Does a partial sale of the property make sense? Advantages & requirements

Does a partial sale of your real estate make sense? The partial sale of real estate is a way to liquidate your own real estate assets and thus create financial leeway. If you would like to have an additional financial cushion in old age without having to move out of your home, the partial sale is ideal. Like every decision in life, the partial sale of your property should be a well-considered step. Find out here when the partial sale of your property is particularly worthwhile. Also: An overview of the advantages and disadvantages.

The pro rata sale of house & apartment explains

A partial sale of a property is a great way to release a portion of your real estate equity and continue to retain sole right of occupancy and use. In a partial sale, up to half of your property is sold to a partial sale provider. You receive the purchase price immediately. The usufructuary right is secured in the land register and in return you pay a monthly usage fee to the partial buyer.

This brings with it a host of advantages. Let’s take a closer look at them.

Advantages of the partial sale

Whether selling part of your home privately or through a professional part sale provider, you retain your financial independence, stay in your familiar surroundings and can also benefit from additional cash flow.

The advantages of the partial sale at a glance:

• Improved liquidity
• No need to move out of the property
• Sole usufructuary right to the property
• Possibility to continue using the property or rent it out
• Repurchase by seller or heirs possible

More financial freedom through instant payout

One of the biggest advantages of a partial real estate sale is that you have immediate cash without having to sell the property outright. Thus, you can quickly and easily get money to meet financial obligations, make investments or fulfill a lifelong desire.

Sole usufructuary right to the property

As a partial seller, you get the right to live in your home and use it as you wish. You can use the property for your own use and have family members or caregivers move in. In addition, the usufruct right allows you to rent out your property.

Wealth accumulation through renting & appreciation

A partial real estate sale can also be a way to contribute to wealth accumulation by renting out the property. By renting out the property, regular rental income can be generated, which can serve as additional income.

In the event of an increase in the value of the property, you will also benefit, for example if you decide to sell your property completely after 10 years.

Sellers & heirs benefit

Not only you as the seller benefit from a partial sale, but also your heirs. Since your liquidity is increased, the family is relieved financially. After your death, the heirs are also granted a priority right of repurchase of the sold share. If your heirs decide to sell the entire property, the partial buyer takes over the settlement and your heirs do not have to worry about anything.

There are also a few things to consider when partial selling. So what are the partial sale disadvantages?

Disadvantages of the partial sale

Compared to other models, such as the life annuity, you remain the owner of the property in the partial sale. Due to the registered usufructuary right, you can generate additional cash flow through the property, but at the same time this also comes with some costs.

User fee: Monthly payments to partial purchasers

As already mentioned, as usufructuary you have to pay a monthly usage fee to the buyer. The amount of the user fee depends on various factors, such as the current economic situation and the purchase price paid out. Since the amount of the user fee differs depending on the partial sale provider, it is advisable to compare the different partial sale companies in order to find the best possible offer for you.

Costs: Surveyor, notary & Co.

In addition to the monthly usage fee, a real estate partial sale may also come with some additional costs and fees. One of the most important cost factors is the preparation of the partial sale contract, which must be certified by a notary. There are also costs for an appraiser who determines the current value of the property. Which fees you have to pay yourself, and which costs are borne by the partial buyer, also varies from provider to provider.

You may incur these costs as a partial seller:

• User fee
• Expert’s fee
• Land register & notary fees
• Maintenance costs
• Administrative expenses
• Implementation costs
• Speculation tax, if applicable

Therefore, it is advisable to find out in advance about the expected costs to facilitate long-term financial planning.

Requirements: For whom is a partial sale worthwhile?

So, after looking at the advantages and disadvantages, the question becomes:

For whom is a partial sale of real estate worthwhile?

When a pro rata sale makes sense and when it does not depends on your property as well as on your personal circumstances. In most cases, the purchase price of the sold portion should not be less than 100,000 euros. Since a maximum of 50% of the property is purchased in a partial sale, only properties with a minimum market value of 200,000 euros are usually considered. Since the partial sale of real estate is a real estate annuity model, the offer is usually also aimed more at seniors.

You should have these prerequisites:

• Value of the property: at least 200,000 euros
• Payout: at least 100,000 euros
• Minimum age of the seller
• Ideally: completely / largely paid off property

The partial sale is most interesting for owners who need liquidity but do not want to give up their real estate assets completely and would like the property to remain in the family until the heirs later decide what to do with the property – an option that a life annuity and a reverse mortgage do not offer.

Conclusion: A comparison of providers is worthwhile

Overall, the partial sale of real estate offers an attractive opportunity for property owners to quickly and easily obtain liquidity without having to sell the entire property. Especially for older people, the partial sale can be a good option to achieve financial freedom. In addition, renting out the remaining part of the property or increasing its value can help build wealth. Since the conditions differ, you should take enough time in advance to compare the different partial sale providers with each other to find the best offer for you.