Determination of the "monetary value" of a property in later financing

Good morning dear forum members,
I have been a silent reader for a while and hopefully, I will be able to realize my dream of owning a house someday. This forum is a real asset for a newbie who soaks up information wherever possible. Therefore, thanks to the people responsible and all active members for sharing in this forum! Great!!

Now to my question: Our city currently offers several interesting plots for sale, unfortunately by bidding procedure, as has been common lately. Specifically, this means I submit my maximum offer in an envelope and hope to be awarded the plot. To have a chance, my bid will certainly have to be significantly above the standard land value of €100 (for comparison, in the same area plots are currently offered at a market price of €210/sqm). I am thinking of 40-50% above the standard land value as a maximum bid.

Now to my question: My maximum bid would be completely covered by my equity and would then be fully exhausted. I know that I can then count the plot as equity in financing, keyword lending. BUT, how does the bank evaluate the existing plot in a later financing of the building project? Does it base it on the standard land value or on the purchase price/market value? Since there is a large difference from the standard land value here (estimated >€50/sqm, which at 800sqm amounts to at least €40k), this question is not insignificant for the offered interest rate. Does anyone have experience with this?

On the internet I found the following: "An already existing plot counts to the same extent as the corresponding Geldwert as equity for your It is important that the plot is free of debt and solely owned by you."

Thanks!

Best regards

Hello Purchase price = fair value = your equity at the bank. To be honest, I find it terrible that now municipalities are starting to conduct bidding procedures.

Hi, thanks for the quick reply. You said it, I also find it f***ing awful, but it’s common practice. Otherwise, as a small family, you have no chance to get a plot anymore. And honestly, I don’t even know where the price will stabilize or what to offer compared to the overpriced market price.

Regarding your answer, that sounds good as a general statement, but what if the bank says you simply paid too much, and they only count a maximum of 70% or so?!

Cheers

I can tell you from my experience. We bought a plot of land for 40 € / sqm 2.5 years ago. That was the standard land value as of 31.12.2017. The current standard land value is 120 € / sqm. Market prices will be around 150 € + / sqm. We also want to "deposit" the plot of land as equity. There are three ways banks calculate your plot of land as equity:

- standard land value
- purchase price
- market price (this rather with local banks/savings banks)

You should hire several financing experts for comparison. But also visit the banks on site, possibly ask your house bank.

No bank says that. The purchase price is market standard, otherwise you wouldn't have gotten it for that. BRW are outdated, the banks know that too. We received a plot of land in a 70s new development area through a gift. BRW in this area are completely outdated. There is also no real data basis because nothing is sold there. The bank considered the land significantly above BRW as equity.

Hi, thanks for the quick reply. You’re right, I also find it f...., but it’s the norm. Otherwise, as a small family, you have no chance of getting a plot anymore. And honestly, I don’t even know where the price settles or what to offer compared to the overpriced market price.

Regarding your answer, that sounds good as a general statement, but what if the bank says, you simply paid too much, we only calculate a maximum of 70% or so?!

Regards

For the loan-to-value assessment, the purchase price is used. Conversely, you could also say, look, I paid 150, but other plots go for 210, so please set it at 210! The bank will say no to that as well.