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

The right property abroad: Paris, Alsace or Côte d’Azur?

The decision has been made and you have decided to buy a property abroad in France? Then be sure to read this article, because we offer you helpful tips. In order for your search to be successful, you first need to discover the right online portal for you. Although many online portals have the same basic structure, different filter functions and the focus on the country France can make a difference for the selection.

The most beautiful residential areas France

As everyone knows, France has various charming cities and Mediterranean beaches. No wonder that many do not immediately know where to start looking for a property abroad in France. While there are various beautiful places to live, not all places to live will satisfy your desires. For this reason, we have picked out 5 different places to live in France to help you make your choice.

Investing in real estate: France

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

Toulouse: The pink city

Toulouse is located in the southwest of France and is the fourth largest city. In Toulouse there are very many buildings that are made of red bricks and for this reason it is often called the “pink city”. Not only is it often very windy here, but there is also no shortage of tourists as there are many places of interest. Toulouse is also a good starting point for those who want to make a career. That is why there are also countless students.

Toulouse city video with resident

Map & Location

Paris: City of Love

The city of love. Just about everyone wants to have been there at least once in their life. You’ve already been there, fallen in love with the city and are now considering buying a property abroad in Paris? One thing should be clear to you right from the start, especially with this city: Paris is very expensive. But Paris is not for nothing one of the most famous cities in Europe. Here you will not only find good French cuisine, but also culture and art play a significant role. No wonder that the city seems very crowded. However, you still have the choice whether you want to live directly in the hectic city or in the somewhat quieter surrounding countryside. While the surrounding countryside is more often chosen by families, students often like to choose the city centre.

Paris from above: Video

Paris Map & Location

Eifel Tower 360°: International Relevance & Landmark

Nice: Port city

The port city of Nice is particularly popular and there is often a lot going on here as well, because there is a large shopping mile and the nightlife is not neglected either. Families therefore like to choose residential areas that are a little further away from the centre. If you are interested in what sights Nice has to offer, you will mostly come across museums and famous old buildings. Should you decide to buy an overseas property in Nice, you will benefit from plenty of sun and beach. Here you have the opportunity to unwind and enjoy the good weather.

Video

Map & Location in France

360° harbour view

Bordeaux: City on the Atlantic

Bordeaux is a very popular city to live in – but why? Quite simply, this city fulfils all wishes. On the one hand you have the city life and many career opportunities and on the other hand it is not far to the sea. So, should you buy a property abroad in the middle of Bordeaux and have too much of the hectic city life in between, you can just grab your car or bike and be at the sea in not too long.

Video

Bordeaux: Map & Location

Lyon: Little Paris

The city of Lyon is often known as “Little Paris”. Students are especially drawn to this city, as there are countless universities here. The advantage of Lyon? Compared to other cities, such as Paris, it is much cheaper here. Lyon has a lot to offer. Besides shopping and nightlife, there is also a charming old town and great French cuisine. Since it is only “little Paris”, people here are less stressed and hectic and thus often more open to be found. If you are interested in a property in Paris, but find it too expensive, or if the hectic pace of life makes you doubtful in the long run, Lyon could be the perfect alternative for you.

Video

Map & location: Lyon

Monaco and Monte-Carlo: principality

If you like the French Mediterranean coast, you’ll love the Principality of Monaco. As in many exclusive places in this world, it is not so easy to buy a property in Monaco. Those who are often in Kitzbühel in winter, for example, know that one has to live in Kitzbühel for 5 years in order to be allowed to buy a property or a plot of land. But why does a city council do such a thing? It is mainly to protect the residents, because the more “speculators” come to such a relatively small town or principality, the greater the vacancy of properties. Used once a year as a holiday home or never if the property is considered a pure speculative investment. But Monaco also wants to protect itself from this by such regulations. Accordingly, there are laws that clearly regulate the acquisition of real estate and land.

• Buy property Monaco

House & Apartment for sale in France

From the valuation to the speculation tax. In this guide you will find all the important factors simply explained. Learn step by step the procedure in the apartment sale to be able to answer the question: Selling with or without an estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation to the offer price to the individual marketing, from “advertising” to internal customer network and off market real estate sales.

• Sell apartment
• Sell house
• Sell land
• Sell property

Buying: Portals for cheap real estate

Real EstateScout24

Everyone knowsImmobilienScout24. This real estate website brokers properties all over the world. Here you will not only find properties for sale, but also if you are looking for a property that is rented, you are exactly right here. If you are looking for a property on ImmobilienScout24, you will benefit from a clear presentation and also the popularity of this portal.

Green-Acres.com

This online portal focuses on France, Portugal, Spain, Italy and Greece. This could be the right place for you if you are already sure that you want to buy a property abroad, but still doubt whether France is the right country. You have the possibility to make comparisons, which can concern the price, the area or also the location.

Franimo

As the name“Franimo” suggests, this online portal focuses solely on France. Accordingly, this website has a lot of properties for different places in France to offer. If you haven’t found a favourite place in France for yourself yet, you can read our place recommendations further down in the article beforehand.

AuSud

The online portal“auSud” also only deals with the country of France. The most important information about a property is clearly presented here in a table and there is also a small description of the property. You can specify the price range from the outset and also the location.

Immowelt

The portal Immowelt mediates real estate all over the world and for this reason also has a large offer for France. Sellers have the opportunity to create clear advertisements for their properties. The contact is usually directly under the ad and you have the opportunity to immediately contact the seller.

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Buy a holiday home
• Foreign property Italy
• Foreign property Spain
• Foreign property Mallorca
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets