How do we avoid pursuing sales prospects
We ensure a quick sale
The sale of a house can result from a wide variety of reasons and motivations. But for whatever reason you want to sell your house, in the end the sale should of course be successful and not bring any nasty surprises. Above all, of course, that means that the sales proceeds are right. An important point. But there are other points that home sellers are often not aware of or are not very clear about and which can possibly cloud the “experience” of sales success. In addition to the sales process and the right steps, in this article we therefore also want to address topics that are related to a house sale, but are often fraught with question marks such as taxes, or whether it is better to sell with or without a broker and whether it is the optimal time for the sale.
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1. Taxes on home sales
2. Hire realtors to sell your home? Yes or no?
3. Necessary documents for the house sale
4. General process of selling a house - step by step
5. Duration and time of sale
6. Selling costs when selling a house
1. Taxes on home sales
Selling a house can result in numerous costs, including taxes. It actually depends on the individual case, which and how much taxes are due. Let's look at the possible scenarios:
When selling real estate, a so-called speculation tax may apply under certain conditions. The tax authorities levy taxes on profits from private sales or from income generated through securities or investments (income tax on sales profits from private transactions).
When is the tax due on a house sale? By law, if a not inhabited, z. B. a rented house is sold and there are less than 10 years between the purchase and sale. The 10 years are the so-called speculation period, after which no more speculation tax is due.
The speculation tax is also not due if a seller has only used the house himself. In the case of personal use in the year of sale plus the two calendar years before the sale, the sale remains speculation tax-free. If the house was rented during this period, the tax is due when it is sold.
Speculation Tax Amount:
The amount of the speculation tax depends mainly on two factors. These are the actual profit made on the sale and the personal tax rate.
The sales profit actually achieved is largely calculated from the sales price, with the original acquisition costs (purchase price, notary, broker) and the costs incurred in the sale (renovation, other sales costs) being deducted.
The personal tax rate is calculated from the income tax paid in the year divided by the annual income (in percent).
You bought a house for € 500,000 7 years ago and then rented it out. Now you want to sell it. In the meantime, real estate prices have risen sharply, and a sales price of € 700,000 can be achieved. The cost of the sale adds up to € 25,000, your personal tax rate is 40%. Since the sale occurs within the speculation period and the house has not been used, the speculation tax is due:
The sales profit is € 700,000 - € 500,000 - € 25,000 = € 175,000.
First of all, inheritance tax is not a tax payable on the sale of a house, it is of course payable on the inheritance. However, the question of inheritance tax often arises in connection with a house sale when a newly inherited house is to be sold. In some cases, heirs will have to sell their inherited home if they do not have adequate reserves to pay inheritance tax. In certain constellations, there is even double taxation through speculation tax and inheritance tax. The facts about it:
Amount of inheritance tax
Basically, it only makes sense to think about inheritance tax if the statutory allowance is exceeded. Heirs of different degrees of kinship can inherit different amounts of money without having to pay inheritance tax. Spouses can inherit € 500,000 without having to pay taxes, children € 400,000, grandchildren € 200,000. If a property is inherited, the tax office sets a market value that is calculated as a monetary amount for tax purposes. Is z. If, for example, a house worth € 1 million is inherited, this is above the exemption limit and a spouse has to expect around € 60,000 in inheritance tax in this case, a child around € 75,000, a grandchildren with a good € 100,000.
You can find more details here: Inheriting real estate, inheritance tax
Inheritance and speculative tax
If the inherited house is sold, a speculation tax may also apply if the speculation period has not yet expired or the testator has not lived in the house himself.
Of course, the heir can sell the house free of speculation tax if the testator was the owner for 10 years or used the house himself in the year of sale and the 2 years before that.
The tax has to be paid if the apartment was rented and the heir wants to sell it within the speculation period. However, in the event of an inheritance, it should be noted that the speculation period does not start again with the takeover. Since the heir takes over the house free of charge in the case of a regular inheritance, the 10-year speculation period does not start again with the inheritance. An inheritance is not a sale or purchase, so there is no tax-relevant sales profit.
As an inheritor, you can avoid speculative tax by moving into the house yourself and living in it long enough, or you can not sell it until the speculation period of 10 years has passed since the testator bought it.
Double burden of inheritance and speculation tax
If an inheritance tax is due due to the size of the inheritance, and the heir wants or has to sell the house during the period subject to speculation tax, there may be a double tax burden in the form of inheritance tax and speculation tax.
Until 2008, this double tax burden had a full impact, if the criteria were met. With the introduction of Section 35b of the Income Tax Act, there is now the option of a partial but not complete reduction. To do this, you have to tick line 79 in the income tax cover sheet and clearly describe the situation to the tax office on an additional sheet. This can potentially save a considerable amount of tax.
When changing ownership of real estate or land, the state is always involved and demands a so-called real estate transfer tax. Usually the real estate transfer tax has to be paid by the buyer, which is also stated in the sales contract.
Not often, but it does happen that the buyer does not pay his real estate transfer tax or does not pay it on time after the request for payment. In this case, according to the Land Transfer Tax Act, the state has the right to demand payment of the land transfer tax from the seller. And if he has the money, which should be the case with the sales revenue, he has to pay.
The seller can claim the money back from the buyer in a separate procedure, but first has to pay the tax for him to the tax authorities. And, it is not certain that a buyer who cannot afford the tax now will be able to repay it later. Therefore, it is important to make sure before a sale that the creditworthiness of a buyer goes beyond the pure purchase price reimbursement and also includes the real estate transfer tax and other ancillary purchase costs. As I said, it does not often happen that buyers do not pay the real estate transfer tax, because without a corresponding proof of payment from the tax office, the buyer is not officially registered as the owner in the land register and the purchase process itself is not completed. However, such a situation always involves additional effort and aggravation.
The amount of the real estate transfer tax is depending on the federal state 3.5 to 6.5% of the sales price: Bavaria 3.5%, Hamburg 4.5%, Baden-Württemberg, Bremen, Mecklenburg-Western Pomerania, Lower Saxony, Rhineland-Palatinate, Saxony-Anhalt 5%, Berlin, Hesse 6%, Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein and Thuringia 6.5%.
2. Hire realtors to sell your home? Yes or no?
For many who want to sell their home, the question arises whether they should hire a real estate agent to do it or whether they would rather try it themselves. There are arguments for both. When answering the question, however, you have to be clear from the outset that selling a house is about more than just placing a real estate ad on an online portal. It is entirely possible to sell a house yourself. In order to be successful, however, you have to do practically all the steps that a broker does yourself.
Actually, when considering not hiring a broker, the main thing is to save commission costs. Not all federal states pay a commission as a seller. B. and some other federal states, however, 3.57% "internal commission" is common for sellers. For buyers there are practically always some commission costs, unless one agrees z. B. in the case of properties that are difficult to sell, and the seller pays the commission entirely.
When selling a house, the question is whether you can get rid of it without a realtor and also whether you will sell it for a good price. Because the broker naturally offers decisive advantages in this regard with his professionalism and market knowledge. If he achieves a, let's say 10% higher sales price than the seller in private sales, the broker has already more than paid off. Whether you should hire a broker or not depends above all on whether you have the confidence to successfully manage the sale yourself and whether you have the necessary know-how. The fact is: Selling a house is time-consuming and you need a lot of specialist knowledge and negotiating skills for a successful sale.
Decision support - broker yes or no?
Let's take a quick look at the different steps involved in selling a home. The question is:
The be-all and end-all right at the beginning of the sales considerations. In order to offer a property with good sales prospects, it needs a suitable price. If it is too high, it will not be sold; if it is too low, money is given away. Do you have sufficient market insight and real estate knowledge to provide an accurate price estimate for the house that does justice to market conditions?
|B) Procurement of documents, legal matters|
When making a sale, many factors and circumstances must be considered in advance. There may be restrictions on the use of the property or in terms of conversion options. Sometimes issues have to be clarified with the authorities. Ownership relationships may need to be clarified with the land registry. You need to know which documents are needed and where to get them in case of need and how and with whom you can clarify legal questions.
|C) Make the property salable|
Not only the industry knows that products sell better when they are nicely packaged. It also applies to home sales. Houses that are nicely done up and presented tend to sell more easily and bring in higher returns. The expert knows what renovations and beautification measures need to be done so that the house is as well received on the market as possible, or whether it is more worthwhile not to beautify anything for a particular property. Do you have the skills to judge what needs to be done about your house to make it sell well?
|D) Sales promotion|
Do you know how to bring your house to the market and how to find potential buyers in the best possible way? And how do you address the right target groups? Can you create an appealing synopsis?
Can and do you want to carry out the viewings with interested parties? Do you have the time to organize the viewing appointments and conduct the viewing?
|F) Buyer selection and negotiations|
The viewings show who is seriously interested in a purchase. Do you dare to choose the right buyer? Can you reliably determine the creditworthiness of a potential buyer? Are you familiar with financing issues and know whether the buyer's financing is absolutely secure? Can you conduct a bidding process if there are several interested parties? Are you steadfast in price negotiations?
Those who have come to this point usually don't have that difficult anymore. At the notary appointment, in principle, the notary does the job. In principle, you only have to participate and sign the contract, if the buyer does too.
If you have done everything correctly beforehand, the handover is basically a matter of form. You hand over the keys and any outstanding documents. Possibly. a handover protocol is kept.
Statistically, most home sellers end up choosing to sell through a real estate agent. Figures for Munich for 2019 show, for example, that 74.4% of the houses offered for sale on the market were offered through real estate agents, 13% were advertised by commercial property developers and 12.6% were advertised by private sellers.
Whether the private sellers already have experience in real estate sales, e.g. B. have sold a house several times, of course, cannot be derived from these figures. Overall, this means that a total of 87% of all house offers came from professional sellers on the real estate market.
3. Necessary documents for the house sale
A whole range of documents and documents are required for a sale. It is best to get these early so that they are available when they are needed. Here is an overview of the required documents:
- Current certified excerpt from the land register
The land register extract is available from the land registry at the responsible local court. He identifies the owner and carries out, among other things. Housing, usage and rights of way and registered land charges.
The location, size and outline of the property are shown on the site plan. The site plan is available from the land registry or the local land surveying office.
If floor plans are no longer available, they can usually be obtained from the building inspectorate of the city or municipality. Floor plans must show complete pictures, all floors and sections of the house.
Building permit, building plans, building description, construction year information. Usually also available from the responsible local authority.
Important for the buyer to plan his future costs. The ancillary cost documents include: Current property tax assessment, last bills for heating and hot water, maintenance reserve, invoice documents for maintenance or modernization measures, other invoices for operating or ancillary costs. In addition, documents on current residual debts at banks, building societies and insurance companies.
- Home insurance policy
If the home is sold, the home insurance is automatically transferred to the new owner. If he has the insurance policy, he can register with the insurance company as the current policyholder or cancel the insurance.
For properties with up to 4 residential units, a so-called energy requirement certificate is required; from 4 residential units, a consumption certificate may also be sufficient. If you apply for a KfW loan, a needs certificate is always required. You can get an energy certificate from the architect, for existing properties this can also be issued by a suitably trained craftsman or energy consultant. There are also opportunities to order an energy pass on the Internet.
- Documents on living and usable space
There may be documents that contain a living space calculation or an exact statement of the number of square meters.
- Documents on renovations, renovations and conversions
Such documents primarily prove when something was changed and what. It may be possible to derive an increase in the value of the property from this if appropriate investments have been made.
4thGeneral process of selling a house - step by step
If you hire a broker, he will coordinate the most important steps for you. If you are selling privately, you must take the appropriate steps yourself. Anyway, selling a home basically follows the following pattern:
During the preparation for a house sale, several steps have to be carried out, which can be consecutive or run in parallel, but which must be completed before the actual sales effort can begin.
- Valuation as the basis for the offer price
- Obtaining all documents (see above)
- Prepare / renovate property for sale
b) Sales organization
This phase involves the following steps:
- Carry out advertising measures and find potential buyers
- Carry out visits with the interested parties
- Choosing the right buyer
The advertising measures mostly include advertisements on Internet platforms or newspapers, and in the case of brokers, possibly also letters from registered prospective buyers. The house will be visited with prospective buyers found, and real prospective buyers will emerge. With these you will enter into sales talks, if necessary into price negotiations and check the creditworthiness, best on the basis of a financing confirmation from the bank. If the purchase candidate is determined, it goes to the notary.
c) Sales processing
The final stage in selling ultimately consists of
- Development of the sales contract
- Notary appointment
- handing over
The notary is responsible for developing the sales contract. About a week or two before the notary's appointment, the buyer and seller each get a copy to preview, in order to familiarize themselves with it and, if necessary, to request corrections or to ask or prepare questions. At the notary appointment, the text of the contract is read out and signed. Soon after, the notary will send the buyer a notification of the due date for payment of the purchase price. As soon as the purchase price has been transferred, the house is handed over to the buyer. This basically completes the sales process.
5. Duration and time of sale
Of course, there cannot be an exact answer to the question of when it is best to sell a house and how long it will take. But there are a few clues.
First of all, it often depends on the case whether you even have the choice of waiting or whether you have to sell quickly. Does the sale become necessary because of a divorce, do you move, have you inherited the house and don't know what to do with it?
Right time to sell
If you have a choice, it is better to sell when there is good demand on the market and the prices are higher. To do this, it is advisable to observe the market a little. Basically you can do this for. B. follow up the real estate offers on internet portals for a certain time. Interest is also a notable factor. Low interest rates are good for a sale. And at the moment (beginning of 2020) interest rates are lower than ever. How long the market situation and interest rates will continue to offer this favorable sales climate cannot really be predicted. In the long term, interest rates are likely to rise again. So now is, in principle, a good time to sell.
As far as the time of year is concerned, it may be advantageous to choose a bright month for the sale, because the house is then easier to present. However, that is not really the decisive factor. Apart from the Christmas season, when there are traditionally fewer real estate sales, you can actually always sell a house.
Duration of the sale
And how long does it take? Depending on the location, an average sales time of around 5.5 months can be established in rural areas, while in urban regions it is a little faster on average at 4.8 months. However, these are only averages. Those who know the market and know how to sell real estate are often well below average, but even with professionals, some properties sometimes take a little longer to be sold. All in all, the time for a house sale from start to finish is usually within 2 to 6 months.
6. Selling costs when selling a home
Most home sellers look at the money they will make when they sell. However, with every sale there are also costs, which one should not lose sight of. Let's take a look at the various costs typically associated with a sale, so there are no surprises here.
Renovation costs do not necessarily have to be incurred when selling a house. Often, however, something has to be renovated or refurbished in a house so that it can be sold. Depending on the property, high or even only minor investments may be necessary, sometimes a few thousand euros are enough for a few beautification measures, sometimes the amounts can reach five or even six digits if more is to be done. Occasionally, through a renovation before the sale, you can even achieve a significantly higher sales price in the end than without renovation, so that the amount invested actually pays off. However, the money to be expended for the renovation costs is initially recorded in the form of sales costs.
- Costs for valuation / appraisal
To sell a house, you have to know how much it is worth so that you can go to the market at a reasonable price. Ultimately, you have to competently determine the property value, otherwise you may be offering the house at an unrealistically high price and you won't get rid of it, or you will ask too little and ultimately lose money.
If you want to know a relatively reliable market price for your house, a professional valuation is recommended. You can get one in two ways: If you give a real estate agent a sales order, he will determine the value, usually free of charge as part of his order. On the other hand, you can hire an expert or appraiser yourself.
Expert or appraiser costs start at a few hundred euros for short reports, but they certainly provide information about the price. If the property value is required for a legal dispute, the tax office or a bank, an appraisal from a sworn appraiser is required. Here the costs are usually in a range from € 1,600 to € 2,500. A court-approved full report costs approx. 0.5 - 1% of the determined market value.
If you have hired a real estate agent, he will lose a commission. Different payment methods are common depending on the federal state. In some federal states, the buyer pays the commission alone, in some of the seller and buyer share the commission. In Bavaria z. For example, the seller and buyer normally each pay 3.57% (including VAT) of the sales price. But sometimes that is also a matter of negotiation. More details about the commission can be found here: Broker commission
If a broker has been hired, there are in principle no costs for this, as these are covered by the commission. If you sell yourself, cost z. B. Internet advertisements with a duration of 4 weeks are around 60 to 120 €. Prices for newspaper advertisements vary depending on the newspaper, size for an advertisement 500 €. In addition, depending on the advertising measures that you take, additional costs may arise.
- Costs for documents and documents
A number of documents are always required to sell a property (more on this under point 5). If these are not available, they have to be procured and fees may be incurred.
Since the enactment of the Energy Saving Ordinance 2014 (EnEV), for example, when selling B. an energy certificate showing the energy consumption of the property. Depending on the property, different versions are required (more on this: "Energy pass for house sales and ENEV 2014". In general, a so-called consumption certificate costs around € 50 - 80, and a requirement certificate € 400 - 500).
In addition, other documents are required, for which fees also apply. For a current extract from the land register z. B. around 50 € etc. Other documents are usually available anyway, copying costs may apply.
The notary costs for the conclusion of the sales contract are usually borne by the buyer, so that there are no costs for the seller. However, it can also be agreed in the contract that the seller assumes these costs or a portion of them, then this would fall under the selling costs. The notary and land registry fees for the purchase are combined at around 2.5% of the sales price, which, as I said, is usually borne by the buyer.
On the other hand, there are often land debts that the seller took on when he bought the property himself and that are often still entered in the land register, even if they should no longer be encumbered and the loan itself has been paid off. These land charges then usually have to be cleared and the costs for this are usually borne by the seller. There are notary and land registry or court costs, which are usually in the lower four-digit range for house sales.
- Prepayment penalty
Occasionally sellers still have a loan that they took out to finance the house and want to repay this loan early after the house has been sold. If the bank incurs interest damage as a result of this early repayment of the loan, the bank can charge the borrower for the damage and demand a so-called prepayment penalty. Here, depending on the case, you can quickly get involved with higher four-digit or five-digit amounts.
Especially in the case of vacancies until the sale is completed, there are some costs that still arise. Housing benefit, operating costs, interest, property tax ...
Rainer Fischer, your real estate agent in Munich
Phone +49 89-131320
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