How much should a mid-terrace house cost per square meter today?

Well, that's great, then just tell her: You paid 400k, of which 125k is paid off, so 275k are still outstanding, so I offer 300k. Or 300k with 5% return is 1,500 per month, so here 300k. At the end of the day, you sell to the person who puts more money on the table anyway. Fortunately, the seller's market for property is not as intense now as it was a few years ago.

You have to convert the cold rent into the interest, not including repayment. Then you come to a financing of €450k.

With 100 sqm land and €500/sqm standard land value, I expect a significant upward adjustment of the land value. The land utilization will be extremely high. Maybe the land is valued at €80,000-120,000 (? - no idea which correction factors are applied there).
The new building with 150 sqm living space currently costs between €450k and €525k. Then maybe an additional €30k-50k for incidental building costs and some for garden/terrace. So a new build should be somewhere around €550k-650k. Then you subtract the depreciation for age – 7 years with 2% depreciation (AfA).

Then I roughly come to €475k-550k for the house with land. The location and therefore the demand should be good at that standard land value. As a seller, I would probably start with a selling price somewhere between €550k and 600k.

With an actual purchase price of €550k + incidental costs = €600k, that probably fits well. The cold rent is the interest rate – fits. Equity then €150k – manageable 25%. Thus, an attractive product on the market.

Uff, cold rent = interest is of course a different matter! I rather stick to Kommer: The gross rental yield = 5% is a fair and reasonable offer: with €1500/month that equals €360k (including incidental costs). Incidentally, this is also what Immoscout says.
The €550k to €600k translate into a gross rental yield of 3-3.2%. According to their logic, this would be highly overpriced.

In the end, I as a buyer, of course, see a different logic: I have to convert the money I have into interest and repayment, since I have to pay both: with a €1500 installment, I therefore cannot afford a €450k loan.

What she said was sort of between the lines: it doesn't matter whether I transfer money to her or to the bank every month, which I interpret as rent = purchase installment.

Consider what the landlord's motives might be: has she become a retiree and wants to move to La Gomera without a German house tying her down / hike through Tibet, move to her lover in Düss... or what is it about for her?

I would think carefully whether a move is worth it for you. Not paying the final price out of "stubbornness" and moving is a matter of taste. You know it’s not your dream house. Say goodbye to that thought. Even a new build is a compromise between finances, location, and timing.

I would play the trust card and show interest. You were asked first. That is a good sign.

The chance that you have the choice between this house and a "dream house" is small. Otherwise, you would already have a dream house and not this one. Quality of life and established contacts would be more important to me than a big garden.

The question is not “what should a terraced house cost?” but “what can it cost for us?” Even if you buy and later find something else, the money is probably not lost in a sale. Your “either-or_or” considerations probably suffocate the best solution.

Uff cold rent = interest is of course a different ballgame!

That is the usual consideration. You have a cold rent that corresponds to an interest payment. As a tenant, you save money separately; as an owner, you amortize.

I rather stick to Kommer: The gross rental yield = 5% is a fair and reasonable offer: at €1500/month, that means €360K (including additional costs). Immoscout also says so, by the way.

Ah, Kommer. What he writes about the 5% is an average value from the past. It also concerns classic investment properties. Go to Munich (maybe not anymore today), before the war there was a gross yield of 1,x% for good locations.
For single-family houses today you can calculate with 2.5-3.5% – and that is already more than decent. If you calculate with 5%, please don’t make yourself ridiculous and don’t submit an offer at all. That would correspond to 20 times the rent for multi-family houses. Even today you won’t find anything reasonable for that.

I have shown you what the house would cost new. So don’t fool the potential seller with illusory wishes.

In the end, as a buyer, I also see a different logic: I have to convert the money I have into interest and amortization, because I have to pay both: With a €1500 installment, I can’t afford a €450K loan.

That is your problem. Not the seller’s. If you have no equity and currently can’t save either, you can’t afford to own property. It’s harsh from me, but unfortunately the reality.

P.S. I had some fun looking at rented properties on ImmoScout. In condominium sales, the factor to the rent is often 30 even for older properties. So a yield of just over 3%. That confirms my calculation.

A few years ago, I was in the situation of having to sell a property myself - and no, the process was not pleasant overall, although the profit, of course, was. So after an extremely unprofessional look at the market in hindsight and even an appraisal for the large property and the small house together, we listed the price at X. The current tenant saw it quite differently: Another house costs him the amount Y, but that would already be more modern than our house, so he deducts the renovation costs and ends up at X/2, which is half of our proposed price. We said: Price X or nothing - so he moved out. We then pushed forward with the divisibility of the property and ultimately got 2X for it, which is four times the price the tenant had offered us.

For the seller one thing is important: money in the account. Whether it comes from the current tenant or the new owner – who cares.

For the buyer it looks quite different of course:
- The owner-occupier wants to get the existing tenant out as quickly as possible and then live there.
- The investment buyer wants to raise the rent for the tenant.
- The current tenant wants to avoid property hunting, moving, possibly a new commute, possibly changing schools, etc.

So yes, if you get along with the house, the neighborhood is nice, the school and the commute fit, that’s already worth something. What would the alternatives be? If the owner wants 600k for the current house and there is one next door for 200k, sure, but that doesn’t seem to be the case. So yes, use the benefit of the doubt, engage in conversation, feel free to show your own calculation but also accept the completely different calculation of the seller.