Partial sale / partial purchase: what is it? Explanation + advantage

Surely you have seen the advertisements of the many part purchase providers. This purchase offer is aimed in particular at older property owners who need money, for example, for a more pleasant retirement.

A look at costs of use, advantages, disadvantages, the total sale, the calculated increase in value under inflation and a comparison, what is “cheaper”: partial purchase or the alternative real estate loan, more specifically the mortgage loan? In addition taxes, sale from community of heirs, divorce and much more.

Here you will also find all calculators with examples: Partial sale provider comparison.

First, a quick, short definition.

Definition partial sale or partial purchase

What does real estate partial sale?

Of course, no second person moves into your property; you remain the sole user. However, as the former sole owner, you now pay a fee for the use of the part of the property that no longer belongs to you in full after the partial purchase – comparable to rent. This payment is referred to as “compensation for use” or “usage fee”.

Partial sale summarized:

• You sell a part of your property (usually 10-50%)
• Partial purchase house: Yes
• Partial purchase apartment: Yes
• Partial purchase of land: Yes
• Financial company becomes part owner
• You remain the sole user of the property
• You pay monthly usage fee
• Total sales in X years (optional)

The most important questions about the partial purchase

The most important questions at a glance:

• Can I sell half of the house? Yes, most sellers ~ 20-50%.
• Can I sell part of my apartment? Yes.
• Partial purchase also for land? Yes.
• Advantage? Fast, uncomplicated purchase price transfer.
• Disadvantage? Usage fee (~ 3-5% p.a.)
• Moreover, for total sale: sometimes below inflation

These important factors in the purchase of parts

The key factors for the partial sale:

• Value of the property = 500,000 euros
• Desired immediate payout = 100,000 euros
• Share for sale = 20%
• Monthly usage fee = ?
• (if) total sale after X years = ?

You have to answer two key questions in the comparison:

1. What is the monthly usage fee?
2. (At total sale, later) appreciation and fees?

Difference: sale vs. partial sale

What distinguishes the partial sale from the normal real estate sale? If you want to sell a property in the normal way, you will go through a total of three major phases (preparation, viewings/credit checks, sale), which in turn contain several steps. The search for solvent buyers (creditworthiness) can take a longer time depending on the real estate situation (demand).

Regular real estate sale: timing

Roughly summarized, the real estate sale includes the following steps:

1. Prepare documents
2. Valuation
3. Real estate marketing
4. Preparation of an exposé
5. Realization and planning of the viewing appointments
6. Purchase negotiations
7. Processing and drawing up of the purchase contract
8. Handover of keys

Shortened sales phase

With a partial sale, a large part of these steps is skipped completely. You go directly to a financial service provider who buys your property on a pro rata basis. Accordingly, the following steps remain from the procedure of a regular real estate sale:

1. Valuation
2. Processing and drawing up of the purchase contract
3. Handover of keys

Advantages at a glance: Sold and paid for quickly

Whether it’s a terraced house, a single-family home or even the condominium in an apartment building: you’ve never sold part of your property so quickly.

A partial sale has advantages:

• Financing method independent of banks
• No credit check, cf. credit financing
• Fast sales process

Disadvantage? Use in cost comparison

As described in the introduction, the “Partial Purchase” offer is aimed in particular at older property owners.

“Banks give no / few loans to older people”.

Such a common prejudice. That is why advertising with the “partial purchase of your property” currently works so well. However, the subsequent costs are often not taken into account. For example, if you sell 25% of the property and then pay 300 euros a month usage costs, you should definitely compare the amount with a regular real estate loan, more precisely mortgage loan.

In retrospect, otherwise an experience that will cost you cash, every month.

Let’s start the analysis.

Usage fee for partial purchase: Disadvantage 1

Now for the “follow-up costs.”

What is monthly user fee? Many currently advertise it as “easy,” “convenient,” “no bank.” True. But the price is high. First of all, the ongoing costs incurred in the partial purchase to financial companies. The financial company becomes a co-owner. The sold part of the property, will be returned to you.

So you do not give “half” of the garden or part of your rooms: you continue to use your property alone.

For this you pay the “compensation for use”.

Amount of compensation for use

The compensation that the financial company requires for the use of the property is usually:

• Between 3-5% of the amount paid out p.a.

The sum refers to 1 year in each case. The formula for calculating the usage fee (depending on the provider) per month:

• Monthly usage fee = 3% * purchase price (share) / 12
• = 3% * 100.000 / 12

Thus pay, at the partial sale worth 100,000 euros, 250 euros a month.

User fee at 100.000 Euro = 250 Euro / month

As always, depending on the provider. All providers can be found here in the part purchase house: comparison.

Real estate loan comparison: 2-4% cheaper

How much do you currently pay for a “classic” real estate loan? Due to the low interest rate phase, you currently pay only:

• Approximately 1% of the disbursed amount p.a.

Compared to the financing request of 100,000 only ~ 80 euros / month.

Credit only ~ 80 Euro / month

It pays to calculate and consider when it comes to the partial sale of your property. Tip! You will also learn about the “real estate annuity” as another alternative to the partial sale.

Taxes: What do you have to pay?

The tax does not differ in the partial sale from the regular sale.

As you can see in this tax checklist, for private individuals it is actually “only” about the speculation tax. It comes into effect when a property is resold within the first 10 years after purchase. The amount of the speculation tax is calculated according to the individual tax rate, which can be more than 25 percent.

Mentioned for completeness, anyone who sells 3 or more properties in 5 years is also subject to commercial real estate trading and therefore also to trade tax. Last, for the sake of completeness, the sales tax (buyer) for commercial real estate trade.

More on the subject of taxes when selling real estate:

• Selling real estate: taxes

Calculator! Provider comparison

In this analysis, I have calculated example for you in all the calculators of the providers. How much is the usage fee? How much do you get in the total sale? Here you can find the big provider comparison:

• Partial sale provider comparison

Total purchase price and inflation: Disadvantage 2

If you think carefully about the online calculation of step 2) the total purchase, you will notice that you do not specify any regions(real estate location) of the property. Accordingly, the increase in value is a very rough value. But let’s take this as a basis.

Inflation vs appreciation: comparison (-2.8% loss)

Inflation factor (currency devaluation) – If you now add inflation as a second factor, which according to the European Central Bank should be at 2% per year, but is currently even at 5% (as of 01/22), then you will see:

The increase in value of only 25%, 30% in 15 years, does not even equal inflation.

So let’s compare 30% in 15 years and inflation (“as desired” at 2%, with no increases):

The result of our comparison:

According to (most) online calculators, a loss of -2.8%.

Accordingly, you will not even be compensated for inflation if you are below 32.8%.

Tips for your partial sale: use, annuity, divorce and inheritance

Here are some practical tips and food for thought:

Real estate pension: Another alternative

You have now learned about the partial sale, also the mortgage loan. Perhaps another tip for you, the real estate pension. Especially interesting if you have already reached a higher age, usually from 70, 75 years.

Real estate annuity means: You sell your real estate (directly) completely, but keep a lifelong right of residence and use. In addition, you receive a small monthly amount. For some, this is a good solution. Because you also no longer have anything to do with maintenance costs, the new owner takes care of that.

Real estate pension simply explained:

• Direct, complete sale of your property
• Lifetime right of residence and use
• Small, monthly “extra pension” from the seller
• No maintenance costs

Usufructuary right: “Lifetime, sole right of residence

Before we compare the different providers, here is an important tip if you really decide to sell your property in part. As you have already learned in the guide partial sale, you can sell your property in 2 ways: Partial or Partial including total sale in X years.

If you are considering an overall sale after X years, be sure to take a look at the:

Usufructuary right in the event of a total sale

Usufruct right simply means that you have the sole right to use your property – even after the sale (as well as in other cases, such as early inheritance).

Advantage: The usufruct right brings you the advantage that you are not dependent at any time, on the goodwill or the consent of the seller.

Partial sale possible despite current financing?

Partial sales are possible – by arrangement – but both you, as the borrower (property owner), and the bank, are fundamentally bound by the loan agreement you have concluded, at least for an agreed fixed-interest period. Ideally, therefore, your property is paid off.

What is the difference between partial sale and annuity?

Let’s first clarify the term life annuity: Under a life annuity, you sell your property in exchange for an annuity payment and simultaneous, lifelong right of residence and use. It is therefore a special form of selling a property. The advantage: liquidity.

• Mostly owners over 70 years
• Complete sale to a financial company
• In return, lifelong right of residence and use
• Additional monthly amount for you (life annuity)
• No additional costs / maintenance costs

Community of heirs: sale after inheritance

Is it possible to sell a share in a community of heirs? Yes. With reference to BGB § 2033 Paragraph 1, which states:

“Each co-heir may dispose of the share in the estate.”

More on the topic:

• Community of heirs: selling property

Divorce: sale after separation

Is it possible to sell a share from a separation or divorce? In the case of divorce, things are initially a bit more complicated. In principle, only after the separation year, but at the latest after the divorce, can spouses demand that their partner sell their home. Talk to the providers individually about this.

More to:

• Divorce: Sell property

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Prepare purchase contract: Important data, attachments & Co.

To ensure that your purchase contract is ready for notarization, you need to collect all important data, documents and commitments in advance. Let’s go through the most important points here chronologically.

Master data: Buyer and seller

At the beginning of the contract, the master data of the buyer and seller must be listed.

The master data includes:

• Name
• Address
• Date of birth

Master data: House, apartment & multifamily

The same applies to the property. The master data of your property includes the exact address of the property and, in the case of condominiums, the residential unit. The location and the land register sheet number must also be listed here.

Summarized here:

• Address of the property
• Housing unit, if applicable
• Location
• Land register sheet number

Purchase price and payment term including additional costs

The final purchase price is then displayed here. Important: This is not just the purchase price of the property itself, but the final price including ancillary purchase costs, such as notary, broker, land registry entry, etc. The payment term should also be recorded here. The payment term should also be recorded here.

Reading tip: Calculating the purchase price including incidental purchase costs

• Purchase price
• Payment term

Tenant data and list: Appendix

Important for rented properties: The tenant list and data. These are attached as an appendix to the purchase agreement. Finally, all information regarding the tenancy and the respective deposit must be set out. Rent arrears and house money arrears must also be listed here. If there are no arrears, this must be confirmed.

• Tenant data / Tenant list
• Current status of tenancies
• Deposits paid by tenants
• Confirmation: No rent arrears
• Confirmation: No house money arrears

Commitments made by the seller in the purchase agreement

Also important: All promises made by the seller must be included in the purchase agreement. If, for example, renovation or refurbishment work still has to be carried out, this should be documented here. This prevents misunderstandings later on.

Land charge documents from your bank

Finally, you will need the land charge documents from your financing bank. If you do not yet have them for your appointment with the notary, then include the power of attorney for the land charge appointment in the purchase contract instead.

Economic transition: billing and costs

If ownership is transferred to the buyer, this also entails an economic transfer. The economic transfer involves both the settlement of tenants’ accounts and contributions from residents. Important: If you buy the property before the middle of the year, the seller must take care of the settlement. If you buy the property in the second half of the year, you have to take care of it.

You will need the following additional documents for the economic transition:

• Documents for the settlement of tenants
• Receivables due to contributions from local residents
• Assignment of claims against craftsmen

Checklist: How to draw up the purchase contract

So here again summarized all the important data and attachments for the purchase contract:

1. Buyer & Seller Master Data
2. Master data of the property
3. Purchase price and payment term
4. Tenant data and list
5. Commitments from the seller side
6. Land charge documents
7. Documents for the settlement of tenants
8. Receivables due to contributions from local residents
9. Assignment of claims against craftsmen

You want to buy an apartment and still have some questions? Then you will learn everything from A-Z here: owner-occupancy or renting, financing a condominium, apartment search, real estate portals, brokers, valuation, purchase prices, negotiations and taxes. Knowledge and experience from experts, in one guide.

✓ A guidebook
✓ All facts
✓ Insider tips
✓ Purchase checklists

Learn step-by-step the home buying process and lots of insider tips!

• Buy apartment

Der Beitrag Create real estate purchase contract: Master data, purchase price, payment term & tenant – checklist erschien zuerst auf ℄ Real Estates.