Financing purchase of existing house BW, 800-850k€

Thank you very much for your post! The decision all-in vs as far as necessary is indeed a question we have not yet been able to clarify 100% for ourselves. In our calculation, the return of the capital market far exceeds the interest costs even if we calculate pessimistically. But as you already say, we are the generation that has grown up in direct confrontation with these capital market returns. Possibly we are somewhat blind to "bad times".

The return still exceeds it even if you save up the money again first. You (still) have no children and therefore cannot give a reliable indication of how your income will look then. I would therefore find the option of the lowest possible rate and saving what is currently possible much more relaxed and sensible. But of course you have to mentally clarify that for yourselves first. :)

I would personally probably contribute more equity and then see how much you can still save afterwards and put that money into ETFs.

I can definitely see something in the idea of a parallel ETF. Of course, there is also an ironclad rule never to buy stocks on margin (and in fact, that would be the case here, although the margin lies on the house, but is correspondingly larger). But the advantage of the ETF: If ArmAberSexy chooses the faster repayment (with €3800/month) and then it gets really bad (someone becomes unemployed or full-time + 2 kids doesn’t work out, etc.), then in a big emergency you could liquidate the ETF and put it into the repayment. True, you then additionally risk having to sell during low prices - but we are talking here about an emergency scenario where you have to price in a certain risk premium. Theoretically, you could hedge the ETF downwards with a warrant, but then you could almost just leave the money directly on the daily allowance account. A high hedge with warrants almost consumes the entire average return.

Now I have taken a closer look at the listing again and meanwhile I have some doubts about the seriousness. What strikes me:

a) Listings with fake names are always suspicious to me

b) Roof insulated with 20 cm of insulation between rafters, but exposed roof truss with plasterboard cladding that already protrudes several centimeters between the rafters? How are 20 cm supposed to fit over that? Maybe the insulation pros can say something about this.

c) The facade does not seem to be insulated separately (i.e., after the construction year). The photos show that the walls are relatively thin. Also, I can’t imagine that after facade insulation the asbestos slate was hung back onto it.

d) Air conditioning required in the bedroom? That does not look like good roof insulation either.

e) Consequence from b+c+d: How do you get an energy performance certificate with efficiency class C from that?

Hi Proeter, many many thanks for your detailed analysis and feedback! I’ll try to respond:

a,b,c) I find your comments about insulation very interesting and will keep them in mind mentally for the viewing. Unfortunately, I’m absolutely no expert in that area.

d) In Germany, I believe neither of us has ever used air conditioning anywhere – so we see it more as a gimmick.

e) I also wonder about this but for now just trust in the effectiveness of the measures. The question about the energetic framework conditions of the house is almost our main concern when evaluating the venture. My idea was to calculate backwards from the oil consumption since that should clearly be available for at least 2020, if not already 2021 (and otherwise the house is not heated with electricity anywhere).

2.) Does the stated sale price for the house come from a discount negotiation already conducted with the owner? Or has the owner already increased the price (e.g., due to numerous inquiries)? The listing states a significantly higher price than you assumed in your calculation. At the price listed there, it would be tight.

+ I combine that with

3.) As a result of point 2: If you look at the standard land values of the neighboring communities (at the location of the house BORIS shows no land value), then the plot should roughly be worth €200k. The house standing on it would then be priced at about €2500 - €3000/m² (without land value!) – and that seems to me clearly too much for an (albeit partly modernized) object from the 70s (also energetically unmodernized with oil heating). Why do I write this? The bank could spoil your plan because they might set the lending value so low that your equity is not sufficient.

I see it the same way that the pure property in the offer is clearly overpriced since I can estimate fairly precisely through various contacts for what amounts the plots in this area go, and your price assumption hits pretty exactly (if it even applies at all). In my opinion, they are speculating here on people’s emotional attachment to the individual villages and driving up the total price (the land situation there is just absurd now, patchworks of undeveloped plots but no one wants to sell because no one needs the money, hoping the kids will move back to the village some day). For this reason, we want to make an offer that we consider appropriate and are of course then at the mercy of the competition. I would also not rate our chances as great given the desperation of many with lots of money :rolleyes: But at some point/somewhere you have to start and set clear limits for yourself. But to your actual point: I’m curious what the bank will say about the property – we are currently in the middle of the coordination process.

Thanks again!

PS: It should not be a scam since we are already in contact with the owner, were able to identify him online (interestingly, he is himself an estate agent) and we will visit the place soon, along with other interested parties. (Or do you see a potential scam here?)

e) I wonder about that too, but at this point I simply trust in the effectiveness of the measures. The question about the energetic framework conditions of the house is almost our main concern when evaluating the enterprise. My idea was to calculate the oil consumption backwards since this should clearly be available for at least 2020, if not already 2021 (and otherwise there is no heating with electricity anywhere in the house).

My first assumption was that the stated value of just under 100 kWh/m²a comes from such a calculation. But then it wouldn’t be an energy demand certificate, but an energy consumption certificate. Maybe the owner confused the two. Have the energy certificate sent to you – it’s stated there. If it really is a consumption certificate, then you have to consider that this huge house might not have been fully heated. The children have probably moved out long ago (no children’s rooms in the photos) and if the house was only inhabited by one or two people, then heating can be very economical.

In my opinion, this speculates on the emotional attachment of the people to the individual villages and drives the total price up (The property situation there is just absurd now, patchworks of undeveloped plots but no one wants to sell because nobody needs the money, hoping the kids will move into the village someday).

An interesting line of thought that I have never considered in my analysis of property prices. Do you already know the reason for the current owner’s sale? If they don’t need the money, then they have a lot of time.

For this reason, we want to make an offer which we consider reasonable and are of course at the mercy of the competition. Considering the desperation of many with lots of money, I wouldn’t consider our chances great either :rolleyes: But at some point/at some place you have to start and set clear limits for yourself.

In my opinion, it helps a lot to discuss the financing OBJECT-SPECIFICALLY with an independent financing advisor. If they are a good advisor, they will assess the house according to Sprengnetter (a method frequently used by many banks). This has two advantages for you: You find out what a fair purchase price is AND you can estimate the bank’s lending value. If you go directly to the bank, they will also appraise the house but usually won’t tell you the result. Instead, they just tell you "yes" or "no."

My first assumption was that the stated value of just under 100 kWh/m²a comes from a similar calculation. In that case, it wouldn’t be a demand certificate but a consumption certificate. Maybe the owner confused that as well. Have the energy certificate sent to you – it will say there. If it really is a consumption certificate, then you have to consider that this huge house might not have been fully heated. The children have probably moved out long ago (no children's rooms in the photos), and if the house was only occupied by 1 or 2 people, then heating can be very economical.

That’s true, that would be absolutely plausible. I’ll add it to my list. Many thanks!

An interesting line of thought that I have never considered in my analysis of land prices.
Do you already know the reason for the sale from the current owner? If they don’t need the money, then they have a lot of time.

They said they wanted to leave the country for a longer time and use the money from the sale as a financial cushion. That already sounded almost like an emigration story to us. Depending on motivation and background, there could well be some time pressure here – but that is probably very speculative.

In my opinion, it helps a lot to discuss the financing SPECIFIC TO THE PROPERTY with an independent financing advisor. If it’s a good advisor, they will value the house according to Sprengnetter (a method frequently used by many banks). That has two advantages for you at once: You find out what a fair purchase price is AND you can estimate the lending value for the bank.
If, on the other hand, you go directly to the bank, they will also value the house but usually won’t tell you the result. Instead, they just say "yes" or "no."

That sounds good and I will keep that in mind. Regarding financing, we have only recently started looking around, and we just started with the local bank. If you have any tips, I would gladly add them to the list for future inquiries.

In any case, many many thanks already for the numerous tips. :)

Best regards

PS: It shouldn't be a scam since we are already in contact with the owner, were able to identify him online (interestingly, he is a real estate agent himself), and we will soon be viewing the property, along with other interested parties. (or do you still see a potential trick here?)

You are probably referring to my previous comment regarding the listing with a fake name. I don't really see it as a "scam" in the true sense (i.e., that he wants to harm you with it).
My experience, however, is that with listings without a stated name, various nasty tricks are more common, especially:
- The house is not actually for sale, but the offer is only for market value determination, e.g., in a dispute with a wife during a divorce
- Later price increase
- Agreement to sell, but cancellation shortly before the notary appointment
- Sale is aborted and the house appears again later - but through an agent and with commission (here unlikely if the seller is an agent himself)