With what value does a property enter the financing?

Hello home builder,

I have been reading here for a while but just registered now.

We want to build and basically already have a plot of land (fully developed) which we would buy from a private party (through a Sparkasse broker).

Actually a building gap in a development area that was designated in the early 80s.

One street over is the current new development area of the municipality, where a sqm fully developed costs almost 120 EUR. We would get the old plot at a price of 88 EUR per sqm, plus broker, notary, etc.

We can pay cash. The standard land value there is 85 EUR. AFAIK that is plus development costs.

How will the bank value the plot for the construction financing? At the purchase price? At the standard land value? At the price from back then (as far as I know about 80 DM/sqm plus 40 DM development costs)? Or at the price of the current new development area?

If I forgot any info, just ask.

Looking forward to your answers!

Thank you very much,
Rüdiger

Hello Rüdiger,

the bank will consider your property with the purchase price you paid at market value.

As proof, you submit the purchase contract to your bank, and that contains the market value (at least that was the value achievable on the market at the time of purchase).

Best regards

M. Thiemann

Hello Marco,

thank you very much for the information.

Best regards,
Rüdiger