Property Purchase Guidance - Info about Berlin and German Court Real Estate Auctions*
Last Change: July 20, 2015
Our Company and our Business in Berlin Real Estates
Already since the early 1990's the proprietor, Frank Noack, operates on the Berlin Property and Real Estate Market.
At the end of the 1990's
the company NOACK Immobilienberatung (means NOACK Real Estate Consultancy) evolved its todays shape. During this time we realized several letting and sales
transactions of residential and mainly commercial properties.
Properties and real estates for sale might be let and vacant apartments, family homes (single/duplex),
multi family buildings/apartment blocks, tenements, residential and commercial buildings, offices, medical practices as well as industrial halls, building sites etc.
Sometimes even shopping malls, vacancy homes and many more. Most of these objects may come out as an investment as well.
Buy Properties or Real Estates in Germany as a Non-Resident (Foreclosure or Open Market)
Generally there are no restrictions for foreigners to buy real estate property in Berlin or Germany. Documents are
written in German, of course, so it would be wise to hire an interpretor. The purchaser must be present at the foreclosure
hearing (auction) in courthouse, both parties have to attend the reading of the contract by a notary in case of open market
sale respectively. Another option would be to authorize somebody else by notarial certification at additional costs.
Kinds of Real Estate Auctions in Germany
In Germany we have different kinds of real estate auctions. Surely not that different from other countries. If we speak about property auctions we
always mean judicial foreclosures / court auctions. We don't do "normal" auctions. It's important to know that we are no auctioneers.
Attendance in German Property Auctions in Court
There are no restrictions who may attend a German property auction in court. You neither need an interest in a property,
nor you will have to register or to pay a fee. Just make sure to understand what's going on, so hire somebody to translate in case you don't speak German of
Should you intend to place a bid, you will need a valid ID or passport and you will have to pay a security deposit
in advance. For more details please continue reading. Our offering e-mails will contain the required bank details, also internationally. If you want to
place a bid, but can't be present, you will have to authorize somebody else notarially certified.
It's also possible to
place bids on behalf of a company, but you will have to prove to be allowed to do so.
Please consider that we work
for the creditors with mandate in writing and that we therefore will not place a bid on your behalf!
Procedure of German Foreclosure Auctions (breakdown)
Generally an auction in court takes about 45 to 60 minutes. The court-appointed officer will open the hearing by
telling a few details about the property, the land-registry and so on. Normally it's not that interesting to
get all the information from the property deed (section 3 about depts, mortgages, etc.) because in most cases they will be
discharged if the prosecuting creditor/bank ranks in first place (most cases). Only sometimes entries in the land-registry
might remain, but we don't go into details because it's more an exception. Furthermore the officer will read out existing
claims, open payments. They later will be paid out of auction proceeds, so they do not come on top!
Than the bidding
time starts and will take minimum 30 minutes (even without a bid). It does not really make sense to wait "until the last
minute" to place a bid because the bidding time, theoretically, might last ages.
The first bid has to be done in
front of the officer to prove identity (ID or passport) and to check the security payment (if required). The officer has to
read out the name of the bidder and the amount of the bid, so that everybody in the room can understand.
From now on
it depends on other bids what is going to happen. Generally you can place your further bids from your seat. The final bidder
normally will become the new home owner at the end of the auction as far as the creditor accepted the last bid to
be high enough. The creditor/bank makes the rules about the final price! Only sometimes the creditor might ask for
some time for a final decision or there might be a legal reason to suspend the decision (e.g. leasehold property to file the
new contract between lessor and lessee). Anyway, in court you buy "as-is", seen or not seen, without any guarentee at all.
So you can't call the deal off. Basis is the judicial appraisal report.
The final bidder, who becomes the new
owner, will receive a letter to his information until when and in what account he/she will have to pay "the amount left". The
deposit comes out to be a down-payment. The tax bill about the property transfer will be send from the tax office.
After all fees have been paid by the new owner, he/she will receive the cleared off land-registry (German property deed).
Should you still need further information please don't hesitate to contact us.
Minimum Auction Price (also Upset Price or Starting Price)
Please allow to point out that mentioned property and real estate prices at foreclosure auctions are NOT negotiable.
They in fact represent the minimum selling price in court from the view of the creditor (mostly a bank), who actually decides
about the acceptable price. Neither the court officer does, nor we do. We "just" work for the creditor/bank, so if we publish
a price this will be the minimum to get the property.
Pre-Foreclosure Sales (also Prior to Auction Sales/Short Sales/Pre-Auction Sales)
Sometimes it might become possible to run a sale prior to auction. But that's not a general rule! In Germany the banks do
not own "repossessed" properties. If the owner is not willing to sell (signiture on sales contract required) or is not present or
sadly passed away, this process will be impossible, except there is an appointed liquidator. It also depends on the entries
in the land-registry (German property deed). Normally we will leave a note, whether it might be possible to buy before or
not. Prices for pre-auction sales (short sales) normally will be higher than minimum prices in court. It's always a
Provide Deposit to become able to place (acceptable) Bids
It's required to pay security deposit to place an acceptable bid. Cash will not do! The deposit is always (minimum)
10% of the market value set by court. So it's not a percentage of the minimum price. Please consider that your bank might
charge a fee for the international transfer. We advise to pay about EUR 30 more to be sure the deposit will cover the required
amount. If you need support on how and where to pay, please send your request.
There are several options how to manage. Most common, and most convenient for non-residents by the way, is the bank wire transfer.
The money always has to be addressed to the court, the court cashier's office respectively. Not to us! If one hasn't been the
final bidder the deposit is (fully) refundable, of course. Please allow the court a few days to manage the transfer back into
your bank account (goes automatically into the sender account). It's also possible to pay deposit by bank check (filled out
by a German bank!), check from the Deutsche Bundesbank/Landeszentralbank or by bank guarantee from a German bank.
Notary Public and additional Fees
Often we receive questions concerning notary fees on property auctions. Well, if one buys property or real estate from
open market or "normal" auctions of course one will have to engage a notary (at costs of up to around 1.5%, depends on the
sale price). BUT... if one buys property or real estate from auction in court (foreclosure) no notary will be required and there will
not be a normal sales contract. The final bidder will receive a title instead the notarial deed. The court will charge a fee
of a bit less than 1% of the final bid on the purchaser for doing the paperwork. Subject to the bank's acceptance of the highest bid.
Term of Payment/Due Date of Purchase Price
Should one be the final bidder the deposit will be deducted from the purchase price, so it comes out to be a down payment. Within
a time of about 6 to 12 weeks after the auction the amount-left will fall due. The purchaser/highest bidder will get a letter
to his information (in German language) until when he will have to pay the money (incl. bank details). Furthermore there will be an interest of annual
4% on the amount left, but only for the above mentioned period of course. You can save these extra interest by making a payment of
the total price into the court cashier's office within a few days. This is an individual arrangement and you will have to apply for
this to the court after the auction. It can't be arranged before!
Property Purchase Tax / Stamp Duty
The current property purchase tax in Berlin is 6% of the purchase price (final bid at auction, respectively). In state Brandenburg it's 6.5%, Mecklenburg-Western Pomerania has a 5% tax
on property transactions. We just consider regions of our business. FYI, in the rest of Germany the Stamp Duty ranges from 3.5 to 6.5%. Subject to change. Of course it doesn't matter
whether the purchaser bought from free or from forced sale, e.g. through auction. The tax will have to be paid either
The property tax in Berlin is a bit more difficult to explain.
It depends on the so called "Einheitswert", what could
be translated by "rateable value". It varies from the location. If it's the former Eastern part, the value has been
determinated in 1935. As the basic year for the Western parts 1964 has been specified. Please note: the rateable value has nothing to do with the current
market value! It's more the "defined value" of a real estate in that (past) time.
Then there is the "Steuermesszahl". Best translation should be "basic federal
rate". It is meassured in "Promille / ‰", which is equal to 1/10th of a percent (US = mill). The basic federal rate depends on the kind of the property. As an
example we take an apartment in the Western part of Berlin, which has a basic federal rate of 3.5 ‰. So you have to count 3.5 ‰ / 100 = 0.35 % / 10 = 0.0035 as the multiplier.
Or you can just say: 3.5 / 1,000! Please also see the table below.
The result of the last calculation (rateable value x basic federal rate) gets the "Steuermessbetrag", so the "basic federal amount". Now multipicate this by the "Hebesatz", which is the "rate of assessment".
In the beginning of 2007 this amount raised from 660% to 810% (Exception: undertakings in agricultur and forestry 150 %), so the factor is 8.1 because 810% means 8.1-times of 100%!
At the end you will have the Property Tax.
Non-binding example, apartment in the former West-Berlin:
Suppose the rateable value is EUR 30,000. So you count EUR 30,000 x 0.0035 basic federal rate = EUR 105 basic federal amount x 8.1 rate of assessment. At the end this
amounts to EUR 850.50 annual taxing of this property. It has to be paid per quarter (EUR 850.50 / 4 = EUR 212.63), starting February 15th .
This is a simplified overview of the rates of assessments in Berlin according to the Land Tax Law (GrStG = Grundsteuergesetz):
Former Western Part:
Single Family Homes (depending on the rateable value)
2.6 to 3.5 ‰
Single Family Homes (in meaning of home ownerships, e.g. apartments)
Two Family Homes
Other Estates (esp. operating realties)
Former Eastern Part:
Single Family Homes (depending on the rateable value & the year of construction)
5 to 10 ‰
Most other Properties (depending on the year of construction; incl. home ownerships [e.g. apartments], rental housing, commercial estates a.s.o.)
6 to 10 ‰
Undertakings in Agriculture and Forestry
Non-binding statements without a title on completeness. More details you can find here (German). The calculation of the property tax in the Federal State of Brandenburg may vary.
Nevertheless you are welcome to send your queries.
Stories - Measurements - Rooms
Stories - this should only be interesting for people from North America/Asia/Russia, we guess?! If we say
"Ground Floor" in Germany you probably would say "1st Floor", wouldn't you?! "2nd Floor" would be "3rd"? This might be a bit
confusing on the first view. We will normally add both figures on the pages.
Certainly you are used to specify an apartment by the number of bedrooms, as it is common use e.g. in the UK or USA.
In Germany the number of rooms is always announced by the total number of residential rooms. If we say
3-room apartment this comes out to be an apartment with e.g. a living room and 2 bedrooms.
The indication of
measurement of the floor space might vary, too! On the English item pages you can find a rough conversion from square
meters into square feet or acres in case of land for sale.
Inspections of Properties and Real Estates
According to the German Law an occupier (tenant or owner) doesn't have to allow a viewing of foreclosed property. So it
will always be a case-by-case situation whether we will be able to arrange an inspection or not.
How to contact us
Most effecient is to send an e-mail, at best by using our contact-form.
It's a general one. Please always fill-in the subject matter and leave a message so that we know how we can be of help.
If you are going to request an offer please don't miss to tell the address or kind of property or real estate since we
actually don't use property ID's on auction items. Thanks and we're looking forward to hear from you.
*Non-binding details to your information, based on our experience and subject to change. We can't assure for the accuracy and/or completeness. The given information does not reflect any legal advice.