House Purchase - Financing and Valuation - Berlin Area

Hello,

we are looking for a property in Berlin and have currently found one and accordingly submitted a request to the bank. We have the following conditions:

[*
Total net income: 4400/month (currently still 1 earner + child benefit)
[LIST]
[*]We can currently save about 1.8 - 2k/month on average.
[*]Our rent + parking space is about 700 EUR/month


[*]We will probably work for another 30 years
[*]2 children of kindergarten age
[*]Property price: 500K <- from acquaintances
[*]Equity: about 170K
[*]Loan amount: 360/370K

We currently have 2 concerns and would like to hear your opinion on them, as we are completely inexperienced in this area:

[*]The bank would agree to the loan amount. We calculated a rate of 1700/month and then the loan would be finished in about 20 years! -> What is your opinion on the amount of the rate? Too risky?
[*]The property is located within Berlin and is about 60 years old. The house is in good condition, so the renovation costs are manageable. However, the bank values the property significantly below the current price. about 350K <-- which is an unrealistic price for Berlin. My question is how can I estimate the purchase price? According to the standard land value, the plot would be worth about 200-250K for about 500 sqm. In the same district, newer terraced houses are traded at 450-500K.

Thank you very much!

Hi.

Is it a condominium or a single-family house?

1. I find the rate very daring. That is a monthly burden of 38% of the net income. We are currently in the financing approval process for a house and do not want to spend more than €1,500 on the rate with €5,400 net, because otherwise it is difficult to build reserves and "live." At least for us. I don't know your expense situation.
Otherwise, keep in mind. At least €1/sqm per month is charged for additional costs and reserves for repairs. With 150 sqm, that adds another €450 on top.

2. Keep in mind that you may HAVE to renovate quite a bit (Gebäudeenergiegesetz). Have this checked by an expert. They can also estimate the costs. Otherwise, I can't say much about it.

A few more details about the property would be helpful to assess the price.

However, the bank values the property significantly below the current price. approx. 350K

Why? You should find out.

My question is, how can I estimate the purchase price?

Through an expert who inspects the house inside and out.

According to the standard land value, the plot would be worth approx. 200-250K for about 500sqm.

That leaves 100 thousand for the house. Fair for a 100sqm, 60-year-old house, not for bigger ones. Your “house” could now also be a castle or a wooden hut for us ... :rolleyes:

First of all, thank you very much!

Brief information about the property:

[*]DDH
[*]100sqm living space
[*]4 rooms
[*]Finished basement
[*]Garage
[*]Major things like roof insulation, roof covering, windows, doors were done in the last 10-20 years
[*]Bathroom, kitchen renovated in the last 5-6 years
[*]Built in the 60s -> pretty thin walls (25-30cm) and without insulation
[*]Oil heating -> still about 10 years remaining, I think
[*]Electrical system is probably old or around 30 years old
[*]Radiators are partly renewed

And some more information about us:

We currently still live in a 3-room apartment and will have to move to a larger apartment in 2-3 years. Then we will probably pay at least 1200/month or even more for the new apartment including additional costs. For this reason, we want to take the step into owning our own property.

From my personal point of view, we live modestly, so no high demands, and get by happily with about 1500 EUR/month excluding rent. That means, ideally, we would have to spend 1500 + 1700 + 500 (additional costs) = 3700 per month. So only about 700 would remain <--- Four digits would be preferable for me...

Regarding the price -> I don’t know if we would have time for appraisals and all that, or how long it takes to get a result. The market in Berlin is already "insane" concerning demand and how fast things move. Affordable properties don’t even stay active on the portals for half a day and are already gone. If you do get a viewing appointment, there are probably 10 people there and then the agents say: Yes, I will send you the documents, check with your bank. The first one who comes with a commitment gets the notary appointment.

I quickly checked: for example, North Berlin in a good location has land reference values at about 600/sqm -> For houses with about 500sqm plot, prefab houses from the 70s, prices are easily at 600/700K, rarely also at 550K. But that means the houses themselves cost 250-300K -> How do the banks assess that? Or do the land reference values still have anything to do with market prices (in Berlin) at all? Even considering that apartment prices for about 100sqm easily start at 400K.

The question is, does/will the second adult also want to or be able to earn some money in the foreseeable future? If yes, I see the situation relaxed. If no, it could become tight in the future. The kids are getting older, the demands increase. Maybe one doesn't want to live "modestly" for their whole life, a bigger vacation, a nicer car, hobbies, maybe one also needs to bridge a longer illness or unemployment? But you can really only answer that question yourselves.

How the bank evaluates the property doesn’t matter. The fact for you is that it is being offered at that price. If you like it and want to have it, you have to pay that. It won’t get cheaper in Berlin. When you see the prices sometimes asked and paid there, you can probably be glad to get something.