Is a reservation deposit common? How much?

Hm, but €500 is a different story than €5000. Also, we had our first appointment with the real estate agent last Thursday. Everything is happening very quickly, I think. How long can you wait before signing anything without it being rude? Probably depends on the seller, right?

Good evening,

I had understood it so far that the €5000 would go into their possession if we decide against it, but I could be wrong.

Then you would have negotiated unwise or just naively.

What is the usual procedure here? So what usually happens with the deposit amount in case of withdrawal?

There is no "usual"; it always depends on what you have negotiated. No property and paying for nothing would always be a no-go for me.

Should the buyers unexpectedly be denied financing of the purchase object at the usual market financing costs, the paid a deposit reservation payment will . Upon conclusion of the purchase contract, the deposit reservation payment is credited with the first purchase price installment. Withdrawal of the buyers from the purchase contract must be notified mutually in writing. If the buyers withdraw from the purchase contract without an apparent reason, the paid reservation payment can be withheld. If the seller withdraws from the purchase contract, there must be an important reason. An important reason is the failure to provide proof of financing or failure to apply for financing.

Does this mean that we only get the amount back if it doesn’t work out because of financing?

This is a wording I would not accept in your place, as it leaves too many questions open; overall it offers room for interpretation. Usually a withdrawal right is formulated like this or similarly:

The contracting party grants you the right to withdraw free of charge, provided that no more than one basic investigation for order confirmation has been carried out by the contractor (provision of standard drawings and calculation for financing). A condition for the free withdrawal right, however, is that the client provides written proof of rejection of financing requests from at least 2 independent banks..

Sometimes supplemented by:

The contractor is entitled to verify the financing of the entire project, provided that it is at market-standard conditions. For this purpose, the client undertakes to provide the necessary documents and data.
Absolutely necessary:

If financing cannot be demonstrated under the above possibilities, the reservation fee must be refunded in full and without deduction promptly.

A lawyer you trust is therefore the right recommendation!

Rhineland greetings

Good evening,


Then you would have negotiated unwisely or simply naively.

We hadn’t negotiated like that yet. We discussed the details about the house and the contract, etc. It was more like: "I will send you additional documents XY and prepare the reservation agreement." Then a few words about that.

There is no such thing as "usual"; it always depends on what you negotiated. Paying for nothing and no land would always be a no-go for me.

What exactly do you mean? Here the land would actually be included. It is already developed, ideologically separated, soil reports are available, etc. That would all be included in the price. We wouldn’t have to worry about anything else. A duplex is already half finished. We would get a purchase contract for the land with all the trimmings and then the contract for work.

This is a letter which I would not accept in your place, as it leaves too many questions open; it overall offers room for interpretation. A right of withdrawal is usually worded like this or similarly:

The contracting party grants you the right of withdrawal free of charge, provided that no more than one basic evaluation for order confirmation has been prepared by the contractor (provision of standard drawings and calculation for financing). The prerequisite for the free right of withdrawal, however, is that the client provides written proof of rejection of financing inquiries from at least 2 independent banks..

Sometimes supplemented with:

The contractor is entitled to demonstrate the financing of the entire project, provided that it is on market-standard conditions. For this purpose, the client undertakes to provide the necessary documents and data.

Absolutely necessary:

If financing cannot be demonstrated under the above conditions, the reservation fee must be refunded in full and without deduction promptly.

A lawyer you trust is therefore the right recommendation!

Rhenish greetings

Sorry to ask again here: Even your wording would mean that you only get the reservation fee back if the financing fails. Not if you decide "just like that" against it?

Financing probably won’t be the problem for us, since we can provide about 75% equity.

We just don’t want to be "pushed," hence my question above about how much time to consider one can reasonably take without it being rude and without signing the reservation agreement. As said, our first appointment was last Thursday and now they want us to commit already – that feels a bit too fast for us.

Unfortunately, we don’t yet have a lawyer we trust, but we are considering joining the Association of Private Homeowners.

Thanks already for your help!

Best regards, Neon

I probably wouldn’t rush the biggest investment of your life within 14 days. And certainly not let myself be pressured into anything. You’re wise to practice patience and approach the matter confidently. Right now, it’s about who is in the better position, and if the seller finds another buyer who is faster, then that’s just how it is. Why don’t you make the proposal that the seller should pay you 5000 euros if they sell the house/land to someone else even though you’ve already invested time and money in reviewing the contracts... they’ll probably be taken aback at first and then politely decline the proposal. But maybe then they’ll understand how you’re feeling right now. Deciding to buy a 1000 euro TV might take about 30 minutes. For a house, it doesn’t have to be 300 times the amount of time spent, but that period is advisable. Something like that develops over time. So take the time you need to make the decision. Not an hour less and not a minute longer. There simply is no rule of thumb for that.

Hello,

We hadn’t really negotiated like that yet. We discussed the details of the house and the contract, etc. It was more: "I will send you documents XY and finalize the reservation agreement." Then a few words about it.

That’s why I wrote “would have”.

What exactly do you mean? Here the plot is included. It is already developed, ideologically separated, soil reports are available, etc. That would all be included in the price. We wouldn’t have to take care of anything else. A semi-detached house is already half finished. We would get a purchase contract for the plot with everything included and then the construction contract.

I meant that "I" would not pay €5,000.00 for nothing. Meaning, if you – due to financing difficulties – don’t get the plot, can’t build at all, "I" would by no means want to pay €5,000.00 anyway.

Sorry for asking again here: Your wording would mean that one only gets the reservation fee back if it fails due to financing. Not if one just decides "simply so" against it?

Yes.

You are interested in the entire construction project, right?! So there must be some liability in the negotiation – always assuming you have checked the provider and all the framework conditions suit you! If you are considering possibly withdrawing from the project altogether, you shouldn’t sign anything at all, but hope to get the building plot anyway. Then also with the risk that the plot has been sold to someone else.

So what exactly do you want? All the risk on the seller’s side or a fair cooperation?

We just don’t want to be “pressured,” that’s why my question above about how much “consideration time” one can claim without it becoming rude and without signing the reservation agreement. As I said, our first appointment was last Thursday and now we should already fix it – that feels a bit TOO fast for us.

I already wrote in an earlier answer that I might consider this approach. But if I only read your reaction to it, I prefer to stick to how I handle it so far; I already have enough discussion in times of the internet and the half-knowledge that comes with it. It looks like this: first come, first served! Meaning, if I have an exclusive mandate to market a plot, then the one who signs first gets the contract; however, always with a free right of withdrawal regarding financing. If it’s a so-called “prime piece” of land, always with the risk for the interested party that someone else is faster. Your question about “consideration time” therefore depends on supply & demand.

I also think – again, “only” if the provider is reputable – that you are confusing something here. If a plot is on the market that you like, meets all criteria – then the seller’s behavior rarely has to do with “pressuring” but rather reacting to the “demand” market. There are an incredible number of interested parties who cannot handle a building project at all AND know it. But they still "reserve" plots cheerfully, blocking them for serious interested parties and thus also the seller’s business. This “game” can actually be reduced to a minimum “only” if a reservation costs money.

I don’t know how often, for example, I have already spoken with municipalities/development agencies who develop new residential areas for the public sector. Usually, a plot reservation costs “0” euros with the risk of “deliberately” getting bad actors but also that competition occupies plots through straw men. THAT is an imposition for serious interested parties, since such a reservation is often valid for 3-4 months. Then there are also interested parties who can easily afford a construction project but block 3-4 plots because they cannot decide; just as bad. In this respect, I can somewhat understand the practice of reservation fees. BUT it must be fair for both sides!

Maybe you should try to understand the other side once. In the vast majority of cases, sellers/providers/BU/BT/GU/GÜ etc. work very professionally; even if the internet likes to portray the opposite. That means not everyone wants to take advantage of you.

Unfortunately, we currently do not have a trusted lawyer yet but are considering joining the Association of Private Builders.

That’s a good start!

Rhenish greetings

Hi, thanks again

Of course, I also understand the other side. I had mentioned that before. That’s why I’m asking about the "consideration period" without being rude.

We don’t want to take advantage of anything and we have no other prospects. But this is also our first house purchase and should also be the last. Naturally, our knees are a bit shaky

The building plot is only available here in connection with the house construction. But that’s how we want it too. We like the house. Everything is already planned and, as mentioned, partially already started (semi-detached house 1). "Our" semi-detached house will start once a buyer is found; currently both halves are still available because one buyer dropped out due to financing difficulties. That’s also why I understand, of course, that the other side wants to secure themselves even more. It’s not about us not wanting to sign anything, but that we want to carefully review the drafts of the contracts first and think them over for a few more days.

Honestly: Yes, the internet drives you crazy, with all this information.

From the conversations, I actually have a good feeling and also the impression that the parties involved know what they’re doing. As already mentioned, they mostly handle large projects like apartment buildings etc. The advice seemed competent to me, possible additional costs were discussed precisely, advantages, disadvantages, options for changes etc.

Best regards; Neon