personal beliefs on what their house costs. "I like my random outdated pos house, lets list it for 850K and see what happens" seems to be the norm here. 

1

Share this post


Link to post
Share on other sites
Quote

 see what happens" seems to be the norm here. 

 

and is the norm across the united states.

 

OP - go to your bank(s) and find out what the max loan you can get.  That tells you your limit.

See as many houses in as many places as you can to get educated in today's market.  It's a seller's market...accept it.

When you then come across a house you'd like you'll have multiple reference points of comparisons to determine market value.  If the shoe fits and you can afford it, make an offer.  Formulas are useful in a stable market.  Today is unstable.

It's all about homework..like most things.

3

Share this post


Link to post
Share on other sites
5 hours ago, catjones said:

 

and is the norm across the united states.

 

OP - go to your bank(s) and find out what the max loan you can get.  That tells you your limit.

See as many houses in as many places as you can to get educated in today's market.  It's a seller's market...accept it.

When you then come across a house you'd like you'll have multiple reference points of comparisons to determine market value.  If the shoe fits and you can afford it, make an offer.  Formulas are useful in a stable market.  Today is unstable.

It's all about homework..like most things.

 

Yep. We've made in the past many, many offers below the asking price for properties that we found OK but for whatever reason not worth the €€ and checked maybe one hundred in total over the years. In the end the couple properties we actually bought cost us a bit more than the asking price or in another case we said right away that we're buying without negotiating. You need to know the market very well as a small investor,

 

1

Share this post


Link to post
Share on other sites
On 8/20/2021, 3:50:21, catjones said:

OP - go to your bank(s) and find out what the max loan you can get.  That tells you your limit.

OP - this is the absolute first step you need to do. Even better if the bank are ok to tell you that you will get the loan if you apply (usually the person you talk to should be bale to judge that based on the info you give them.

 

It's important for the reason catjones mentions but also as it will save you time later. if you are going to go searching for places to buy it is possible you will see quite a few properties, most you won't want for one reason or another, but when you find one you like speed can be important.

 

As you have already been to the bank and found out how much you can get, you have also already collected most of the documents you need to submit the loan application. You may need to get a few more update things (salary stuff etc) but things like marriage certs, birth certs, outgoings, what capital you are bringing (and the proof of that) etc you now have at the ready. This saves you time and if you are in the running with other people who do not, you have ahead start.

 

When we were looking we were told by more than one agent that the amount of people who find the place they want to buy and then go to bank was more than you would expect. Most underestimate the amount they can borrow or even worse, they push themselves to the limit.

When we went to check what we could afford we were interviewed in a way. We were given a quote on what we could borrow based on repayment time and hat we wanted to do in between no and the last payment. banks will lend you a lot more than that, even if it means sitting at home for the next 25 years spending your vacation camping on your garden.

 

 If you know what you can afford you have a rough idea what your budget is. It is of course possible than you have to go over that to afford something. You may have to borrow more and only go on vacation once etc, but if you know how much you can afford (comfortably and at your limit) then you save time and you can sort out things that are great but you can't afford. Looking for something to buy can be draining and depressing in certain areas (I think it took us about 12 months from starting to finding the place we bought).

 

As also said above a few times, it is a seller's market. They will ask what they want and if it isn't too unreasonable, they will get it. We've even been told that the offer on the prospectus was the minimum price, it was expected to make an offer.

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now