Our terrace

I was looking for apartments using mainly RNK and Sperrmüll newspapers. Once I even got to something interesting - a new apartment in a 3-family house in quite a small village. The distance to my working place was 12 km, there was a bus once an hour and a priamry 4-year school. The nature around was beautiful, hills and forests. Built on the hill side the house had 3 separate entrances, one for each family. About 100 sq. m. appartment with the fireplace and the garden with a small fountain.

View on the terrace (the right one)

Zwangsversteigerung is the auction where banks try to get rid of real estate that is difficult to sell because of the possible reasons:

• it has a big drawback; like, for example a high-voltage line above the house or a bad smelling chinese restaurant on the ground floor.
• the current tenant stopped paying and is not going to move out.
• The owner is bankrupt or died without relatives. In this case current tenants are usually trying to get the apartment . They have a full right not to let anyone see the apartment, until the auction takes place. And there is hardly anyone who wants to buy that cat in a sack.

View from the terrace

Front of the house

• How really old the house is (there was a case when the built date was just wrong, something like 1980, but the house looked like a middle-aged fortress. It turned out that it was a 200-years old factory that was rebuilt to living a house in 1980)
• Look careful at the conditions of walls, roof, planning, where the windows go, how much light in every room.
• Check if there is a high-voltage line above the house (this is not stated in Gutachten).
• Check if there is a factory that spoils the air nearby, where the garbage collectors are? (in front of your windows?)
• Check the public connections (buses, trains)
• Check neighborhood (are there reach people or emigrants, are there schools, shopping centers, kindergartens)
• Talk to the current tenant, he might give you the most precise information if he agrees to talk. Or talk to the neighbors.
• Call Hauseverwaltung and ask them when next reparations are coming and what part will be yours (once I was answered that I would have to pay 10K for the front house renovation, ne windows, pipes in the next year).
• If the tenant refuses talking to you, call Zwangsverwalter and ask him if it is possible to move the tenant out and how long will it take (from 3 months to 1 year and in some cases you just can’t get rid of tenant. For example one eldery woman lived 28 years in an apartment She was invincible.)
• Take your time. In all it took me 8 month to find a good apartment.

Playground in front of the terrace

• Get 10% of the estimated sum in cash or as Landesbank check (just explain what you need the money for and the bank give you the check to the required sum. This sum will be withdrawn from your account. If you bring the check back - the sum will be returned to your account.)
• Visit several similar appointments. It costs nothing and anyone can see it. The auction starts with declaration of the property and then 30 minutes are given to submit proposals. I was also able to ask the officials questions in this time, the atmosphere was informal.
• At the auctions I got the following impression: If there is only one person that makes a bid, Gläubiger tries to stick to 50% of the price. Probably he has instructions from the bank forbidding him to sell for less to one person. The other notice was that some bidders probably knew each other and made small bids against each other, but at the end got the property for 30%. My father advised me to do the same. So you can invite a friend to make bids with you for the property. I didn’t do it because I was too lazy and because I thought that many other people would come (there were about 5 interested persons as the object tenant told me). And as a result I most likely overpaid 10K more for the apartment.
• If there are other people bidding for an apartment – raise only 1000. If the person raised only 100 euro – it is a signal that it is his last word and he stops. I observed a stupid situation when the second guy raised also 100, not knowing this rule and the fist person raised again 1000 thinking that this was the last word. The second person had to raise again 1000, got an object and thus just lost 1000 on the last bid.
• If you are the only interested person in an object - offer a good bid, but seriously bellow the market price. And let the Gläubiger try to persuade you to raise it. I made the mistake offering a very small bid, 25K. And waited to the last. At the end Gläubiger told me that I would not get it for that price and asked for 50% (71K). I tried to bargain with him, saying that the property was in a bad district, that it would require some reparations, that I had to pay the security back to the tenant, but he didn't go lower. The apartment was rented well. What really worked was when I said that current tenant had 3 kids and was just looking for a bigger apartment. Then I saw him thinking. When I came back to the auction room I offered 65K for the object and got it for 67K finally. This was a serious mistake, I should have offered any reasonable price, say 45K and then listen to what the Gläubiger would say. And then raise it additional 5K, and then 3K, etc. He might have got tired and agree at a lower price.
• Good advice – talk. If you get in trust with Gläubiger – he may tip you on a really good object. Or may be he will give your a good deal. Many people say that really good objects never come to Versteigerung Termin and are sold before it.

A 3-room apartment, 71 sq.m (Wohnzimmer 24 sq.m , Schalfzimmer 15 sq.m and Kinderzimmer 13 sq.m) in a 4-storeyed house built in 1997. Plus the garage, a parking lot and a terrace (16m). In the new district with mostly Russian-German, Polish and American (US base soldiers) population.

Room with the terrace

What was good:

• I went through the “Apartment checklist” including talking to neighbors. So my new apartment haven’t brought me any surprises yet (I have been living there for a month already).
• Overlooking the fact that I could have bargained a better deal and save say 10K, I still regard it to be a good investment as it minimizes our expenses greatly and secures money from the inflation.

• I didn’t took a professional appreciator to estimate the apartment before the auction. He could have probably adviced to bargain smarter. You don't need an architect - there is all necessary information written by an architect in Gutachten. You need someone who can read this information and translate it to you. And the one who knows the prices in the neighborhood.

Three windows on ground floor

• I didn’t invite anybody to bid with me. For this and the following mistake I probably overpaid 5-10K from the price I could get from this opportunity.
• I bargained too bad. (Tried to bring his price down, but should have offered considerable price and let Gläubiger attempt to bring it higher).
• I didn’t talk enough. I could have talked to officials and Gläubiger at another auction more and could have learned more from them.

Should I also buy an apartment now?

Personally I think that real estate market in Germany is saturated. And when Eigenheimzulage will be removed by the government, prices may fall. If you just go to estate agent and buy quickly a new 3-room apartment, the price in our area will be about 150K. You can rent it for 550 euro Kalt. That makes profit 6600 euro minus depriciation 1500 = 5100 a year. That is about 3,5%. But if you search well, there is always a chance that you can find much better deal. Investment in real estate is very secure. Profitability depends on your search skills. And liquidity is very long. You may count to 6 month for selling an apartment. You should buy only if you stay at the same place for several years. And check the difference between interest rates you willl have to pay on credit and you current rent. If there is no big difference – may be you should wait and save more money.

Should I search for an objects on Versteiterung auctions only?

Our terrace

You may check objects on auctions, but they are mostly low-cost objects that have some drawbacks. If you can find a drawback that you can put up with (like Russian district for me), you will get a big discount on price. Also – there are many objects that are in bad conditions and require reparation. If you have free time and used to handswork or can find people that can do it cheaply, then you can also get big price advantage.

What is Eigenheimzulage?

Eigenheimzulage is a sort of tax deduction that you get when you buy an apartment for your own use. For newbuild apartments this is 2.556 euro a year, for not-new ones this is 1.278 euro. Plus 767 euro multiplied to number of kids you have.

For our family it is calculated like this: 1278 + 767* 2 = 2812 euro a year for 8 years.

Everyone who pays taxies in Germany can get it. But if you loose your job and move back to Russia, Eigenheimzulage payments will be stopped.
There is also an income limit. You family income should be less then 163K in the last 2 years plus 30K for each kid. For family with 2 kids income limit is calculated like this: 163000+30*2 = 223000 (sum income for the last 2 years, i.e. ca. 112 000 a year).
The law in German language you can read here. But if new rules are accepted by the government this is all due to be changed soon.

It is stated on the object description sometimes: „Ein Zuschlag unter 50 % ist möglich”

There can be several auction appointments for an object. On the first auction appointment the object is not to be sold for less than half-price. And if the price is less than 70%, the Gläubiger can reject to sell it. On the second auction appointment the price can be less than 50%, but the Gläubiger has still the right to reject selling the object for less than 50%. This sentence means that the object had already been auctioned but nobody bought it. And you can probably get it for less than 50% from the estimated price now.

What is “Verkehrswert”?

This is the so called “Estimated price”. The estimation made by an architect based on the tenants rent in area and the built year of an object and its conditions. Good or bad position of an object is not really taken into account. Negative factors, like high-voltage lines above an object or nearby factory are also not accounted. You MUST always visit an object before the auction.

How about bank credit?

If you have a steady position in a big company – then getting a credit even for a Green Card owner is not a problem. But you need to talk to several banks. One bank offered me a credit only until the 5-year term, the other (Dresdner) bank offered a 10-year credit, starting from 50K, at 3.95% a year only. A year ago they offered 5.5% for a 10-year credit. A couple of years ago the rate was 8%. So now it is really low. The sum I needed was too small for a fixed credit flexible credit with 6% rate today.