A while ago we had a moan about how much we hated selling our house in the UK and why we wish we’d not used an estate agent to sell our house.
Well, I can now announce that our estate agent experiences in Berlin have by far surpassed the ones in the UK – and not in a good way.
In Berlin, you’re basically screwed. There aren’t enough properties and prices seem to be rising rapidly. Another problem if you’re trying to buy somewhere for you to live is that there are lot of rental properties.
Finding a property in the first place.
Tenants in Germany have a lot of rights which is obviously great if you’re renting but less great if you’re looking for somewhere to live yourself.
If there’s a tenant in an apartment you’re trying to buy to move into yourself you obviously have to give them notice. The only reason you could ever do that is because you want to move in yourself. Fair enough, right? Well, kind of as in most cases you have to give the tenant 10 years notice!
(It’s slightly more complicated but that’s basically what it comes down to.)
Even getting a viewing can sometimes be tough. There are almost never photos on the internet (after all who would share pictures of their home on the world wide web for everyone to see) and you’ll usually find yourself in a block viewing with loads of other people.
One apartment we tried to view was amazing (on paper at least). It was even larger than ours, in a slightly better location than ours and cheaper than ours. But after 5 months of trying to even get a viewing, we gave up. The tenant living there would only allow one viewing a month. And when I say one, I don’t mean one day, I really do mean one!
Another property we viewed in an old bakery was in need of a complete renovation. We were interested and the estate agent promised to send us over drawings and studies that had already been carried out. If you’re going to buy a wreck you’re going to want to know exactly what you’re getting yourself into and knowing exactly what parts of the building were included with the sale also seemed like a good idea. If you’ve not already guessed, we never got to sent over any other information.
We also viewed an apartment in this amazing building.
As spectacular as the outside of the building is, the apartment itself was a bit meh. It still had some great features but the location wasn’t ideal, it had a weird layout and needed quite a lot of work even though the price it was on the market for was what you’d expect to pay for a finished apartment (in our opinion).
Having said that, it would have still been an interesting project and we were interested. We asked the estate agent a load of questions but he couldn’t answer any of them and when he then asked us to put in an offer he actually told us not to be cheeky with a low offer – even before we mentioned any numbers.
Needless to say, we weren’t too bothered after that!
The reservation.
You have to sign a reservation to secure a property in Berlin and if you really want to make sure you get your new home you have to sign it as quickly as possible. We usually got it shoved in our faces at the first viewing.
The reservation is valid for 2 weeks and it costs money. A lot of money. In our case, it was over 4000€ which we would have lost if we’d had to pull out of buying the apartment for any reason.
The big problem is that at this point you don’t even know if the bank will give you any money as they only lend property specific. Basically, it’s a huge risk. Do you wait till you’ve got the okay from the bank before signing the reservation or risk someone else coming along and snapping up the apartment?
I should point out that the reservation fee is deducted from your final estate agent bill if everything goes though. And yes, I just said deducted as it get’s worse…
The fees.
Our estate agent was definitely one of the better ones we encountered. He seemed nice and he was helpful.
There’s a huge but though…
In Germany, the buyer pays the estate agent fees. Now if you’re thinking that’s unfair, wrong, mean and just plain stupid. Well, join the club but it still get’s even worse.
The amount you pay is extortionate. Think I’m exaggerating?
We’ll, we paid a whopping 40000€ for our estate agent. And before you ask, no I’ve not slipped and accidentally added a zero. To say that it was painful, eye-wateringly expensive and felt like a complete rip off would be the understatement of the century.
I guess that’s part of the reason that people rarely move here in Germany.
No champagne.
Okay, so I know this is going to sound really petty but given that we’ve just spent way, way more money on our estate agent than anything else ever in our lives (other than our house and apartment) I just can’t help feeling like there should have been more.
A bottle of something sparkly or some flowers or even just a card (which I even got when I purchased my first car for a lot less money than our estate agent cost) just something to congratulate us!
Yes, I’m being picky but if you’d just spent over 40k on an estate agent you might be, too!
There you have it. Next time you moan about your estate agent just remember it could be worse! It’s also not all bad – we’re living in our dream home in a fab city and hopefully won’t have to pay for any more estate agents for a long time!
What’s the buying process like where you live? Has anyone ever had a good estate agent experience? To be fair, ours wasn’t bad – just very expensive! Am I the only one that finds it really weird that the buyer has to pay the fees of someone he’s not even commissioned?
Dave says
I completely agree. I’m tempted to make it my life’s mission to change it, but i have no idea how to start!
Christine says
Well, we moved to another country because we didn’t want to go through that again. :) Seriously though, it’s been years since we bought and sold German property and I’m still in shock.
Cx
MAZ says
Are you sure your estate agents fee did not include the land transfer tax and notary fees? I believe that currently the Berlin add-ons are as follows: 6,00% Land transfer tax (plus 19% VAT on that), 1,50% Notary fees, 7,14% Agents fees. So about 15% of the purchase price in total. It has always been the case that you need a lot of capital to proceed in Germany. When I bought in Berlin back in 2007, the situation was that you needed a 40% deposit, plus the 15% purchase costs, so 55% cash, and the minimum mortgage available was 50,000 euros. This meant that any property under 100,000 euros basically had to be a cash purchase, which was the situation in my case. I also ended up having to buy my apartment without seeing inside it! Every time we went to view something it sold by the time we got there, they were going like hot cakes. That said, my 65,000 euro holiday apartment is now worth around 265,000 euros (after a 50k refurb) and I love it… but equally I think Bob has given excellent advice. Most of the real estate agents I met in Berlin owned property in other areas even in other countries, none owned the place they lived in!
Christine says
Your right that the estate agent fee is 7,14% (although it doesn’t include the notary fees or land transfer fees). I’m not saying that buying property isn’t a good idea (I think it is!) but the estate agent fees are just so high. I would be very surprised if our estate agent had spent more than a day (if even that) working on selling our apartment and, although I’m sure that they don’t sell apartments every day, the amount we paid is difficult to justify.
Cx
rob says
Just note but principal residents remain tax free, investment properties are tax free if you hold them more than 10 years
Christine says
That’s not exactly right, Rob. It’s true that investment properties are tax-free after 10 years however you still have to pay tax on your principal residence if you sell your home and have lived there for less than 3 years.
Cx
Ruth says
I have just moved to Bruges from Birmingham and, whilst I’m not buying immediately (I don’t want to emigrate and buy somewhere right away, especially with 16% taxes if you sell within 5 years of buying in Belgium!) their fees are similar. A €300k property will set you back around €60k in fees and taxes! I’ve decided to rent for the time being due to tennant security and it also gives me the chance to build up a bigger deposit from the sale of my house in England. Plus I’m secretly hoping the euro rate gets better!
Christine says
Oh, wow! Bruges is such an amazing and beautiful city!There’s a similar system in Germany where you have to pay tax on a profit you may make if sell your home before you’ve lived in it for at least 3 years (I’ve not looked into the details though).
We definitely rushed into buying our home here – even if the fees like in Belgium are extremely high. I have to admit that I’d not expected to find a new home so soon. You never quite know what’s going to happen but so far so good!
The whole exchange rate issue it was extremely painful when we moved. I’ll keep my fingers crossed that it gets better for you!
Cx
Sarah says
Wow, and I thought it was difficult to get a house in the UK!! That’s extortionate. I’m surprised there’s anybody on the property market in Germany for those prices. I think I’d pick a house and stay there for 50 years.
So glad you’ve found somewhere that you love though, and I hope you can turn it into everything you want.
Christine says
Totally shocking, isn’t it! Actually, that’s exactly what happens when people buy a home – almost everyone stays there forever!
Cx
Jessica@CapeofDreams says
I still get a poinsettia every Christmas from the agent that helped me buy my house 6 years later, and I paid a hell of a lot less than you! Even so, I am thinking about getting my own realty license before ever buying another home. I think the time and money for the license would be less than I would pay another agent.
Christine says
That’s so lovely that you still get a Christmas gift! I guess we all just feel like we want to get value for money.
It’s a really interesting idea to get a licence to buy your own home! I don’t think it would work here in Germany but I think the system here will change at some point. It’s ridiculous that the buyer has to pay for someone that’s essentially working for the seller.
Cx
Simon says
Actually, reservation fee agreements are void if the reservation fee is significant (not exactly sure but 100€ are probably not significant, but 4000€ definitely are) unless attested by a notary. Which is probably never done. But it might certainly still be a major hassle to get your money back.
After we finally signed our contract, the seller admitted themselves that the reservation fee was illegal…
Christine says
That’s good to know, Simon! As a buyer it really felt like everyone could do what they wanted and you just had to put up with it. Glad it’s all over with now!
Cx
rob says
Yes it maybe illegal but like with “key money” in an overheated property market like Berlin the property will go to the person who is willing to fork it out. Renting in Germany, can be a sweet experience, compared to the UK where you booted out at the end of each tenancy (why is beyond me) so why not just rent? Running your numbers 40,000 means an 800,000 property. With taxes and fee’s you’re looking at another 60 grand. so in essence you were looking at properties in the 1 million Euro range. Hardly the stuff of poor people.
My advice to people in your situation is to rent and buy elsewhere. Using 1 million Euros as you budget you’d comfortably be able to buy 5-6 units in the Frankfurt area, even more if you were aggressive. Those 6 units would generate in the range of 3000€ gross income more than enough to cover your rent in Berlin. Considering the tax benefits that the Government government bestows on landlords you could be earning a nice (almost) tax free income.
But alas for the English their home is their castle.
Christine says
Thanks for the feedback, Rob. I’m not sure how you did your calculation but it’s way off what we actually paid. We definitely had a very healthy budget but we had nowhere near close to a million (the total wasn’t even anywhere close to the 800k you also mentioned).
In the greater scheme of things, Berlin is still an affordable city and it’s much cheaper than a lot of other big German cities like Munich, Hamburg and Frankfurt which we considered moving to but would have all been out of our budget.
I totally agree that renting is a much better option in Germany but it wasn’t an option for us. After all, we could hardly blog about home improvements if we lived in a rental property.
We are German (and not English as I think you assumed) so we knew what we were letting ourselves in for. Also, who’s to say that we don’t have rental properties, too?
Cx