Before the notarisation of the notarial purchase agreement a decision must ultimately be made as to whether the price for the property or apartment is appropriate. Expertise is often obtained in this regard. In Germany, real estate is valued according to three different valuation methods. These are the asset value method, the capitalised earnings value method and the comparative value method.
The comparative value method
The basis of the comparative value is the purchase price of land that sufficiently corresponds to the land to be valued with regard to the value-determining characteristics. This is legally defined in § 183 of the Valuation Law. The comparison prices are collected by the so-called Gutachterausschüsse and can be called up for a relatively small fee. Alternatively, the comparison factor method can be used to determine the comparison value. Here, property-specific value-determining factors are evaluated and combined. If you use comparison factors that relate only to the building, the land value must be taken into account separately. The land value is regularly derived from the Bodenrichtwert in accordance with § 179 of the Valuation Law.
Comparison value factors
Factors that determine the value of condominiums include parking spaces, elevator, balcony or fitted kitchen. In the event of a dispute, the court can, if necessary, make additions or deductions by means of estimation without a separate expert opinion in order to establish the comparability of different properties, cf. Hamburg Finance Court order dated 31 August 2015, file number 3 K 15/15.
Tax valuation may differ
The certified purchase price is decisive for the land transfer tax (Grunderwerbsteuer). Gift tax is payable in Germany for transfers free of charge. In these cases an expert opinion must often be obtained. The tax office is often content with the so-called common value. For this purpose, the actual sales price for the property to be valued can be used if the sale of the property took place close to the time of the free transfer, see Federal Finance Court judgement of 2 July 2004, file number II R 55/01.
Combinations of different valuation methods
It is generally not objectionable if an expert combines the comparative value method and the capitalised earnings value method. A so-called full appraisal regularly determines the market value of the property even according to all three valuation methods, further using the asset value. According to all three methods, a different market value is then regularly determined, which is then weighed against each other in a final step and a weighted average value is formed. In the case of single-family houses, the asset value is usually given the greatest weight in terms of measured value, in the case of investment properties, the capitalised earnings value, and in all other respects, the comparative value dominates.
Legal advice on the purchase of property in Germany
I offer you affordable legal advice in English language in connection with the purchase of a property in Germany. I check the notarial draft of the purchase contract for you. You will find further details and useful links on the page Advice on German Real Estate Law .