I am currently in the decision-making phase and would like to get a second opinion (preferably from you).
It concerns our future house. I found a new development project (3 duplex houses, i.e., 6 semi-detached units) in Langenhagen (Hannover region). A real estate agent purchased a large plot and plans to have an architect build 3 duplex houses on it. I contacted the agent and received an offer after the three of us (the agent, the architect, and I) discussed which features I would like in our semi-detached house (some changes in the floor plan).
The offer is as follows:
The house costs a total of €600,000 plus property transfer tax (€30,000) and notary fees (€8,000), so the total comes to €642,000 for about 150 sqm (1,615 sq ft) of living space and 374 sqm (4,025 sq ft) of land. The agent showed us her own house as a sample, which she built two years ago with high quality. I was promised that our house will be built to the same quality (solid construction, island kitchen, freestanding bathtub, Town & Country toilet, 1mx1m (3.3ft x 3.3ft) tiles, etc.). It is planned to be built to KfW 40 energy efficiency standard.
We are now at the point where I want the agent to sign a contract. Upon signing, a payment of €25,000 is due as a flat fee for modification work (and simultaneously as a down payment). This means the agent will start building the house with her own money. There is a draft for the notary purchase agreement, which we are only supposed to sign once the house is completed (around April 2022). We will receive the house turnkey.
My question to you is: Are we making a mistake by signing this agreement? The risk is that we would lose the €25,000 if we can’t secure financing for the house or for any other reason do not sign the notary purchase agreement (€575,000).
I have already spoken with banks about loan offers and received several options. I cannot finance the house on my own because the loan amount is too high. Unfortunately, my girlfriend is not currently taken into account because she does not yet have permanent residency. However, she will obtain permanent residency in February 2022, about two months before the house is completed. Together, we will probably be able to finance the house, as both of us are employed with a combined net income of over €5,000 and equity of about €80,000.
Would you take the risk in my position? If not, why?
Thank you in advance.
It concerns our future house. I found a new development project (3 duplex houses, i.e., 6 semi-detached units) in Langenhagen (Hannover region). A real estate agent purchased a large plot and plans to have an architect build 3 duplex houses on it. I contacted the agent and received an offer after the three of us (the agent, the architect, and I) discussed which features I would like in our semi-detached house (some changes in the floor plan).
The offer is as follows:
The house costs a total of €600,000 plus property transfer tax (€30,000) and notary fees (€8,000), so the total comes to €642,000 for about 150 sqm (1,615 sq ft) of living space and 374 sqm (4,025 sq ft) of land. The agent showed us her own house as a sample, which she built two years ago with high quality. I was promised that our house will be built to the same quality (solid construction, island kitchen, freestanding bathtub, Town & Country toilet, 1mx1m (3.3ft x 3.3ft) tiles, etc.). It is planned to be built to KfW 40 energy efficiency standard.
We are now at the point where I want the agent to sign a contract. Upon signing, a payment of €25,000 is due as a flat fee for modification work (and simultaneously as a down payment). This means the agent will start building the house with her own money. There is a draft for the notary purchase agreement, which we are only supposed to sign once the house is completed (around April 2022). We will receive the house turnkey.
My question to you is: Are we making a mistake by signing this agreement? The risk is that we would lose the €25,000 if we can’t secure financing for the house or for any other reason do not sign the notary purchase agreement (€575,000).
I have already spoken with banks about loan offers and received several options. I cannot finance the house on my own because the loan amount is too high. Unfortunately, my girlfriend is not currently taken into account because she does not yet have permanent residency. However, she will obtain permanent residency in February 2022, about two months before the house is completed. Together, we will probably be able to finance the house, as both of us are employed with a combined net income of over €5,000 and equity of about €80,000.
Would you take the risk in my position? If not, why?
Thank you in advance.
H
Hausbautraum203 Jul 2021 12:27Personally, I would never do that.
First, I don’t understand the whole setup, so I wouldn’t agree to it in the first place.
Second, €600,000 with a net income of €5,000 is crazy to me. We have a loan of €470,000 with over €5,000 net income, and that’s already intense.
But it also depends, for example, on whether more children are coming.
Overall, we don’t know enough about you (age, how secure the permanent residence permit is, why you urgently need a house now...).
First, I don’t understand the whole setup, so I wouldn’t agree to it in the first place.
Second, €600,000 with a net income of €5,000 is crazy to me. We have a loan of €470,000 with over €5,000 net income, and that’s already intense.
But it also depends, for example, on whether more children are coming.
Overall, we don’t know enough about you (age, how secure the permanent residence permit is, why you urgently need a house now...).
Hamidhaus schrieb:
The real estate agent showed us her own house as a model, which she built with high quality two years ago. I was promised that our house would be built to the same quality [...]
Now we are ready, and I want the agent to let us sign a contractual agreement. By signing, a fixed amount of €25,000 becomes due as a flat fee for renovation measures (also serving as a down payment). This means the agent is building the house with her own money. You want to buy a house that still needs to be built. Since the house does not exist yet, there is nothing to "renovate." It does not matter whether the developer is professionally a real estate agent or a hairdresser (apart from the fact that, in her role as the seller, she should not also charge a commission on the house price as a real estate agent). Such a purchase from a developer normally includes an attachment to the purchase contract: a brochure with a detailed description of the construction services. The quality of your house is therefore not based on vague verbal promises. A reservation fee of about four percent seems unprofessional to me, especially since nowadays six semi-detached houses typically attract around forty to one hundred interested parties. If you, as a potential buyer, do not proceed, a replacement buyer can be found within hours. So, in the current market situation, she does not have a risk of marketing failure—except one she has created herself: if the construction description does not convince the banks of the buyers of the price’s reasonableness.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
H
HilfeHilfe3 Jul 2021 15:34A real estate agent who thinks she’s acting like a developer and needs startup financing. Normally, payments for a turnkey property must be made according to construction progress. It doesn’t make sense that you would only need financing shortly before completion. Also, there’s no guarantee that your girlfriend won’t suddenly leave. You have a purchase contract, no financing secured, and the agent wants payment. Development projects are risky and capital-intensive. Find a reliable business partner and wait until your girlfriend has obtained citizenship.
N
nordanney3 Jul 2021 16:41Hamidhaus schrieb:
Now we are at the point where we want the real estate agent to sign a contractual agreement. By signing, a sum of 25,000€ (about $27,000) becomes due as a flat fee for renovation work (also serving as a deposit). This means the agent is financing the construction with her own money. There is still a draft for the notary purchase contract, which we are only supposed to sign once the house is completed (around April 2022). We will receive the house ready for occupancy. I don’t want to write much, just one thing: The deal-breakers mentioned in your short paragraph feel like a dozen. Essentially:
- Deposit of €25,000 (about $27,000)
- Flat fee for renovation work
- Agent funds construction with her own money
- No description of construction services
- No notarized purchase contract
STAY AWAY!!!!!!!
Sorry, I must have quickly overlooked this aspect earlier:
... and in that sense, I can also understand the association with "scammers and fraudsters" ;-)
Under these conditions, the house would realistically be finished in 3033 or 4044 instead. Take some time to read through the forum using the search term "payment schedule" (some refer to property developers, others to general contractors, so you may need to adjust your thinking accordingly, because with a property developer, the large chunk for the land is included upfront, whereas with a general contractor, it’s a separate item). You will quickly notice that a payment plan split into just two installments—about 4% before the start and then 96% after completion—cannot honestly work. No property developer has that much capital or would want to commit to such a long pre-financing period. Either it won’t work, or it’s not legitimate.
The good news for you is: it doesn’t work (an indication is the timing of the notary appointment).
If the notary appointment was at the start (where it normally belongs in a purchase from a property developer) but the above "payment schedule" was the same, you would immediately receive an invitation to talk ;-) from the public prosecutor’s office (on suspicion of aiding money laundering). You will probably only understand this last paragraph after 1. spending some time here reading about the keyword "payment schedule," 2. having a look at the broker and property developer regulation, and 3. asking a trusted banker to explain the complex topic of "Basel" in layman’s terms. After that, it should be clear that either the statement that the broker is building with her own "money" is missing the prefix "black-" (illegal funds), or that the time until you become suspicious is being used to get your money on a one-way ticket to a tropical beach destination that does not extradite to Germany ;-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Hamidhaus schrieb:
There is also a draft of the notarized purchase agreement that we only need to sign once the house is completely built (around April 2022). We will receive the house turnkey.
... and in that sense, I can also understand the association with "scammers and fraudsters" ;-)
Under these conditions, the house would realistically be finished in 3033 or 4044 instead. Take some time to read through the forum using the search term "payment schedule" (some refer to property developers, others to general contractors, so you may need to adjust your thinking accordingly, because with a property developer, the large chunk for the land is included upfront, whereas with a general contractor, it’s a separate item). You will quickly notice that a payment plan split into just two installments—about 4% before the start and then 96% after completion—cannot honestly work. No property developer has that much capital or would want to commit to such a long pre-financing period. Either it won’t work, or it’s not legitimate.
The good news for you is: it doesn’t work (an indication is the timing of the notary appointment).
If the notary appointment was at the start (where it normally belongs in a purchase from a property developer) but the above "payment schedule" was the same, you would immediately receive an invitation to talk ;-) from the public prosecutor’s office (on suspicion of aiding money laundering). You will probably only understand this last paragraph after 1. spending some time here reading about the keyword "payment schedule," 2. having a look at the broker and property developer regulation, and 3. asking a trusted banker to explain the complex topic of "Basel" in layman’s terms. After that, it should be clear that either the statement that the broker is building with her own "money" is missing the prefix "black-" (illegal funds), or that the time until you become suspicious is being used to get your money on a one-way ticket to a tropical beach destination that does not extradite to Germany ;-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/