Selling Property in New Development Areas

Extremely relevant factors for the sale of apartments in new construction are the equipment of the apartment itself, but also the equipment and technology in the communal areas and in the house itself. The market value assessment of apartments is generally more complex than for owner-occupied homes, which is why you should definitely aim for a professional value assessment for planned sales in new construction.

Influence of Location and Structure

In many cities, new development areas are emerging in the form of fully developed neighborhoods on the outskirts and in up-and-coming neighborhoods. For potential buyers, the location is as relevant as the structure of the area in which the apartment is offered. You have just planned a new development area and are looking for owners who are interested in your project as investors or want to buy the newly built apartment for their own use? It is common practice for developers to offer apartments in new development areas not only after completion. Since the equipment and all environmental factors of the new development areas are already determined in the planning phase, you can already at this point in time hire an experienced real estate agent who is familiar with new development areas and have the offer presented.

Real Estate as Capital Investment: Special

• Part 1: Classical or exotic investment – Which real estate is suitable as capital investment?
• Part 2: Real estate as capital investment – What do I have to pay attention to?

In practice, it has been shown that new development areas designed with green spaces and a good infrastructure are highly attractive and ensure that all apartments are sold quickly. The offer price is determined on the basis of your construction and planning costs, the data relevant to the property and the comparison prices of similarly located and designed new development areas. Would you like to sell your apartment in a new development area and avoid losses when selling it? If so, you should opt for a professional sale and hire real estate agents who are well versed in new construction and who offer you comprehensive service in all phases of the sale.

Apartments or Houses for Capital Investors

With apartments in new buildings you address two different target groups. On the one hand, a newly built apartment is a good and high-yield capital investment and on the other hand, more and more families are looking for an apartment for sale in a newly developed residential area. In addition to condominiums, new construction areas with owner-occupied homes or terraced and semi-detached houses are also interesting and popular. If you would like to offer a property or an apartment in a newly developed area, you should definitely hire an estate agent and in this way ensure the greatest interest in your offer. The exposé for investors requires a different structure and density of information than the presentation of the apartment to be sold to owner-occupiers. You want to achieve the best price and gain the certainty that your offer will sell immediately in the new development area.

With Lukinski, you decide, in addition to professional brokerage, for a full service support, which includes the examination of the solvency of buyers and prevents unrealizable sales contracts. The completeness of all documents and an exposé geared to the target group are sales-promoting. Especially if you want to address professional buyers in the form of capital investors, your sales appearance should be characterized by professionalism and expertise.

New not More Expensive than Old: The Facts

Many prospective buyers assume that the costs of apartments and houses in new construction areas are much higher than in old buildings. Certainly, the asking price is usually higher than the amount you have to pay for an existing property or a condominium in a second occupation. But the purchase price is only one cost factor and therefore not the only factor when it comes to deciding between an old building and a new building.

In the new building area you acquire a modern apartment in which no costs are incurred for renovation. Newly built areas are state-of-the-art and offer a high quality of living. For you as a potential owner, this means that with the purchase you acquire an apartment ready for occupancy and therefore only invest the purchase price and the costs for interior design work. For existing properties and apartments in old buildings, extensive modernization measures may be necessary and increase your costs to the actual purchase price. It is therefore always worthwhile to weigh up concretely and calculate the purchase on the basis of the market value assessment and the necessary renovation measures. In the end, your decision to move to a new development area or an older property will of course also be based on your own preferences and the idea of your new home or a profitable capital investment.

Move to a New Development?

Tips for potential condominium buyers – Anyone who wants to buy an apartment or house and move in immediately, without renovation and modernization, will generally focus on a new development area. Are you looking for a new building and want to save yourself a lot of time with your own research? At Lukinski, we not only look after owners, but are also happy to support you in your search for a new apartment or house. Tell us your explicit wishes and have a look around our portfolio where we might already have an offer for you. If you decide to buy an apartment in a new development area that is only just being planned, you have a lot of leeway for organizing the financing.

We will be happy to advise you and help you find a favorable real estate loan for your apartment and complete the purchase without complications. Since we at Lukinski work for various owners and developers, we have some attractive new development areas in our portfolio. Furthermore, we already know before construction where new development areas will be built and which target group the apartments should reach.

Sell land: drain

In all areas, the location is what counts most, not only when selling your developed or undeveloped property. With sale of an apartment, sale of a house but also when you sell your multi-family house, the location is a central valuation factor for the selling price of your property. Selling privately or “free of charge” and without an agent carries risks and makes the sale as well as the entire transaction (valuation until notary and contract of sale) prone to errors. Selling real estate needs a good network of buyers, often real estate is not presented publicly, but only internally as off market property.

When selling a property, similar questions arise as with a house sale. However, there are also some other points worth mentioning here. With a property it is to be paid attention to whether it concerns building land or building valuation land. In the latter case, the land must first be developed by the respective municipality. Only when there are connections for water, gas, electricity and sewerage, may construction work be done on the property. Building plots are usually more valuable than building land.

A professional exposé and meaningful pictures are the basis for selling a property. By listing the data and photos you establish the first contact to prospective buyers and lay the foundation for requests for viewings. If your description does not contain enough information or if the pictures leave questions unanswered, the interest will be lost or you will have to expect a large amount of individual questions.

Procedure in short form: Pictures until credit check

Another important point is the sales-related documents. Procuring them costs a lot of time, money and nerves. But without the important documents you cannot offer your property, so you cannot leave this part of the organizational tasks out. To simplify the sale and to offer your house with all relevant documents, it is worthwhile to engage an estate agent.

If your property attracts interest, potential clients will be waiting for a quick response and assume that you can be reached by phone and online.

With your assignment to real estate agents, you transfer all tasks from preparation to the sales phase to the conclusion of the contract to an expert who will take care of the brokerage of your property and who will find a suitable buyer for your property.

Foreword – Free tip? Yes!

All my tips in this guide are free of charge for you. As real estate agents we mediate properties starting from 1 million euro Verkerhswert, under the category luxury real estates. We are happy to give you tips and tricks for your sale, free of charge, explained in detail and step by step. Also pay attention to our links, here you will find more detailed information on the individual topics. Should you wish to sell your property with us: Do you know what our unbeatable advantage is? We independently reach more than 250,000 readers per month, which means 3 million people per year. We are independent from common real estate portals and reach a solvent, special target group. In addition, we offer internal buyer groups and investors in our Off Market area, to whom you have no access via usual offers. Read more here: Real estate agents.

Sell land: Built-up & undeveloped

Just like the sale of a house, the value of the land is also determined. As a rule, the municipalities determine the so-called standard land values every two years, which have resulted from the sales of other plots of land. However, these standard land values are not binding for the sale. The location and transport connections of the land also play an important role in pricing. Building plots in sought-after residential areas achieve higher prices. Also those plots of land that are oriented to the south have a higher sales value. Then you have to find a buyer. Nowadays, this usually happens online.

Basic questions when selling

Before going deeper into the subject matter, laws and the like, we first deal with more general questions: How much tax is payable on the sale of real estate? What do you need to sell land? Is it possible to sell land without a notary? Is the sale of land taxable?

Let’s start with potential buyers or interested parties. In the end, they finally decide whether to refuse, accept or even outbid a purchase price.

Checklist: What do buyers want?

When searching for a suitable prospective customer, the following aspects can be taken into account:

• Type of land
• Use possibilities
• Plot size
• Inclination of the property >/li>
• Urban or rural location
• Transport connections

Use options: Building land, field or forest land

The nature of the property also determines its possible uses. Is it building land, agricultural land or forest land. The size of the land is usually given in square meters. In the case of large agricultural areas, hectare specifications are common. The slope of the land is meant by the gradient of the land. This is especially the case with slopes.

Plots of land located in cities offer different possibilities of use than plots of land in rural areas. This is especially true for the type of development. In addition, transport connections also play an important role. It is of primary importance mainly for building sites or commercial properties.

Arable land or built-up area in the city center:

Visualization: new construction project after sale.

Checklist: Prepare land sale

Selling a property in the hectic of everyday life is quite demanding: planning and thoughts as well as discussions, as you will see in the next two checklists for preparation in house selling.

Owner questions before the sale

Time expenditure, appointments, creditworthiness and inspection. As a real estate agent, you know how much work is involved in selling a property.

Here it is particularly about experience in real estate trade, in order to avoid risks and errors in the house sale in the apron.

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The company is also actively involved in marketing the land. The right platform must be found or not, keyword off market real estate. In addition there is the time planning for the sales, from preparation over advertisements, photos, portals, answering prospective customer inquiries, date arrangement for inspection, examination of the soil quality of the potenziellen buyers or investors, purchase price negotiations, sales contract, taxes and much more besides.

9 simple steps for selling a house:

1. How well do you personally know about the sale of houses?
2. Have you sold a house before?
3. Can you create a meaningful advertisement (online and print)?
4. How do you rate your negotiating skills in local pairings?
5. Would you like to let any unknown person into your property?
6. Do you want everyone to know about your sales intentions? Tip: Our Off Market Real Estate
7. Are you ready to deal with the legal requirements necessary for the sale of the house?
8. Are you willing to take over the time and work involved in marketing your house yourself?

Tip! Buyer network and investors

One reason why many decide to use a real estate agent is, besides risk minimization, the buyer network. Particularly with properties, we recommend that you market your property not only regionally!

Real estate investors are looking for interesting objects, including in particular plots in sought-after locations, but also in locations with development potential.

Negotiations will be more intensive, but the profit from the sale of your property can increase accordingly, worthwhile.

What is my property worth?

This question is at the very beginning. To publish an offer, you need a price for the land. But determining the offer price is not that easy. In addition to the basic material value of the property (if your property is developed), other factors are also included in the selling price.

The market value determination as the foundation of the sale

In this respect, a valuation is the focus and lays the foundation for a price that corresponds to the object, the storage-relevant information and the infrastructural embedding.

Based on the determined market value, you can rule out the possibility of overvaluing the property or advertising it at a price that is below the real value.

Due to the rising real estate prices, you should have the valuation carried out directly before the sale and refer to information on the market value that is not known to you and that dates back several years.

Smooth processing of the property sale

Your advertisement is published and generates interest. Now the sale of the property enters a phase in which perfect organization and scheduling become important. Viewings must be planned, timed with you and the prospective buyers, carried out and evaluated.

If an applicant expresses serious interest, the real estate agent checks his creditworthiness and obtains the self-disclosure including a confirmation of financing. By checking the financial background of potential buyers at an early stage, it can be ruled out that problems will arise shortly before the contract is signed.

Tip! Sell Off Market (not public)

Off Market means that your property sale will never be publicly visible. Your property will only be recommended to an internal, solvent group of buyers with an ideal constellation. Off market sales are especially claimed by prominent persons who want to keep the sale as well as address, photos and much more secret. Also private persons fall back on the service, for example if the family should not know anything about the upcoming sale or the neighbourhood. For such a discreet, off market sale you need a renowned real estate agent with a good network. Your advantage: Nobody will know about the sale.

• Sell Off Market

Valuation: Realistic prices increase the revenue

There are many questions to answer, the best answer is to have an expert at your side for the real estate valuation.

Which price is appropriate and realistic for your property, with or without real estate? If the purchase is not too long ago, the purchase price at that time can be a first indication. Comparable properties from the online offers of the regions can also provide a vague estimate.
If the value is too high, the property can “burn”, because it remains too long on the market and something seems to be wrong with the property.

Often the price is lowered, which means that the actual revenue potential of the land is lost – you are missing out on good money. This is also confirmed by a study conducted by the savings banks in cooperation with FlowFact AG and the IIB Dr. Hettenbach Institute. The study found a connection between marketing duration, sales price and marketing price. The study confirmed that the proceeds are greater and the marketing duration shorter if one relies on a realistic estimate when evaluating the property.

Thus, the professional assessment by experts of the market value of the property is highly recommended for a smooth sales process.

• Valuation by appraisers or experts (real estate agents)
• Revenue potential loses through price reduction, with too long insertion

Market value, mortgage lending value and real value

Different property values are used as the basis for valuation. The most important are the market value, the mortgage lending value and the real value. In principle, the market value, also known as the market value, is determined in a property valuation or real estate valuation.

Frequently used methods for determining the value are taken into account:

• Objective value
• Loan value
• Unit value
• Ground standard value
• Soil value

What valuation method for my object? Property + real estate

Three standardized methods are permitted for determining the value of the property by experts and appraisers: comparative value method, real value method and capitalized earnings value method. Which method makes sense when depends on the property. If it is a property, different valuation methods are used than for a building. Different valuation methods are also used for owner-occupied and rented properties. In the case of objects in compulsory auction, the value appraisals of the real estate can be viewed at the responsible local courts – often online. In this case, the owner’s consent is not required and any interested party can view such an appraisal free of charge.

Property Value Ordinance (ImmoWertV)

Until 1988, real estate valuation was based on the German Valuation Ordinance (WertV). In 2010, this was replaced by the German Real Estate Value Ordinance (ImmoWertV). The new law is intended to standardize valuation once again. With the adoption of the new regulation, the legislator also had foreign investors in mind. The ImmoWertV regulates binding terms and procedures for privately commissioned and publicly appointed experts. It is also binding for expert committees for real estate valuation.

The ImmoWertV distinguishes between the:

• Valuation of real estate and the
• Value determination of buildings

Good reasons for an evaluation by experts

If the property value is of interest, the market value must be determined. If the property is to be sold, if a divorce is pending or if inheritance matters are involved, the market value of the land is taken as a basis. The market value is also the basis for the value to be negotiated when granting loans and other forms of asset distribution. In case of a division of real estate assets (divorce, community of heirs) a price range is unsuitable. For this reason, a concrete sum must be stated when valuing real estate within the framework of market value assessments. This market value refers to the date determined in the expert opinion.

In the case of a sale of land, the precise value is less decisive and often the determined value of the land is quantified with a price range. When selling land and buildings, the regional market and supply and demand play an important role. Depending on the sales strategy, the comparative or market value determined is used differently. A basic distinction is made between sales at a fixed price and sales of land by means of a bidding process. The “perceived value” of the property should never be included in the marketing basis. If the selling price is higher than the market value, the buyer has to provide much higher equity than necessary.

Valuation of developed and undeveloped land

With the comparative value of the IPV, an offer price can be determined more precisely. In contrast to the comparative value, which is compiled by the real estate agent, the market value is the exact price that a property can probably achieve on a certain key date. What is included in the market value is regulated in the Building Code (BauGB). In order to determine the market value of a property, the location, condition, equipment (in the developed state), but also legal circumstances are taken into account. The term market value is used synonymously.

In a property valuation, the land value is determined. The determination of land value is based on the comparative value method and the use of suitable standard land values. In accordance with the German Federal Building Code (BauGB), expert committees must be formed to calculate the land values. These expert committees are composed of independent experts as well as an employee of the tax authorities.

• Tips & details: valuate property

The value of the building site

For the evaluation of building plots, the standard soil values provide a point of reference. The standard values indicate how much a square meter of space in a certain location costs on average. Concrete characteristics of the property are not included in the standard land values. Since only an average of the regional location is used for evaluation, the standard land values can deviate greatly from the actual value of the property.

In order to determine the value of the building site, it is necessary to inspect the extract from the land register. This excerpt, which is available from the land registry, contains all entries in the land register for the property and corresponds to a history of the property. However, only the seller is entitled to request the extract from the land register. The extract from the land register ensures that the seller has corresponding rights to the property and is actually allowed to sell it. If several entitled persons are registered, they can only sell their respective shares. Existing restrictions regarding the use of the land are also entered in the land register extract (e.g. land can only be built on for residential purposes). For buyers and sellers, the land register excerpt is indispensable for the valuation, division or sale of the land or property.

Another important point in the valuation is the location of the land or property. Criteria for the valuation are:

• The macro location, i.e. the region or the city district
• The microlocation, the immediate neighborhood of the property

The evaluation takes into account, for example, the neighborhood’s social milieu and its infrastructure. Even if good transport connections to shopping, school and industrial areas are not planned until the future, this can already have an impact on the property valuation.

Property valuation in the focus of investors

In addition to the standard valuation, the profitability of a plot of land or a property is of particular interest to investors. The profitability of a property refers to its development in future years. Since the boundary parameters of a property and the valuation made on a reporting date can change at short notice, only an estimate of the expected profitability is possible. The “location” factor also receives special weighting in this estimate. In a study, “Die Welt” (German newspaper) has taken into account the development of the macro locations of all German districts until 2030. A further focus of future performance is the “renovation backlog”, provided that above-average maintenance measures are expected. If the marketing of your property is to be aimed particularly at investors, further criteria are required to assess the investment offer. In addition, the form and framework of the financing are also important for investors in a property valuation. In addition, the reputation of the project developer is also important.

Taxes on land sale: Overview

Taxes are payable on every sale. Of course this also applies to real estate.

Acquisition tax, speculation period, sales tax, trade tax

Since 2012, taxes of 25 % are due on the sale of land. This applies to the profit made from the sale of a property. In principle, a speculation period of ten years also applies here. The profit is calculated as the difference between the acquisition costs and the sales proceeds.

There is no sales tax on the sale of land. Trade tax is only payable by businesses if the purchased property is counted as business assets.

In the case of large plots of land on which no construction projects are possible, a division is also advisable. In some German federal states, however, special official approval is required for the division of a property. The public building authorities or a civil engineer can provide information on this.

Building right: Later development of a property

The building law is the basis for a later development of a property. For this the building authority needs some documents like:

• Marking
• Floor
• Flat piece
• Outline
• Legal charges
• Registered building loads
• Information about adjacent properties

Marking: Real estate cadastre

A markung is a unit of area that can be found in the real estate cadastre of a municipality. The demarcation describes the ownership of a plot of land and is registered in the land register. The term cadastral plot designates an open area, usually an agricultural area.

A parcel of land is an officially surveyed part of an area. An outline sketches the respective plot of land in terms of area.

Grundschuld (former mortgage): Legal encumbrances

The legal encumbrances on real estate include first and foremost the mortgage, the land charge, the annuity charge, the life annuity, the easement, the usufruct and the real charge. The mortgage used to be a common form of loan security. Banks in particular have used these possibilities to secure loans.

In contrast to a mortgage, the land charge is independent of a claim to be secured. The annuity charge is a different type of land charge and secures payments. However, these payments do not repay the debt, but are rather to be considered as interest payments.

Leibrente, usufruct and rights

In the case of the life annuity, a piece of land can be used as collateral. The life annuity as such is a contract under the law of obligations, which can be enforced in given cases. An easement stipulates that a neighbor may use the land or that the land owner may not carry out certain things on his land. This is mainly the case with transit permits or when a building ban is to be registered.

The usufruct regulates the use of the land. The usufruct gives the usufructuary all rights as the land owner. Only a sale is prohibited. Real estate includes all actions to which the owner of the land plot commits himself. A real charge enables a creditor to auction the land.

Building development in settlement:

Large construction site industrial park:

Costs, expiry and land transfer tax

There are also some additional costs that have to be considered when selling land. These include first and foremost the land transfer tax. It is different in the individual federal states. In Hesse the tax rate is currently 6% of the purchase price. In the federal state of Rhineland-Palatinate it is currently 5%.

Land transfer tax at purchase price 500,000 Euro

Source: real estate transfer tax table by Alex Fischer (Germany).

Broker commission and upper limits

In addition, there is the broker commission. The amount of the brokerage fee is not regulated by law in Germany. Usually the buyer usually bears this burden. Sometimes, however, the costs are shared between buyer and seller. The amount of the brokerage fee is regulated differently in the federal states. However, there are upper limits.

In the federal state of Rhineland-Palatinate, the usual brokerage fee is 7.14% and is divided equally between the buyer and the seller. In Hesse, the broker’s commission is 5.95% and is borne exclusively by the buyer.

Costs for the notary public

In addition to these costs, there are also the costs for the notary. The amount of the notary’s fees is uniformly regulated in Germany. The basis for this is the so-called Court and Notarial Costs Act. However, these notarial costs can be lower when purchasing building land.

Whoever acquires a property pays the necessary notary fees. If a building is erected on this property, this circumstance does not constitute a further purchase and does not fall under the obligation to pay notary fees.

Procedure of a notarial act

A notarial certification always follows a certain scheme. For the time being a date is chosen for the notarization. At this appointment, not only the notary but also all contracting parties must be present in person. The notary reads out the purchase contract. Change requests can then still be made. The notary decides whether the desired changes are also possible. Afterwards the purchase contract is officially signed by the contracting parties and the notary.

The notary then ensures that the purchase is recorded in the land register. In addition, the tax office is informed about the purchase, which sends the buyer the land transfer tax assessment. Finally, the notary sends the buyer his fee note.