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 ;-)
You can also use the informal “you” with us 🙂
Rent must be taxed...
... but not a lower final price. Double savings, or even triple, for the buyer since the property transfer tax (also known as stamp duty) is reduced as well.
All in all: a win-win for both.
If possible, avoid involving a real estate agent as well; this attracts twice as many potential buyers.
LMN2018 schrieb:
But in recent years, he often used the option where the seller pays rent to the new buyer.
Rent must be taxed...
LMN2018 schrieb:
Reducing the purchase price probably sounds more appealing to most people, doesn’t it!?
... but not a lower final price. Double savings, or even triple, for the buyer since the property transfer tax (also known as stamp duty) is reduced as well.
All in all: a win-win for both.
If possible, avoid involving a real estate agent as well; this attracts twice as many potential buyers.
LMN2018 schrieb:
We currently live in a prefab house and were very satisfied with it back then. However, for the second time, we would prefer to build with solid masonry, as we expect a better indoor climate (which could probably be a big topic of discussion ;-)) That's right. With monolithic masonry, you can still notice a difference, but with external thermal insulation composite systems (ETICS), I don’t see any significant difference between insulation inside or outside the wall.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
ypg schrieb:
Good climate conditions do the job for the ventilation system. What I am even more of a fan of than sealed-door warm showers is: analog fans :-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
@Curly
You used a bridge loan. What would you have done if your old house hadn’t sold? Would you have been able to afford it financially? We couldn’t afford to keep both houses! That would mean having the existing mortgage for the old house, the bridge loan, and the financing for the new house, or am I misunderstanding something?
Have a nice Saturday![/QUOTE]
We didn’t expect that to happen, why would we? In our area, all houses are selling – I had already seen this in the real estate listings. Even houses directly on main roads or near railway lines were sold quickly. For our new mortgage, we only had to pay 150 euros per month (we had reduced the repayment rate to 1%), and for the bridge loan, we only paid interest. So, we could have kept paying for longer, but it wasn’t necessary. Our real estate agent told us properties have never sold as well as they do right now.
Best regards,
Sabine
You used a bridge loan. What would you have done if your old house hadn’t sold? Would you have been able to afford it financially? We couldn’t afford to keep both houses! That would mean having the existing mortgage for the old house, the bridge loan, and the financing for the new house, or am I misunderstanding something?
Have a nice Saturday![/QUOTE]
We didn’t expect that to happen, why would we? In our area, all houses are selling – I had already seen this in the real estate listings. Even houses directly on main roads or near railway lines were sold quickly. For our new mortgage, we only had to pay 150 euros per month (we had reduced the repayment rate to 1%), and for the bridge loan, we only paid interest. So, we could have kept paying for longer, but it wasn’t necessary. Our real estate agent told us properties have never sold as well as they do right now.
Best regards,
Sabine