BUYING AN APARTMENT IN BERLIN
Purchasing an apartment in Berlin can be quite overwhelming. People tend to think that all that matters is what object they mean to acquire, and that they have their financing in order, but as a matter of fact there are quite a lot of other things to keep in mind when purchasing property in Berlin. To make this entire process of German bureaucracy more transparent, we created a buyer’s guide with the most important things you need to know when you decide to buy real estate in Berlin. We will take you through the process step by step, explain the purchasing timeline in detail, and list the purchasing costs that are charged on top of the sales price of the property:
8 STEPS OF PURCHASING PROCESS
STEP 1 - FIRST CONSULTATION
It all starts with a call - you reach out to us and we discuss the criteria of your search. Your wants, your needs, your means. We then can begin our search within our database and throughout our network of partners to find apartments in accordance with your individual desires. Once we find something you like, we arrange the viewing.
STEP 2 - PERSONAL MEETING & VIEWING
We meet personally at the apartment you selected. Apart from going over the details of the apartment, we also show you around the neighbourhood so you get a first hand impression of what might be your new home.
STEP 3 - RESERVATION AGREEMENT
Once you decide to buy, you have to act fast. “First come - first served” is the rule in Germany to avoid bidding wars for apartments, so the potential buyer who signs the reservation agreement first also gets the first right to actually buy the apartment.
The reservation agreement is signed by both parties: the agency that represents the seller and the potential buyer. A reservation fee has to be paid by the buyer as a sign of commitment. Depending on the price of the apartment the fee can cost a few thousand Euros, but once you buy the apartment, the fee will be returned to you by being deducted from the commission.
The reservation agreement usually is valid for 4 - 6 weeks and gives you the following advantages:
You have the first right to buy the apartment.
The apartment is taken off the market so that no one else can buy it - it is reserved for you only.
You now have time to go through the process of organising your financing, without taking the risk of someone else buying your desired apartment in the meantime. And as the reservation fee will be returned to you in case the bank refuses the loan, you will not lose any money if you decide to buy. Thus, we always recommend to reserve.
STEP 4 - THE DRAFT CONTRACT & COOLING PERIOD
When you’ve signed the reservation agreement, you will receive a draft purchasing contract. If you are from abroad, we recommend you to seek legal advice at this stage, and to appoint a lawyer with a Power of Attorney (POA) that can be your authorised recipient. He can act in your name in all legal matters, and he can even represent you at the notary appointment to sign the contract for you, if you’re unable to travel to Germany.
After the draft purchasing contract is sent to you, you have 14 days “cooling period.” This means you are given time to consider the conditions and you have the right to withdraw from the decision. The notary appointment can only be made once these 14 days are over.
STEP 5 - CONFIRMATION OF FINANCING OR BANK LOAN
Your financing or loan has to be arranged promptly after you sign the reservation agreement, as the bank has to approve your financing before the notary appointment can be set. If you are in need counselling, we can connect you with financial brokers who can find the most suitable bank for your loan.
STEP 6 - NOTARY APPOINTMENT
As soon as your financing is in order and the 14 days “cooling period” have passed, you tell us what date you wish to set the notary appointment to sign the actual purchasing contract. The notary acts as a neutral party that certifies the purchase contract. Both seller and buyer have to be present at this appointment, and our own real estate consultant will also be present in order to guide you through the process.
The notary appointment is in German. If you do not speak German, there are two options:
Either you hire a translator
Or the lawyer that you appointed with a POA can act in your name. In this case, you do not even have to be present, as he can sign for you. This option is often used by our clients who live abroad and do not wish to come to Germany “just” for a contract signing.
STEP 7 - PAYMENT OF THE PURCHASING PRICE & ALL PURCHASING COSTS
After the purchasing contract is signed, the notary will take the necessary steps to place your name as the potential new owner into the land registry. This is called “Auflassungsvormerkung.”
The notary will then notify you and your bank that the payment of the purchase price is due. Without it, you cannot become a full rightful owner. Once you payed the purchase price and informed the notary about it, he can notify the land registry once again, asking for the ownership of the apartment to be transferred fully to you. When the land registry has confirmed to the notary that the note about the new owner is made, the notary can in turn notify you via post: Now the property officially is yours.
The entire process between the notary appointment and the day you become official owner of the apartment usually can takes between 8 - 12 weeks, mostly because the land registry needs time to process the data.
In the weeks following the notary appointment, you will receive the following invoices, all related to purchasing costs: real estate transfer tax, notary fees, land registry fees, real estate agency commission fee, and the lawyer fee if you had one supporting you during the process. All those invoices generally need to be paid within 14 days after receiving them.
STEP 8 - KEY HANDOVER
Once your name has been entered into the land registry as the new owner of the apartment, the key handover can finally take place.
The timeline of purchasing property in Berlin
Purchasing property in Berlin takes about 3-4 months from your decision of buying your desired object until you actually get the keys to your new property. In this step by step guide we will take you through the entire timeline of the purchasing process:
THE RESERVATION AGREEMENT (3-4 DAYS)
Once you’re decided on buying a property, you sign a reservation agreement and pay the respective reservation fee via bank transfer. It usually takes a few days until the reservation is confirmed.
THE DRAFT CONTRACT (2-3 DAYS)
When your reservation is confirmed, the notary can then send you a draft of the purchase contract. This usually takes about 2 - 3 days, unless your purchase is a special case that requires a more complicated deal, for example when buying a rooftop attic. This may take a little longer.
THE COOLING PERIOD (14 DAYS)
After you have received the draft contract, there is an obligatory cooling period of 14 days by law. This serves to give you time to consider the exact conditions of the purchasing contract to withdraw from your previous decision if you should change your mind. The next notary appointment can only be made once these 14 days have passed.
FINANCING
We advise to use the obligatory cooling period to sort out your bank mortgage or loan. When you first inquire about a mortgage or a loan, you will have to fill out some paper work about your current financial situation for the bank. It’s entirely up to you and your financial situation how long this step takes, but once all the paperwork is filled out and sent to the bank, they usually send you an offer within 2 days.
This offer by the bank is a legitimate contract that you can sign immediately if you agree to the terms and condition. Once you’ve signed the offer it takes about 2 - 7 days to get a confirmation by the bank.
By the way: If you need an English-speaking financial specialist who can provide you with offers from different banks to compare, contact us and we will connect you with the right expert for your needs. We will charge nothing extra for this service.
SIGNING THE CONTRACT
Once your financing is confirmed and the obligatory cooling period of 14 days has passed you can set up an appointment at the notary for the signing of the actual purchasing contract. Both seller and buyer have to be present at this appointment, and the notary reads the entire contract out loud in German. This usually takes up between 1 - 1.5 hours, unless you are in need of a translator. In this case the appointment will roughly take twice as long.
PAYMENT OF THE PURCHASING PRICE & ALL PURCHASING COSTS (8-12 WEEKS)
Often people ask me when the purchasing price and the extra costs have to be paid. The purchasing costs are due right after signing the contract at the notary, once you receive the invoices of the respective parties involved in the purchasing process. You have about 14 days to pay them.
The payment of the actual purchase only takes place after your name is placed in the land registry as the potential new owner of the property. The notary will inform you once he has received confirmation that the purchase price is now due. If you take a loan, he will notify the bank too.
KEY HANDOVER (12 WEEKS)
Once the purchase price is payed and as a result your name is entered into the land registry as the legal new owner of the property, the key handover can finally take place. This entire process takes about 3 months counting from the date of the contract signing.
So, all in all, if you are very quick with your paperwork, you can purchase an apartment within 21 days after you reserved it, and you will receive your keys within 2-3 months after that.
Purchasing Costs of Real Estate in Berlin
When considering the purchase of an apartment, there are a number of costs that have to kept in mind apart from the price of the actual object. In Berlin, Germany, purchasing costs of roundabout 15% will be charged on top of the net-price of the apartment by different institutions.
As banks usually do not offer loans for these purchasing costs, these extra 15% need to be available on demand as your own capital. Thus, if an apartment costs 100,000 Euros, 15,000 Euros need to be available right up front, on top of the 100,000 Euros purchasing price.
THE DIFFERENT PURCHASING COSTS
1. THE REAL ESTATE TRANSFER TAX (“Grunderwerbsteuer” in German) - which currently is at 6% in Berlin - goes straight to the German state. As the name implies it’s a tax that the state raises on the transfer of a property from one owner to the next. The responsible tax authority will contact you on the matter shortly after your purchase.
2. THE LAND REGISTRY FEES consist of the priority notice of conveyance (“Auflassungsvermerkung” in German) on the one hand, which puts the potential new owner on record at first, and on the other hand eventually the actual transfer of ownership of the apartment onto the new owner. The land registry charges the fees in several different payments, which approximately amount to 0.5% of the purchase price of the property.
3. THE NOTARY FEES lie somewhere between 1-1.5%. The notary serves as a neutral party during the entire process of the purchase deal, from the reservation agreement to the signing of the actual purchasing contract, so in case you require special legal advice on the matter, you have to consult an additional lawyer. This of course results in additional fees, depending on your lawyer.
4. AGENCY COMMISSION: If the apartment is listed with a real estate agency, you will be charged agent commission. The legal limit for the agent commission is 7.14% including VAT in Berlin.
So if we add
6% real estate transfer tax
+ 0.5% land registry fees
+ 1.5% notary fees
+ 7.14% agent commission
we get a total of 15.14%.
All these purchasing costs are due after the notary appointment and after the actual purchasing contract is signed. Usually they are charged within 2 weeks after signing the contract and have to be paid within the following 14 days.