Property in good condition financable?

What tends to be neglected in the whole discussion is the (mortgage) valuation of the property by the bank.

In the calculations here, the purchase price is always assumed. That will only work with a REAL bargain.

A bank has to deduct these things from the purchase price to determine the value of the house. If done properly – in the normal case for such a small financing, it doesn’t really matter because the mortgage value is determined automatically and no appraiser is needed.

In my opinion and experience, that is not correct. We had a bank appraiser on site back then. Purchase price under 400k.
It is also quite clearly stated in §16 PfandBG.

The appraisal ruined our plans at the time. We also didn’t have much equity and the bank valued the house significantly lower (it was also the time of the crazy Corona prices).
The house had some personal advantages for us for which we would have gladly paid the extra price. On paper, however, they were worth nothing.

Maybe it’s different here.
But I find it very optimistic to take the purchase price as the basis for the 110% financing.

In my opinion and experience, that's not true. Back then, we had a bank appraiser on site. Purchase price under 400k.
It's also quite clearly stated in §16 PfandBG.

Sorry, it's my job. See §24 BelWertV:
(1) When lending on a residential property located in Germany, the preparation of an appraisal according to § 5 can be waived if the loan amount to be secured on the property, including all prior charges, does not exceed 600,000 euros.

This is the so-called small loan limit (which was recently raised from €400k to €600k). It does not conflict with the paragraph you mentioned. By the way, we are a pure covered bond bank that cannot refinance in any other way, since we have no customer deposits.

However, if a bank wants to spend the money on an appraiser, they are welcome to do so. They don't have to waive an appraisal, but they can, and usually do, because the margins in this business are so low that the costs of an appraisal would already destroy half of the bank's earnings from the next 10 years.

If a bank wants to spend the money on an appraiser, they are welcome to do so. They don't have to waive an appraisal, but they can and usually do, because the margins in this business are so low that the costs for an appraisal already wipe out half of the bank's earnings from the next 10 years.

...exactly for this reason we are currently trying to change banks. First appraisal for the house purchase in 2013, second in 2022 for follow-up financing, and for the upcoming renovation they want to have one done again now. No wonder they don't make money in retail banking and no longer want to continue it...

...that's exactly why we are currently trying to change the bank. First appraisal for the house purchase in 2013, second in 2022 for the follow-up financing, and for the upcoming renovation they now want to have another one done.

I just checked the table from our appraisers on ==> Market value of the property up to €750K = €1,950 net fee That adds up in volume business!

Ah cool. Thanks for the clarification!

That is the so-called small loan limit (recently increased from T€ 400 to 600).

It could be that our loan amount was actually over 400k back then. It was definitely before the increase.

I just checked the table from our appraisers ==> Market value of the property up to T€ 750 = €1,950 net fee
That adds up in mass business!

Does that really already make up half the revenue for 10 years?
You can almost feel sorry for the banks.

Does that really already make up half the yield for 10 years?

No, but besides the standard unit costs, ongoing unit costs, risk costs with equity backing, refinancing costs, liquidity costs, etc., it all adds up quite a bit (and then you also go through an intermediary, like many do: that adds up to over 3% commission for Dr. Klein and Interhyp and the like – so almost 0.3% p.a. are taken from the margin). Assume that you get a higher yield on your equity, which you have just invested as a fixed deposit, than the bank gets on its equity, which must be held for a standard 08/15 construction financing. That is really sad. Money is made in commercial real estate financing (and of course in other areas of a bank). Private construction financing is a product you need if you have deposits and to retain customers + cross-selling. Not suitable as a stand-alone product.