Dangers when selling: What to watch out for! Checklist

Before we get into the material errors, risk and dangers, importantly:

Sales and procedure: get to know step by step

Before the mistakes more basics?

In our great guide on the subject of selling property and selling real estate, we have already discussed many aspects that matter when selling a house, apartment, land & Co. Whether real estate or property, is a big difference. We have even more specific guides that deal explicitly with the house sale, apartment sale, land sale and even the sale of villa and apartment building.

Now it’s not about the process, it’s about the mistakes that occur in the process from preparation to the sales phase!

Everything begins, with many questions. And that’s a good thing! Because questions mean that you are not just superficially concerned with the process of selling real estate.

Price, marketing, documents & Co.

One tip in advance, always ask yourself questions like these. This is because you will quickly realize that selling real estate is not a simple and straightforward endeavor. Therefore, it is good that you inform yourself now, ideally, early about the sale of your property.

• When should or must the sale be completed?
• How do you value your property for a solid asking price?
• Which marketing strategy is used?
• How do you ensure your accessibility to prospects?
• What information do you provide via email and on the phone?
• How do you make sure the buyer’s financing is in place?
• What documents do you need to have ready?
• When will the purchase price be paid / the property handed over?

Questions upon questions, let’s go through the typical 15 mistakes step by step.

Too little time planned for sales

Little time? Pressure is already coming – mistake number 1: Many who sell their first property assume that everything will happen very quickly! After all, living space is scarce. Even if everything possible is done in the marketing, from newspaper ads to real estate portals, some properties are real slow sellers for years.

Quantity is not everything, quality is what counts.

In fact, real estate loses its attractiveness massively, especially due to mistakes. Too many portals, too many brokers, advertised too long – why? This is exactly the question prospective buyers ask themselves and quickly switch to the next offer. After all, they have the free choice. The price pressure begins. If time pressure comes into play because too little time was planned for the sale, many sellers have to accept losses.

Pressure from compulsory sale: relocation, new financing & Co.

If the time is short, for example when must be sold (!), by private or professional reasons, there is often only one way, a significantly lower purchase price. Accordingly, the losses, if the time pressure increases, are significant.

Tip: Always plan your real estate sale early, at least 2 months in advance

But pressure can also arise because other loans must be serviced by the sale. But perhaps the new property is already financed and accordingly the old property must be sold now, immediately, as described here in the article sell house fast.

Time pressure is never good and only brings disadvantages for real estate sellers.

The wrong time to sell

Error 2 – In principle, there are 2 parameters for the time factor.

Parameters 1) at what time of year is best to sell, so when are people looking for real estate? Also, many wait, because 2) after all, the value of the property increases every year.

1. Selling at a certain time of year
2. Selling after appreciation

But, when is actually the right time to sell a property? Many people know that the value of their own property, whether land, condominium, house or apartment building, will generally continue to rise. Due to economic factors (depreciation of money [inflation]) and of course because living space is scarce, especially in cities like Hamburg, Munich but also smaller ones like Kassel, Düsseldorf or Braunschweig. The population is growing due to immigration and people are drawn to the cities and prices rise accordingly, year after year.

Factors of permanent value enhancement:

1. Inflation (devaluation of money)
2. Population growth due to immigration
3. Urban exodus, many move to cities and away from the countryside

Statistics: House price development (example: Germany)

As can be seen here, the almost linear increase in house prices in Germany over the last 20 years. In the statistics or the diagram to see the development of house prices in Germany in the years from 2000 to 2020 (2015 = index 100).

You can find more statistics at Statista

All-Time High Effect

In the stock market, this effect is called all-time high, which means that due to the typical economic developments, including fiscal policy, but also the increasing world population, the amount of money you get for your property increases. Just compare the real estate market with the DAX (German stock index).

So let’s look inside also the appreciation that happens every year is a good year (aside from crises like pandemics).

Seasons matter?

Spring, summer, autumn and winter, does it make a difference when selling real estate? When it comes to the seasonal factor, you might think that more people move in the spring and summer and that more properties are bought accordingly. But in fact, renters look for homes relatively spontaneously, while buyers go through a longer-winded process. Some look for not just weeks, but months and years. After all, the real estate is not “only” about a yield property for renting, for a large part of private buyers, the condominium, the terraced or single-family house is the retirement provision. It must therefore please, because one will stay here for a long time.

Due to the relatively long property search cycle, the time of year factor does not play a major role with buyers.

A small one though, a very small one. If you are absolutely looking for an answer, then I would recommend the autumn for the sale of your property. Over spring and summer people make new plans, which then have to be realized in late summer / autumn at the latest, before winter comes.

Inaccurate description of the property

Mistake 3 – The exposé is written unprofessionally – The more inaccurate the property description, the fewer prospective buyers your property will attract. Instead of a long description, here are the most important key data that a good property description or a complete real estate advertisement must contain:

An object description should at least contain this information:

• Meaningful title
• Address, or location and district
• Living space
• Footprint
• Apartment type / House type
• Available from when
• Number of rooms
• Bedroom
• Bathroom
• Garage / Parking space
• Internet

Features and Extras:

• Building fabric & energy certificate
• Year of manufacture
• Modernisation/refurbishment
• Object state
• Equipment
• Heating type
• Energy source
• Energy certificate

Documents in the first step:

• Floor plan

We as investors are no different!

A practical example: When we are offered real estate (condominiums to apartment buildings), one would think that sellers send important information. In reality, however, it is usually only a concise sentence: “I want to sell”. No photo, nothing. Accordingly, people don’t even take the time to answer such offers. Why? If there are 10 offers, 9 are easily accessible and with information (floor space, living area, room layout, for example). This is also how buyers act. There are many offers in the city, which one is appealing and attractive at first sight, so it is opened / read and which one is not?

Complete and comprehensive information is the A&O. Therefore, you must always pay attention to an accurate object description, the second important factors exposé, the photos!

• Real Estate Exposé: Templates

Unfavourable photos in the exposé incl. example

Error 4 – Just like Exposé, by bad photos the demand sinks – We come first to the very most important, the photo and pictorial material of your real estate! It doesn’t matter if it’s a luxurious villa, a condo in the city center or a single-family home on the outskirts of town. Here I want to show you a few standard mistakes with examples.

1. Villa from the outside: Error picture detail
2. Villa from outside: Error image noise
3. Detached house from the outside: blurred and overexposed
4. Condo from the inside: Detail and color
5. Condo from the inside: Poor exposure

Here you can see the first, simple example. Just look on portals like Ebay, there you will see many of these photos. Here the mansion from the outside with errors in the image detail. In addition, the camera did not have a good resolution. In the after example, you can see the difference immediately.

Condo before.

Condo after.

Only when information and visual stimuli come together does real interest in the object develop.

The other 4 before / after example can be found here:

• Real Estate Photos: Errors and templates

Wrong target group and strategy

Mistake 5 – The term target group is otherwise known from marketing. A target group describes a group of people for whom a certain offer is of particular interest. But why is the target group so important?

Every person who needs to know about a real estate listing takes time, so it costs cash.

Many who sell their property privately, put it immediately on eBay and other portals. For small units, e.g. condominium with 70, 80 square meters absolutely okay, if someone really wants to sell on their own from (and risk). But everything costs time and thus again money.

Two practical examples directly: For example, if a new building with student apartments is to be advertised, the classic newspaper would probably not be the best choice. Likewise, an exclusive villa is out of place in a real estate portal, everyone can see details of the villa, save pictures and videos of the premises. Which buyer of a luxury real estate wants that the own villa is still somewhere findable later? Think above all of the security aspect, security is very important to sellers and buyers, in this segment. When real estate is sold anonymously, it is called off market real estate.

The target group address begins with:

• Broker selection: Buyer groups and expertise
• Marketing strategy: offensive or off market
• Channel choice (media): newspaper to social media
• Object description: Especially the title

Here’s another little overview of how different the marketing of different types of houses and apartments can be.

Marketing strategy basics in comparison:

• Apartments for students
• Condominium for young couples
• Terraced house for the family with child
• Detached house for families
• Loft apartment in the city centre
• Villa for entrepreneur in the suburb
• Apartment house as investment property
• Building plots for project developers
• Properties in need of renovation with 50+ units
• Forest land or agricultural land

Properties are as different as their owners. Accordingly, the marketing strategy must also be chosen individually, from the classic newsprint to the modern campaign in social marketing. Tip: Read more about social media marketing for real estate here (external). So every type of property needs the right marketing strategy, from absolutely anonymous and sales to high-reach marketing on portals.

We specialize in the anonymous brokerage of real estate, directly to family offices, real estate investors, construction companies and developers. Read more about our purchase profile here.

Value of the property is incorrectly assessed

Mistake 6 – If the price is too high, your property will not find interested parties – Hardly anyone has experience in selling a property and when the first visit to the real estate agent is due, most make this typical mistake, which later leads again to the property not being sold promptly or not at the desired asking price. Important:

An offer price is not a selling price!

What is the error, the incorrect valuation of a property, in the specific case?

As already described, only a little over 271,000 properties are sold in Germany each year. Accordingly, it takes a long time until all 83.7 million inhabitants have had the experience of how the sale proceeds. Conversely, it means hardly anyone has experience with the sale of apartments and houses. Calculated briefly:

• Inhabitants / sold properties = years until everyone has the experience from the sale
• 83.700.000 / 271.000 = 308.85, so round about 309 years (impossible)

So when it comes to real estate appraisals by real estate agents, there is only one thing left to do: trust.

Danger. The real estate valuation is too high

Comparison offers – so that you do not trust the first real estate agent, you get several comparison offers. A very good idea, but also a deceptive trap. Let’s take a look at why:

• Broker A values your property at 980,000
• Broker B values your property at 945,000
• Broker C values her property at 1.15 million

Which real estate agent do you think will win the bid to sell your property? A large proportion of sellers will now opt for estate agent C, with the large offer of 1.15 million euros. This effect is all too human, after all, there is at least + 170,000 more than the comparison offers, so over 10% more on the sale.

Now the vicious circle begins, the property has too high an offer price. Of course, the real estate agent advertises it on all possible portals so that the deal somehow comes about at the stated price. But it will not, if the offer price differs from a realistic market value. A little room for negotiation is of course always ok, but as soon as the sums are too high, interested parties jump off after a few seconds. This means you don’t get an inquiry – accordingly, many don’t recognize the underlying error: the offer price is too high. Here we come back to the exact object description, which also includes a solid, well-founded offer price.

Notice:

Realistic sales prices (market value) accelerate the sale

If you want to sell your property, don’t just look for a “high price”, get involved with estate agents who also see critical aspects of your property and don’t just promise you the moon in order to get the contract.

Dangerous, because many owners also see a high emotional value in their property. The potential buyer, however, has no emotional attachment to the offer.

Trust in real estate agents who also take into account critical aspects in the calculation.

Tips on the subject of real estate valuation can be found here, among other places:

• Value real estate

Here’s some more detail:

• Valuing property
• Rate apartment
• Rate house
• Rate apartment house

Lack of documentation and evidence

Error 7 – Documents are not available – e.g. floor plan, living space calculation or the extract from the land register). The extract from the land register is important, for example, because it is direct proof that you are the owner of the property for sale. As soon as the first, solid prospective buyer comes knocking, you need these (following) documents. Here is a simple and clear checklist of the documents and papers you need when selling a property:

Documents for real estate (general)

The general documents for the sale of real estate:

• Official cadastral map of the municipality
• Land register entries and documents relating to registered land charges
• Floor plans / construction plans of the property, building description and the building permit certificate
• Living space and usable space calculation
• Open Space Design Plan
• Building specification
• Building permit and building plans
• Property tax assessment notices
• Energy certificate of the object

In addition, there are the photos of the property, as already described above.

For condominiums there are a few special features, as you (usually) do not own all the condominiums in the property. If you are the owner of several condominiums and want to sell them, take a look at our purchase profile for real estate!

Documents for condominiums

For condos, you’ll need to get a few more documents.

• Declaration of division
• Caretaker agreement
• Business plan
• Partition plan (showing special and common property)
• Common rules of the community of owners
• Minutes of the owners’ meetings
• Service charge statements
• Amount of the maintenance reserve

Property is not prepared for viewings

Mistake 8 – The eye eats with you! Not only with the previously described real estate photos, as a visual, first impression, also at the viewing everything should be prepared for the visit. Here we are again with the two sales factors: numbers and emotions. The numbers have usually already convinced before the visit, through data sheets, exposés and other, direct information exchange. Now it’s a matter of presenting the property visually and haptically.

It’s a bit like business meetings, a suit expresses that you’re making an effort and paying attention to detail. If you show up to a meeting in sweatpants and sneakers, you usually lead a casual life. Along the lines of, “So if something breaks, no problem, you can do it later.” For first time sellers maybe this comparison from everyday life, on average car sales are 23% higher if the car has had a thorough cleaning beforehand, outside, inside and engine bay.

Details such as order, daylight & Co – It is the same with the inspection of house and apartment, as well as properties, here everything should be prepared, tidy and neat. Cleanliness is a point, but also the smell plays a role. For me personally also very important, fresh air in the rooms, even if the properties are in need of renovation. Also important: daylight! As with the real estate photos, daylight has a very special factor, light and brightness are always good selling points.

Viewing always only during daylight

Professional cleaning – The day before the first viewing, it is also advisable to hire a professional cleaning team, so to speak, for the basic cleaning. If the appointments are well timed, it is also profitable to hire a cleaning team that goes into detail once. With only 3 or 4 hours of work, a lot is already done in a house. This in turn has a positive effect on the purchase price to be achieved. For further viewings then a quick check is sufficient whether everything is still tidy. When the value of a car can be increased by up to 23% so easily, it quickly becomes apparent how effective preparation for the viewing can be.

The day before the visit: Cleaning to a high gloss

Psychology also plays a role – In addition, there are many subtleties and also small, psychological details that you can apply depending on the target group. A very general tip is: smile! Who provides a positive environment or ambience, creates a good mood and thus increases the probability of the sale. Going even deeper that just mentioned in passing, a warm drink! The one who offers cool drinks creates a cool atmosphere. A coffee, a tea or a hot chocolate, creates directly a completely different ambience.

Here is one last important tip, you always have to get involved with the buyer’s side. If the buyer is e.g. very experienced in the subject of real estate, I hold myself back as a consultant. If the buyer is inexperienced, I take him or her along, step by step, in the process of selling real estate. Sometimes, however, a very active person may need an active counterpart. Now this is explained very briefly and simply, it just means that the more negotiations the seller has already conducted, the more secure and profitable the sale of a house, apartment, apartment building or land will be.

To recap:

• Cleaning of the interior and exterior surfaces
• Professional support on the day before the first viewing (high gloss)
• Daylight during the tour
• Friendly greeting, smile at the beginning
• Drinks and snacks for the small appetite (also for small talk)
• Responding to the buyer personality

PS: Also think about defects! If these can be repaired in advance, this increases the purchase price. The costs and (!) Effort are omitted for the buyer.

Underestimated effort of the sales process: Inquiries

Mistake 9 – Many first time sellers assume that one or two people will call, come right over for a viewing and a week later the house or condo is sold. However, the sales process is not that simple, as communication times in particular are extremely long and involved. By the underestimation of the expenditure of the sales process, many get under pressure, bspw. if the new real estate is already financed. Time pressure is extremely bad, as already described in mistake 1 “Too little time planned for the sale”. Therefore, it is important that you do not underestimate the effort of the sales process of a property.

This is also where we come back to the mistake of being on many portals at once. Imagine your ad is on Ebay today and you have calculated the price too low. Tomorrow you already have 100 emails in your inbox. Which of them are really interested in the property, really interested? You can’t possibly send 100 replies and then answer queries, make phone calls, all before the very first viewing.

Especially this selection of inquiries in the first communication is a very time-consuming factor in the whole sales process. Finding the few, serious buyers requires a lot of experience and usually a good team in the background.

Negotiation in the sales process: leading the conversation

Mistake 10 – After the underestimated first communication and the very many inquiries, comes another step, which is even more important for the selling price: The negotiation(s)! Who is not well prepared here, which will meet in particular with experienced real estate buyers quickly on people who have a lot to criticize and already the price is in the cellar.

For this very mistake, the entire article is generally written. If you think of the process of selling a property as simple, you are making a big mistake. Just take a look at the table of contents and the various headings we cover here from “Too little time planned for the sale” to “Unflattering photos in the exposé” to “Property is not prepared for viewings”.

Of course, you can acquire knowledge through books, learn how to do it. But this costs time and often works in the first, second and third sale according to the principle “trial and error”. That is, you will usually pay apprenticeship money, by mistakes you make as a beginner.

Prospects stall you too long

Mistake 11 – After the inspection and the initial discussions, or the first negotiation, the detailed negotiations (via email, phone, document exchange) follow. Now comes the next source of danger: Prospective buyers stall too long! Valuable time is lost, the property is burned by long listing time. The big question:

How many viewings do you want to do before the property is sold?

Just as a great deal of time is wasted in the first communication, that is, in the first inquiries, for half-hearted inquiries, just as much time is wasted in conversations.

From the first visit to the exchange of documents and documents, the second appointment, especially for larger properties and objects, a lot of time passes. Some buyers then also put the gun to private individuals, please during the time of negotiations, not to talk to anyone else. This can make perfect sense if you are talking to a very solid buyer, but how can you tell as a private individual?

If then 1, 2 months are negotiated back and forth, with personal appointments, e-mails and on the phone, but then no sale is made, the frustration is great.

You generally notice, a big mistake in most cases:

Sales phase is designed alone

Mistake 12 – Selling privately without a broker and expertise – A private sale always sounds great at first, after all you don’t have to pay the broker!

Did you know that in Germany over 65% of properties are sold with an estate agent? Especially in the big cities the number is much higher, in Berlin for example 80%. There are many reasons to hire a real estate agent, for wealthy people it is mainly the time and anonymity. How time-consuming the process is, we have discussed in detail in the last sources of error. For individuals who have no experience in selling houses and apartments, there are various aspects, e.g. the credit check of the buyers, the initial communication at the beginning of the sale and the selection of interested parties, up to the purchase contract and the errors and pitfalls, which we will discuss later.

You can sell privately, but not the first property. Mistakes quickly cost you 10%, 15% of the purchase price, to put it simply.

In the case of a poor property valuation (see Error 6: “Value of the property is incorrectly assessed”) even much more.

My tip for all first time sellers, work with someone who has experience dealing in real estate. If by some lucky circumstance you later sell a second, third property, you may be a little more in the game. Once you sell your fourth, fifth property, you may be able to go the distance on your own.

Ultimately, the professional cooperation with an experienced real estate agent 1) brings more time and brings 2) more money. It is not for nothing that two thirds of the properties in Germany are sold with an estate agent. Half of the broker’s commission is paid by the buyer anyway (in the case of private properties). In addition, there are the properties that were not officially made with the help of real estate agents, but e.g. with family offices like us, who also mediate, but only in a very small, private circle.

Proof of financing (creditworthiness of the buyer)

Mistake 13 – Buyer’s credit rating not checked – how do you know if a prospective buyer can really afford your property?

In modern business transactions, it is no longer possible to imagine life without checking creditworthiness. The reliability in payment matters is already checked with every purchase with a credit card. Even the purchase by instalment in the electronics market, for example, only works for the customer if the creditworthiness is checked immediately. The classic institution for creditworthiness information of all kinds is Schufa. Since 1927, this private credit agency, which is organised as a public limited company, has been keeping track of people’s reliability in terms of their ability and willingness to pay.

Credit rating a new topic for you? Learn a few basics here:

• Creditworthiness (basics)

Defects in the purchase contract are overlooked

Error 14 – Rights but also deadlines, this aspect around law and laws in the sale of real estate, or in the contract of sale, the property to be sold, I will discuss only very briefly. In case of doubt, you should consult a notary or a real estate lawyer in advance for everything.

Here is just a small example from the German Civil Code (BGB), on possible material defects that you as the first seller may not even have on the screen. If you do not explicitly exclude them in the purchase contract, you remain responsible for subsequent performance.

Example:

Remedy of material defect, exclusion in the purchase contract: Example

This example is from §§ 437 No. 1, 439 BGB and states:

If, for example, there is a material defect in the existing property to be sold and the rights of the buyer due to this defect were not effectively excluded in the purchase contract by you, the buyer can always, in principle, first demand immediate supplementary performance (i.e. rectification of the defect).

When such a material defect exists in a specific case is also regulated by the BGB, more precisely § 434. According to the law, it exists in the following cases: “A material defect exists if the purchased item does not have the agreed quality at the time of transfer of risk.

Burn property: Special for apartment building +

Mistake 15 – Large or exclusive properties in mass portals – Exclusive properties such as villas, large properties such as new buildings, special projects such as land, forest land, agricultural land & Co. – In this article we talk about the mistake, or risk and danger of private sales of larger properties and projects, or land or properties in need of renovation over 30, 40 or 50 residential units.

Comparison of buyer types

Let’s first look at the different types of buyers and how they review and value properties. The word “ETW” stands for condominium. We look at 4 groups of buyers:

1. Group: ETW / house 80sqm ~ 200.000 rather indifferent; means also the buyer side is mostly inexperienced, it is less examined
2. Group: 150sqm ~ 900.000 / critical buyer
3. Group: 200sqm ~ 1.200.000 / researching buyers
4. Group: 250sqm and over 1.5 M / examining buyer
5. Group: large properties, new construction, agricultural land, etc. – special real estate / very experienced buyers, mostly with their own real estate office

Group 1-3, i.e. properties up to 200sqm, are mostly in the regular property market, in which “only” private individuals are interested. The typical marketing strategy here is: A lot, helps a lot. Often 2, 3 brokers are commissioned and the property is already in 4, 5 portals, newspapers, maybe even on social media networks.

Group 4 buys properties over 200 sqm, but still private. Who buys in this segment, is usually already experienced and knows, with building fabric, appraisers and so on. At the latest here it needs the help of a broker in negotiations.

Group 5 buys properties in the flow. 50 units (i.e. apartments) a quarter or even a month. Some investors buy 1,000 units directly, whether in A-location, B-location or even C-location. Properties in need of renovation, former hotels that are converted into condominiums or even forest land, agricultural land, old prefabricated buildings, etc.

Rule number 2, from group 5:

Time is (usually) more important than money

Group 4 and 5 need exclusive intermediaries, anonymous real estate sales, instead of “broad” mass and marketing, with direct line to investors, real estate funds and family offices.

Read more here:

• Mistakes in the sale of large properties

The 15 biggest mistakes when selling an apartment & house – list

Here again in summary:

1. Too little time planned for sales – Little time? Already comes pressure
2. The wrong time to sell – Situation and economy
3. Inaccurate description of the property – Exposé is written unprofessionally
4. Unfavourable photos in the exposé – Just like exposé, hardly any demand
5. Wrong target audience and strategy – For example, student apartment in newspaper instead of social media.
6. Value of the property is incorrectly assessed – properties do not find buyers
7. Documents and proofs are missing – Documents are not available
8. Property is not prepared for viewings – Does not convince prospective buyers on site
9. Underestimated effort of the sales process – So many get under pressure, e.g. if the new property is already financed
10. Sale and negotiation are considered easy – preparation is then only half-hearted and leads to purchase price losses
11. Selling phase is designed alone – selling privately without estate agent and expertise
12. Prospects stall too long – Valuable time is lost, property is burned by long listing time
13. Proof of financing (buyer) – creditworthiness of buyer not checked
14. Defects in the purchase contract are overlooked – rights but also deadlines
15. Burn property – Large or exclusive properties in mass portals

Prefabricated house: What does it mean? Features & Definition

A prefabricated house is an umbrella term for a wide range of house types. Most suppliers of prefabricated houses have a large and extensive range of show houses in their repertoire and you have the choice to pick your dream house. Do you prefer a detached house, a villa or a bungalow? With cellar, garage or carport? These are all important aspects that you should consider when choosing your property. Because a prefabricated house is one thing above all: versatile.

You want to buy or build a house, but don’t know which one is right for you? Then take a look at our guide to house types from A – Z! Here you will find all house types, from bungalow to terraced house!

Characteristics of a prefabricated house: Special type of construction

The special thing about a prefabricated house is the unusual construction method. Unlike a solid house, this construction method is not built on the property, but the individual parts / walls of your house are produced in a warehouse. Afterwards the elements are brought to the building site and only pulled up and fastened. The main material for prefabricated houses is usually wood. However, if you want to improve the weather resistance of the building, you have the option of mixing in concrete or lightweight concrete. Especially the fast construction time and the lower costs are an advantage of a prefabricated house and make this type of building so popular.

Building services: state-of-the-art technology integrated right from the start

As soon as you plan to build a new house, the house should be modern and technically up to date. In contrast to a solid house, you have a big advantage with a prefabricated house. The building services are already installed in the production halls and are planned into the shell elements. You have only one supplier, who takes care of all your wishes. This means that the electrics do not have to be agreed with a third person. The heating systems are also very advanced and energy-saving is built from the beginning.

Advantages & disadvantages of a prefabricated house: costs, construction time & quality

As with any type of building, you should consider the advantages and disadvantages beforehand. Think about how your priorities are distributed and what is important for you and perhaps also for your family. Decide before you start building for a solid house or for a prefabricated house. We have listed the most important plus and minus points of a prefabricated house for you, so that you can make the right decision.

Advantages: fast construction time, reasonable cost & co.

As you have already experienced, the biggest advantage of a prefabricated house is probably the fast construction time and the comparatively low construction costs. The ease of planning is also very pleasant. You will only have one contact person for all topics concerning your house and this will save you a lot of stress and time. The building services will also be state-of-the-art and integrated into the building elements from the outset. The high energy efficiency is also a big plus. Last but not least, the construction method is a decisive advantage. The construction on the property will only take a few days and is not dependent on the weather.

• Fast construction time
• Lower construction costs
• Good plannability due to a single contact person
• High energy efficiency
• Integrated building services
• Construction independent of weather conditions

Disadvantages: Loss of quality and hardly any design options

One of the disadvantages is the limited individuality. With a prefabricated house, you will not have the possibility to have the rooms built according to your wishes and will have to accept restrictions. In addition, the quality of the building materials is not equal to that of a solid house and especially the sound insulation will be worse. This results in a lower resale value.

• Hardly any design options
• Poor sound insulation
• Low resale value

Are you interested in new construction projects? Here you can find more information about this topic!

Energy efficient construction of prefabricated houses

Energy saving and especially energy efficient building is an important topic. In this day and age, everyone should contribute to a good environment and this should not stop when building houses. New buildings are built modern and up to date and there must be a lot of guidelines to comply with. Energy efficient construction is also integrated in prefabricated houses. Here you will learn the most important facts about this topic.

Energy-saving building: modern construction with a savings effect

Have a prefabricated house built: Construction time and sample city

If you decide to build a prefabricated house, you must now consider which type of house suits you best. Rather a bungalow, a villa or a terraced house? You can view all of these in advance in a model city. You also have to plan the construction period. Here you can find out everything you need to know about this topic.

Construction time: fast and uncomplicated

You will have already experienced that the construction of a prefabricated house is faster than that of a solid house. Despite this, you can not determine an exact duration or an exact move-in date in advance. Something can always come in between and the wishes of the customers vary. The decisive advantage of a prefabricated house is that the individual elements are manufactured in a production hall and the final construction takes only a few days and is not dependent on the weather. In order to be able to plan approximately, we have compiled a list with the approximate times per work step.

• Planning: up to several weeks
• Building permit: 0.5-3 months
• Production: 2-5 weeks
• Shell: 1-3 days
• Interior work: 8-12 weeks

Show houses: Pre-inspection before construction

One of the biggest advantages of prefabricated houses is the possibility to visit a show house in advance. You have the chance to see your future home beforehand and decide whether everything meets your expectations. Many suppliers have a small town with show houses which you can visit. Get an idea of their repertoire and take the opportunity to see your future home before it is built. Think about possible interiors and get inspired.

Turnkey house: From planning to moving in

In contrast to a solid house, you as a customer have the possibility to get your prefabricated house in different stages. This results in a high price difference between the houses. One variant would be to have only the individual parts of the house manufactured by the provider, so that you carry out the final construction yourself. This would save you a lot of money, but you would have to have the experience to build such a house. In the following you will learn more about the different stages of prefabricated houses.

Different stages of prefabricated houses: Kit house or extension house

Kit houses: At this stage of a prefabricated house, the supplier does not undertake any construction work on site. He is solely responsible for the procurement of materials. In this case, the customer himself is responsible for the construction and the building site. For example, one could have hollow wall panels ordered to be filled with concrete on site. The handling would be relatively simple and the shell construction would resemble that of a solid house. In general, however, it is advisable that only trained customers should (build) a kit house, otherwise it can lead to severe qualitative defects.

Finished houses: When a prefabricated house is handed over by the provider in a weatherproof condition, it is called a finished house. At this stage, the house is standing, but basic work inside is missing. For example, pipes or floors still need to be laid or non-load-bearing walls are still missing. Should the house be handed over in this condition, the customer saves some money but must still invest a lot of energy and time. Here, too, the builder should bring craftsmanship experience and support.

What does turnkey mean? Advised for the move in!

Once a house is titled turnkey, it is completely built. It is weatherproofed, all plumbing and flooring is in place. The only thing the customer has to do now is to put in his furniture, decorate it and paint the walls if necessary. There are no more personal contributions necessary, but you should still have everything specified in the contract, so that nothing is missing at the end.

Advantages and disadvantages of a turnkey house

A turnkey house is in any case more time-saving. Normally, the construction of a prefabricated house takes between five and nine months and with this option you do not have to deal with the planning and can invest your time in something else. All costs are fixed in advance and nothing unexpected can happen. Another advantage is that all the work is supervised by the provider.

Probably the biggest disadvantage is the cost. If you don’t have the experience, you won’t have the chance to buy the house at an earlier stage and build it yourself. However, if you do have the experience, you will have to invest some time in the construction work and can, for example, go to work less. You will also have little room for manoeuvre when it comes to the layout of the rooms.

Comparison: Prefabricated house or solid house – who wins?

As soon as you plan to build a house, you have to ask yourself one question: Prefabricated house or solid house? You have now learned about the prefabricated house and dealt with the advantages and disadvantages. Now you have to decide for yourself how you would like to build. Building a house is a big investment and we would like to support you in your decision. Here you will find a compact summary of the plus and minus points of the two building options.

Prefabricated house: Preliminary inspection and fixed costs

The advantages of a prefabricated house you will now have learned. In summary, it is faster and the costs are fixed from the beginning. You also have the possibility to visit your house before the construction by visiting a model park. Everything is very well planned and you do not have to invest much of your own time.

• Short construction time
• Fixed costs
• Preliminary visit

On the downside, you won’t have many options to change anything about the house or room design, and even small changes will only be done by a few providers. Also the quality will be worse. Thermal insulation and soundproofing are not comparable with those of a solid house.

• No individual design
• Poorer quality

Solid house: Robust, individual, effort and more

With a solid house you have the decisive advantage that you can plan the house and room design right from the start and adapt everything individually. As long as there are no load-bearing walls, you have the possibility to construct your rooms according to your wishes. Another advantage is the better quality of the materials. This results in a more balanced indoor climate, better sound insulation and a higher resale value.

• Individual room design
• Better quality
• Higher resale value

The higher price and the longer construction time is in any case a disadvantage of a solid house. You personally have to put more time and energy into building the house and therefore have less time for other things. In contrast to a prefabricated house, you also do not have the opportunity to inspect your house in advance and to view it from the inside and outside. You will also not have one provider for all areas, but must clarify with several companies different.

• High price
• Long construction time
• More effort
• No prior visit

Financing with equity: risk premium and alternatives?

Building a house is always a big investment and you should be aware that it involves a lot of money. Nevertheless, you should not forget that real estate is the best investment and therefore usually worth investing in. If you are planning to build a prefabricated house, you will have to talk to your bank about a loan, as you cannot pay for the construction out of your own capital.

You need more information on the topic of home financing? Then you will find here an interesting article with many tips on the subject!

How much equity is required? More favourable conditions and no risk premium

Theoretically, you could build your home with no equity, but this leads to extra expenses and more risk. These risk premiums could be higher interest rates. Nevertheless, financing without equity is discouraged because it makes the loan more expensive over the life of the loan. It is recommended to have an equity ratio of 20 to 30% of the total cost. This leads to more favorable conditions of the credit institutions. From your own capital, the additional costs of the construction are usually paid, such as the land transfer tax or broker’s commission. If these ancillary costs are to be settled between you and the credit institution before the contract is concluded, a risk surcharge is no longer necessary.

Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

Purchase Contract: Definition and Procedure

A purchase contract regulates the transfer of ownership. Legally speaking, one always buys a property, no matter whether it is developed or undeveloped. It contains basic conditions and terms to which both parties must adhere in the purchase process. The parties must both have legal capacity to make the purchase of a property. Note that this does not include the additional taxes which you will pay for the real estate transfer tax in Germany.

Important contract contents are:

• Information on buyer and seller
• Purchase object
• Description of the property
• Purchase price and terms of payment (date, partial amounts, etc.)
• Real estate transfer tax
• Economic transition and transfer of the real estate (date)
• Warranty regulations such as the buyer’s right of withdrawal in case of hidden defects
• Rental and leasing relationships
• Conveyance
• Preliminary remark
• Power of attorney for encumbrance
• Interest on arrears
• Special agreements, such as interior design or renovations
• Other

Legal basis: BGB

The contract is based on a legal consideration, i.e. what is given for the property. This can be money, but also any other economic good that is exchanged for the property. Of course, it will almost always be a certain amount of money, but the consideration could also be another property or the mere promise to pay later.

§ 433 Typical contractual obligations in the purchase contract

(1) The contract of sale obliges the seller of an item to hand over the item to the buyer and to obtain ownership of the item. The salesman has to provide the buyer the thing freely from material defects and lack of title.

(2) The buyer is obligated to pay the agreed upon purchase price to the salesman and to accept the purchased thing.

Extract: §433 German Civil Code (BGB; link in German)

Unlike the contract of sale of movable property, the purchase of real estate (and land or part of land) is not form-free. The regulation on this arises from § 311b of the German Civil Code (short: BGB).

The law requires that such type of contracts must be in writing in order to be valid. Accordingly, you need a notary to make the contract official. Shaking hands and verbal promises are not enough. This is to prevent fraud, a useful documentation process for both parties.

What are the Tasks of the Notary?

In general, the main focus or tasks of a notary are first of all

• Notarization of legal transactions
• Certification of signatures

This results in the following areas of law in particular for notaries:

• Real estate law, such as the notarization of property transfers
• Erbrecht, like the notarization of wills
• Family law, such as powers of attorney or marriage contracts
• Corporate law, such as the notarization of AGs or registration in the commercial register

Usually the notary is chosen by the buyer. At the first notary appointment you will need all important documents ready. The notary will prepare the purchase contract according to the specifications and templates of the buyer and seller.

Approximately one week after the notarization, buyer and seller will receive the notarized purchase contract.

Costs for the Purchase Contract at the Notary Public

The individual items include many individual items, such as the notarization of the purchase contract, which amounts to about 1,070 euros. In addition, there is the registration of the land charge with 435 Euro for the land registry and another 535 Euro for the change of ownership. In addition, there is a maintenance fee, signature certification, etc. In the end you will get out with about 3.700 Euro.

Costs for notary public / land register: ~ 3.700 Euro net

Transfer of Ownership after Full Payment

I want to emphasize this point once again:
Regarding cost allocation: Who pays what? You should make clear provisions on this in the purchase contract. As a rule, the buyer pays the costs for:

1. Fees for notary and land registry
2. Fees for necessary official permits
3. Commission of the real estate agent

As soon as the Purchaser has paid the land transfer tax to the tax office and the purchase price has been transferred in full, the notary public should also have received permission to cancel the “old” land charge.

Then the property is handed over and the land registry confirms the registration of the buyer as new owner and owner.

Make sure to take into account the many hidden and unknown costs when buying real estate in Germany

• Additional Costs with Real Estate Purchases in Germany

Special Features Apartment: Excursus

In the case of purchase of an apartment, the purchase contract contains additional elements:

• Basics as in the sales contract (above)
• Apartment number
• Community regulations, costs of maintenance of common property, elevators, etc.
• Co-ownership share, maintenance reserves for common property or investments for renovation
• Special property, further rooms like cellar, attic, garage, balcony, etc.
• Rights of use for common property
• Special rights of use, privileged use such as parking spaces
• Down payments, at New construction (not yet completed)

Our full guide to saving money on the German real estate market with tax optimization can be found here:

• Saving Money – Tax Optimization on German Property Investment

How does one actually buy a share?

The first decision is:

• What do I want to invest in? Stock or ETF
• Where do I want to invest through? House bank, direct bank or app?

Passive (ETF) or active investor (stock)?

Rather than passive investor in an ETF portfolio (stands for English: “Exchange Traded Fund” and is an exchange-traded index fund that tracks the performance of an index, such as the DAX. In essence, ETFs combine the advantages of stocks and funds in one product, so you can invest money directly in entire markets through ETFs. A real advantage. Or do you want to be a more active investor, in individual stocks. Now it’s a matter of analyzing individual companies to determine which paper you want to buy. In the next step, you need to contact your bank to buy a paper.

House bank or direct bank – what is the difference?

With the bank you have two options, either you go through the classic house bank, such as Volksbank and Sparkasse. Here you can have the purchase processed directly through the banker or online. An alternative is the direct bank as well as comdirekt or degiro, which are usually much cheaper than in a classic branch bank.

The difference between a classic branch bank and a direct bank is that you get in the branch bank, with a contact person, advice. This direct contact person you do not have in the direct bank.

Which banks have the most branches?

1. Deutsche Bank AG (2,984 branches)
2. Commerzbank AG (1,530 branches)
3. Postbank AG (1,092 branches)
4. Unicredit Bank AG (933 branches)
5. Wüstenrot Bausparkasse AG (500 branches)
6. Targobank AG (351 branches)
7. Santander Consumer Bank AG (324 branches)

Source: Banking Association (figures, data, facts of the banking industry).

Trading place, price and KDV (price-earnings ratio)

Buying shares online is easy. After logging in, for example at a direct bank like comdirekt, stock values can be found directly via main menu. The search gives directly a result. Here one can select now, on which stock exchange one wants to buy the share. For example, you could select “Xetra” and conclude the transaction via the Frankfurt Stock Exchange.

If you take the Lufthansa share as an example for today, the daily price is 26.915 Eur (+1.64%). But here you can also see the KDV, the price-earnings ratio, currently at 6.3306. The dividend yield based on this price of 2.6

Price: 26.915 euros
Change: +1.64%
KDVe: 6.3306
DIVe: 2.60%

Development and performance on long term

Further down in the search results one then finds charts, mostly of the last 3, 6 and 12 months. In addition to the overview, one also has financial ratios. Here one finds the performance of the share in the last months and years. So you can see the development of the share at a glance. You can also find comparative figures.

The purchase can be completed online simply by clicking on the “Buy” and “Sell” buttons. In the so-called “domestic order” one can then determine the amount of shares to be bought or sold.

Check transaction fees and price-performance list

Tip. Transaction fees are incurred for every purchase. At comdirekt, it is exemplary currently around the 9 euros + 0.25% of the purchase. However, this information can change. E is therefore important to regularly check the price performance list of the bank to know how expensive the share purchase will be.

Again, you can now see all the trading venues through which the paper can be purchased. For example, the stock exchange “Xetra” would be closed on the weekend. During the week, one should therefore trade around 4 p.m., because here is the most volume in the market and so it is certain that one can also buy the share. Between the stock exchanges, of course, there are differences, we will discuss them later in another article.

Limit execution

In the order details, a few more additional information can be entered. Important would be here, the execution you want to limit. That is, they want to pay only a certain price for a share, no more.

If the price of the exemplary share is trading at 26.915 euros, we can say that we will buy the share at a maximum of 27.30 euros. The strict limits are important to be sure to buy at the best possible price. Otherwise the order will be executed in any case and it can be very expensive.

Trading validity determines the length of time. If it is 1 day, the purchase is targeted only for 24 hours. If it can not be executed, at the desired price, the order simply expires.

Summary of the trading order

1. Trading type: buy
2. Designation: exemplary share AG vink.Namens-Aktien o.N.
3. Securities: DE123456789 / 123456
4. Piece: 1
5. Exchange: Telegate
6. Execution: Limit: 27.30 Euro
7. Validity: daily
8. Provisional amount to be made out: 27.30 euros before tax

The last thing to do is to enter the tan. This will be sent to you by the bank. Now the domestic order is placed. Must be paid in successful trading the purchase price plus trading fee of the bank.

The placed purchases can then be seen at all regular banks in the main menu. The purchase can then take a few minutes to a few hours.

Order document after the purchase

After that, the stock is in the depot and a maximum of 1, 2 days later comes the order document.

Trading: Stocks, currencies and apps

If you want to read more tips, in the blog you can find many more articles, like:

• Learn Currency Trading -Experience, Tax & Example
• Cryptocurrency & Block Chain – Simply Explained
• Stocks, ETF, Forex, Cryptocurrency, Social: My Experience and Mistakes!

Loans at a Glance

• A larger amount of borrowed money
• Real estate purchases are often financed by loans
• Interest payments must be made when a loan is repaid
• Commercial banks often require equity capital as a prerequisite
• Private loan: Low interest rates and no credit check