You can choose between a simple, a sole and a qualified sole brokerage contract. If you want to remain capable of acting despite the broker’s commission and reserve the right of prior sale, you should refrain from a qualified commission and choose between the other two solutions when concluding the contract.

Content in the brokerage contract: These facts must be present

In a contract with your appointed real estate agent, all rights and obligations of both parties are explained in detail. An important contractual point is the agreed commission, which is to be paid by the buyer when selling and by the owner when renting. Other contractual contents are based on the scope of the services you want and which the estate agent undertakes to provide.

A brokerage contract becomes valid the moment it is signed by both parties. With your signature, for example, you instruct the estate agent to sell your house and to apply all the necessary measures to promote the sale. In the case of the qualified sole mandate, you further agree to the fact that you will not instruct any other estate agent and that you will not sell your property privately. In the contract, you will find out all the details and tasks that will be undertaken for the sale of the house and will be carried out by the agent himself. With brokerage contracts, the written form is necessary, so that verbally concluded agreements are invalid.

Contract is binding on both parties

Through the binding nature of a brokerage contract, you receive the security that the commissioned broker will do everything to ensure that your home is sold in a timely manner. All figures and tasks, the commission and its due date as well as special requirements for our brokers are included in the contract. The agent will advise you before the contract is concluded and together with you will find the form of contract that best suits your requirements for the sale of your house. He will draw up the contract for you in writing, leaving you time to check the details and commission any changes.

More information on the subject of brokers:

Sell

There are various reasons that make you think about selling a property. Many of our clients already own their own house or condo when they inherit their parents’ home and don’t know what to do with the inheritance now. Are you facing this question or have another reason for selling your house? Our professional online real estate agents will assist you and help to get the best price for the property and not put a long wait on the agenda in the course of the sale. While you can sell privately if you are the sole owner, a house or apartment owned by a community of heirs presents greater challenges.

Tasks of a broker

Basically, a real estate agent fulfils all tasks that are important before and during the sales and rental phase. He creates an exposé, determines the market value of your property, advertises your property and is then the interface between you and interested parties. While the creation and publication of an advertisement is a time-consuming but unique task, answering customer enquiries is part of the daily business of an estate agent.

• Here you can find more information about the tasks of a broker.

Commission for the broker – The most important regulations

More than 80 percent of all properties for sale or rent are brokered. This means that the owner commissions a real estate agent to advertise the offer and to carry out all tasks up to the conclusion of the contract on his behalf. Professional brokerage is a service that is agreed between the client and the real estate agent. After the service has been rendered, a commission, the so-called brokerage fee, is due. Who pays the commission depends on the type of commission and the reason for the commission. If you sell your property through an estate agent, the buyer usually pays. In the case of lettings, the buyer principle has applied since 2015, so that the invoice recipient and commission payer is identical to the person who has commissioned a brokerage service.

• Here you can find more information about the broker commission.

Buying an apartment building: Valuation & investment

Compared to single-family homes and condominiums, multi-family homes offer greater investment stability. With several residential units, you spread the risk of rent losses and benefit from a continuous cash flow. However, it is important that you have the property professionally valued so that you neither buy too expensively nor overlook hidden risks.

PS: First investment? Here are 4 tips for your first investment with video.

Real estate valuation: What is important?

The valuation of a property is not only based on square meters and year of construction. Factors such as location (macro and micro), energy status, condition of the roof, pipes and heating, as well as rental contracts, vacancies and development potential are decisive. A rough online estimate is not enough here – it is better to have a valuation report drawn up or use professional valuation models with comparable properties.

• Valuate property

Reminder! Location, annual net cold rent + purchase price: This is how you can quickly evaluate an apartment building.

Recognize value enhancement & exploit potential

Are you looking for properties with development opportunities? Then look out for attics that can be converted, vacant properties that can be renovated or properties with potential for redensification. Converting to modern heating systems or adding balconies can also significantly increase the value. The decisive factor is cost-effectiveness: calculate each measure and compare it with the potential increase in rent or value.

Relationship between price, location and yield

In sought-after locations(A-locations, good B-locations), the purchase price is higher and the rental yield is usually lower. In structurally weak regions, you pay less – but also with a higher vacancy risk. The optimal balance lies in growing medium-sized cities with good infrastructure, stable demand and moderate prices. Pay attention to micro-location, transport links and demographics.

• A, B and C position

Calculate rental yield & value correctly

The gross rental yield shows you what percentage of the purchase price you will achieve annually through rental income. It is calculated very simply: annual net cold rent divided by the purchase price, multiplied by 100. A solid gross yield for apartment buildings is between 6 and 9 percent – lower in prime locations and often higher in structurally weak areas. But be careful: a high yield in a poor location can be deceptive if resale is problematic.

Annual net rent ÷ purchase price × 100 = gross rental yield

• Rental yield vs purchase price factor

Refurbishment property or fully let?

Refurbish & re-let

Buying a house in need of renovation can be worthwhile – if the location and substance are right. If you renovate efficiently, you can then rent it out again – at higher prices and to modern standards. In the case of vacant properties, make sure that there are no tenancies and find out about the renovation costs and possible subsidies in advance.

Fully let properties: Security & immediate income

A property that is already fully let generates income from day one. You should check all rental agreements here: Term, rent amount, indexation, graduated rents, notice periods. You should also ask for the tenants’ payment history. A mixed tenant structure without rent arrears is ideal.

Important: Tenancy law & limits of termination

You cannot give notice or raise the rent at will. Terminations are only permitted for personal use or breach of duty. Rent increases are limited by law – additional regulations apply in regions with rent control. Refurbishment costs may only be apportioned proportionately. Plan these aspects carefully.

Purchase contract & legal basis

Notary & contract review

The purchase contract is drawn up by the notary and must be notarized. The notary acts as a neutral third party and ensures that all legal conditions are met. You will receive a draft contract in advance, which you should check with your advisor or lawyer. At the notarization appointment, the contract is read aloud and any unanswered questions are clarified.

Land register, transfer of ownership & priority notice of conveyance

With the notarization, the purchase is legally binding – but you are not yet the owner. The transfer of ownership only takes place with the entry in the land register. Before this, a so-called priority notice of conveyance is entered to secure you. Prerequisite: The purchase price must be paid and the land transfer tax paid.

• Real estate purchase agreement

Taxes & ancillary purchase costs at a glance

Real estate transfer tax & ancillary costs

When buying a property, there are additional costs on top of the purchase price: Land transfer tax, notary fees, entry in the land register and, if applicable, estate agent’s commission. Depending on the federal state, these amount to 10 to 15 percent of the purchase price and usually have to be paid from equity. Sound financial planning takes these items into account from the outset.

• Real estate transfer tax

Real estate GmbH & family foundation

For larger portfolios, it is worth structuring via an asset-managing GmbH or a family foundation. This allows you to benefit from tax advantages – for example in the event of inheritance or sale after the speculation period. However, the establishment and ongoing administration require good tax and legal advice.

• Real Estate Ltd.
• Family foundation

Letting: Tenants, contracts & income

Successful letting starts with selecting the right tenants. In addition to creditworthiness and credit rating, personal impressions are also important. A clear, legally secure rental agreement protects both parties. The rent is based on the rent index, but must also match the furnishings and location. Pay attention to mandatory details such as operating costs, house rules, notice periods and rent adjustment clauses.

• Renting out a house & apartment

Conclusion: Strategy for success

An apartment building is not a short-term deal – it is a long-term investment that needs to be well planned. Anyone who knows the market, calculates the right key figures and strives for a legally compliant transaction will create a stable source of income and increase their assets in the long term. Take advantage of professional advice – for valuation, purchase, refurbishment or letting. This will help you avoid mistakes and ensure long-term success.

Own use at a glance

• Cancellation of the rental contract in order to move into the apartment yourself or for family members
• Long notice period to protect the tenant
• Exceptions for hardship cases such as single parents or families with children
• Own requirements in English

Back to the wiki: Real Estate

Selling a house despite a loan: Paying a prepayment penalty or transferring the loan to refinancing?

You are bound to a real estate financing for 10 years despite a longer repayment phase. This period only does not apply to you if the fixed borrowing rate is shorter. If it becomes necessary to sell the house before the end of the period, you can cancel your loan, but you will have to pay an early repayment penalty to the bank. The lender misses out on interest, which he recovers from you and which can amount to several thousand euros for a real estate loan.

Avoid additional costs: Here’s how!

To avoid these additional costs, you should take a closer look at the following two options:

The family has grown and your original house has become too small? Then you have the option of transferring the loan into a new financing. In this case, you can save the prepayment penalty and refinance by removing the previous property from the land register and registering your new purchase as collateral for the loan with the bank. A transfer of the loan to a new real estate loan is tied to the condition that the new house is either more expensive, but at least equal to the sold property.

In general, it’s a good idea to look at different ways to avoid a prepayment penalty and avoid making the high interest payment to the lender if you can.

Transfer existing loan to home buyer

When selling a house, under certain conditions there is the chance to sell the current real estate loan. If the buyer agrees to take over the loan at identical conditions and has sufficient creditworthiness for the bank to approve the transaction, you will be free of liabilities when the house and the loan are transferred. In this case, you do not have to pay a prepayment penalty, as the buyer takes over your financing and pays it to the bank at the existing agreements according to the loan contract. If you are planning to sell the property including the loan, we recommend that you take great care in your search for a solvent buyer.