ᐅ Sell an old house and build a new one in a different location
Created on: 20 Sep 2018 09:10
L
LMN2018
Good morning,
my husband (37) and I (35) have been following this forum for some time and are hopeful for the advice here ;-)
Ten years ago, we built a single-family house in my husband’s hometown (basement, double garage, tractor shed, 709 m² (7,626 sq ft)). Now we no longer feel comfortable there and somehow have lost our connection to the place. We have a son (4 months old) who will likely have few or no playmates in the future, so we have been considering for some time building a new house in a neighboring town (about 4,500 inhabitants).
Since a new residential area has been developed there and some people have already started building, we wanted to secure a plot and purchased a building plot (financed) last year. As we haven’t finalized our plans yet, it was important for us to have a fallback option. Fortunately, in this town, if we decide not to build, the plot goes back to the city. We are of course aware of the financial loss from the financing, property transfer tax, and related costs, but are willing to accept it for such a major decision that must be made carefully. Naturally, like most of us, we worry about what “others will say,” whether the family understands, and whether it all works out financially...
We had discussions with our bank and a real estate agent and have developed the following plan:
- Have the new house planned and start construction next year. Initially, only the shell will be built, financed through a bridge loan from our bank, as our mortgage for the “old” house is still running.
- During this time, we will list the old house for sale online through the agent and possibly find a buyer who will move in only after the construction phase (about 5 to 6 months for interior finishing). The sale price will be paid in advance or as rent by us to allow continuing payments on the new house. With the proceeds from the house sale, we would then pay for the interior finishing, landscaping, and photovoltaic system.
- After completion of the new house, we will move to the neighboring town and the new buyers will move into our old house.
We are now at the point of commissioning the architect/construction company. We just need that final push to go ahead with it. You all probably know how security-oriented we Germans tend to be? There is so much fear of making wrong decisions, losing money, and not being able to turn back. Maybe someone here has gone through a similar project or can offer some good advice!
Thank you in advance for your patience in reading all of this ;-)
my husband (37) and I (35) have been following this forum for some time and are hopeful for the advice here ;-)
Ten years ago, we built a single-family house in my husband’s hometown (basement, double garage, tractor shed, 709 m² (7,626 sq ft)). Now we no longer feel comfortable there and somehow have lost our connection to the place. We have a son (4 months old) who will likely have few or no playmates in the future, so we have been considering for some time building a new house in a neighboring town (about 4,500 inhabitants).
Since a new residential area has been developed there and some people have already started building, we wanted to secure a plot and purchased a building plot (financed) last year. As we haven’t finalized our plans yet, it was important for us to have a fallback option. Fortunately, in this town, if we decide not to build, the plot goes back to the city. We are of course aware of the financial loss from the financing, property transfer tax, and related costs, but are willing to accept it for such a major decision that must be made carefully. Naturally, like most of us, we worry about what “others will say,” whether the family understands, and whether it all works out financially...
We had discussions with our bank and a real estate agent and have developed the following plan:
- Have the new house planned and start construction next year. Initially, only the shell will be built, financed through a bridge loan from our bank, as our mortgage for the “old” house is still running.
- During this time, we will list the old house for sale online through the agent and possibly find a buyer who will move in only after the construction phase (about 5 to 6 months for interior finishing). The sale price will be paid in advance or as rent by us to allow continuing payments on the new house. With the proceeds from the house sale, we would then pay for the interior finishing, landscaping, and photovoltaic system.
- After completion of the new house, we will move to the neighboring town and the new buyers will move into our old house.
We are now at the point of commissioning the architect/construction company. We just need that final push to go ahead with it. You all probably know how security-oriented we Germans tend to be? There is so much fear of making wrong decisions, losing money, and not being able to turn back. Maybe someone here has gone through a similar project or can offer some good advice!
Thank you in advance for your patience in reading all of this ;-)
ypg schrieb:
We arranged it so that we negotiated the purchase price down a bit, received our money immediately, and continued living in the house for another 9 months—not as tenants, but rent-free.
Insurances and utilities remained in our name.
This can be documented in the notarized purchase agreement.We did the same; it’s a better solution for all parties involved...
F
fach1werk21 Sep 2018 09:16We exchanged our old building for a new house in a different location. My personal experience is:
Purchase agreements for houses are generally not designed to be split into parts, meaning a simultaneous exchange (“zug-um-zug” transaction) is usually not suitable for separating the process over time. For example, a seller—even if moving out later—wants assurance that the agreed purchase price remains secured in the future. Securing this costs money and usually involves interest on borrowed capital for the buyer. The buyer often needs a place to live and does not want to wait long. However, if the buyer waits, they expect the sold property to be in exactly the same condition at the handover date as it was at contract signing. Additionally, the handover date is binding, which in our case would have caused problems with Heinz von Heiden anyway.
Our plan: sell the old building first, then stay in it until the new house is finished. Purchase price held in escrow by the notary.
What actually happened: the old building was sold first, then we started searching for the new house. We moved into a rental apartment, adding the rent cost on top of the sales proceeds. The standard transaction process was completed all within a short time.
It was very advantageous not having to worry about our historic property while we had an ongoing construction project. We also had a very reliable financial planning basis. The downside was that prices subsequently increased significantly.
Best regards, Gabriele
Purchase agreements for houses are generally not designed to be split into parts, meaning a simultaneous exchange (“zug-um-zug” transaction) is usually not suitable for separating the process over time. For example, a seller—even if moving out later—wants assurance that the agreed purchase price remains secured in the future. Securing this costs money and usually involves interest on borrowed capital for the buyer. The buyer often needs a place to live and does not want to wait long. However, if the buyer waits, they expect the sold property to be in exactly the same condition at the handover date as it was at contract signing. Additionally, the handover date is binding, which in our case would have caused problems with Heinz von Heiden anyway.
Our plan: sell the old building first, then stay in it until the new house is finished. Purchase price held in escrow by the notary.
What actually happened: the old building was sold first, then we started searching for the new house. We moved into a rental apartment, adding the rent cost on top of the sales proceeds. The standard transaction process was completed all within a short time.
It was very advantageous not having to worry about our historic property while we had an ongoing construction project. We also had a very reliable financial planning basis. The downside was that prices subsequently increased significantly.
Best regards, Gabriele
Oh, with our sale it was a matter of mutual trust. There is also the clause about “treating the property with care... preserving its condition, etc.” And honestly: whether there was an extra dent in one door frame, it wouldn’t have been noticed at the time of sale. An old house isn’t something you inspect for “minor wear and tear” – that’s already factored into the valuation of a used property: square meters of land plus square meters of living space for nearly new, used, or old. It’s all viewed more generally. You don’t focus on small amounts like a thousand.
ypg schrieb:
Handle properties carefully Rude – no, better not. Preferably with a "p" in front :-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
11ant schrieb:
Rude – no, better not. Preferably with a "p" in front 🙂 Hahaha 😀
Hello everyone,
Thank you very much for your replies! It’s nice to see that so many people have already realized a project like this! We always feel like we’re aiming for something quite utopian. If we were to talk about this here in our small town, no one would really understand. Then I thought, why not take advantage of the anonymity of the internet ;-)!!
I’m not quite sure how best to respond here, so I’ll reply to each person directly in the text....
@dertill
You are right that potential buyers probably don’t want to wait that long. Others in the discussion have also expressed that concern. We see this as a critical point as well. Unfortunately, paying off the loan early without penalties is not possible, since we secured a favorable interest rate two years ago which is still fixed, so the loan is still running. We would have to pay an early repayment penalty. We want to basically perform a lien transfer and keep the loan running on the new house.
@Curly
You used a bridging loan. What would you have done if your old house hadn’t sold? Would you have been able to handle that financially? We could not afford to own two houses at once! Then you would have the existing loan on the old house, the bridging loan, and the financing for the new house, or am I misunderstanding?
@montessalet and nordanney
We currently live in a prefabricated house and were very satisfied with it at the time. However, for the second build, we would like to build with solid construction as we expect a better indoor climate (which could probably be a big topic of discussion ;-)). The demand for property here in town and the surrounding area is very high. Even houses in very poor condition were sold within a very short time. With the real estate agent, we set a price range for our house around 300,000 € (roughly 320,000 USD), which is already somewhat high for this area. However, the agent, who has been active here for 25 years, believes it will not be a problem to sell our house. It is very well maintained and no defects are present. Still, we have concerns whether everything will go as planned. Otherwise, we would have a shell construction standing in another town and would not be able to sell our house. Then the next few years would involve completing everything step by step as finances allow. We definitely want to avoid that!
@ypg and lastdrop
The agent also mentioned your option as an alternative—reducing the purchase price and then continuing to live in the house. However, he said that in recent years, it has often been the case that the seller pays rent to the new buyer. We’ll see what the new buyers will agree to. Reducing the purchase price probably sounds more appealing to most people, right!?
@fach1werk
The rental apartment option is unfortunately not an option for us. Firstly, we simply have too much furniture, a workshop, and two cars, one of which is electric and requires a charging station. We don’t want to park our cars without a garage. Secondly, it’s so difficult to find a rental apartment in this area that also has enough rooms and parking spaces. They hardly come onto the market and are often rented out privately. If the rental option worked with our old house, of course we would treat the house carefully until the buyers move in. Fortunately, we have managed that well over the past years. I think we don’t even have a dent on a door or anything similar. For me, that would be obvious both as a buyer and a seller, but you do hear about many other incidents. There’s nothing that hasn’t happened!
Thank you all very much! These answers always give new food for thought! I’m sure no one is paying attention to commas or spelling mistakes here ;-)
Have a nice Saturday!
Thank you very much for your replies! It’s nice to see that so many people have already realized a project like this! We always feel like we’re aiming for something quite utopian. If we were to talk about this here in our small town, no one would really understand. Then I thought, why not take advantage of the anonymity of the internet ;-)!!
I’m not quite sure how best to respond here, so I’ll reply to each person directly in the text....
@dertill
You are right that potential buyers probably don’t want to wait that long. Others in the discussion have also expressed that concern. We see this as a critical point as well. Unfortunately, paying off the loan early without penalties is not possible, since we secured a favorable interest rate two years ago which is still fixed, so the loan is still running. We would have to pay an early repayment penalty. We want to basically perform a lien transfer and keep the loan running on the new house.
@Curly
You used a bridging loan. What would you have done if your old house hadn’t sold? Would you have been able to handle that financially? We could not afford to own two houses at once! Then you would have the existing loan on the old house, the bridging loan, and the financing for the new house, or am I misunderstanding?
@montessalet and nordanney
We currently live in a prefabricated house and were very satisfied with it at the time. However, for the second build, we would like to build with solid construction as we expect a better indoor climate (which could probably be a big topic of discussion ;-)). The demand for property here in town and the surrounding area is very high. Even houses in very poor condition were sold within a very short time. With the real estate agent, we set a price range for our house around 300,000 € (roughly 320,000 USD), which is already somewhat high for this area. However, the agent, who has been active here for 25 years, believes it will not be a problem to sell our house. It is very well maintained and no defects are present. Still, we have concerns whether everything will go as planned. Otherwise, we would have a shell construction standing in another town and would not be able to sell our house. Then the next few years would involve completing everything step by step as finances allow. We definitely want to avoid that!
@ypg and lastdrop
The agent also mentioned your option as an alternative—reducing the purchase price and then continuing to live in the house. However, he said that in recent years, it has often been the case that the seller pays rent to the new buyer. We’ll see what the new buyers will agree to. Reducing the purchase price probably sounds more appealing to most people, right!?
@fach1werk
The rental apartment option is unfortunately not an option for us. Firstly, we simply have too much furniture, a workshop, and two cars, one of which is electric and requires a charging station. We don’t want to park our cars without a garage. Secondly, it’s so difficult to find a rental apartment in this area that also has enough rooms and parking spaces. They hardly come onto the market and are often rented out privately. If the rental option worked with our old house, of course we would treat the house carefully until the buyers move in. Fortunately, we have managed that well over the past years. I think we don’t even have a dent on a door or anything similar. For me, that would be obvious both as a buyer and a seller, but you do hear about many other incidents. There’s nothing that hasn’t happened!
Thank you all very much! These answers always give new food for thought! I’m sure no one is paying attention to commas or spelling mistakes here ;-)
Have a nice Saturday!