When you buy a second-hand condominium, you need to pay attention to a few details to make sure that you move into a flawless property and can possibly sell it later with an increase in value.
In this article, you will learn more about the most important features that such a property should have and how the purchase process works. You will also find useful checklists for many details.
Why buy a second-hand condominium?
Home ownership and condominiums in particular are becoming increasingly popular today. In the big cities in particular, an increase in value is almost guaranteed over the next few years. Consequently, it may make more sense to buy a second-hand condominium than to focus exclusively on a new build.
While new properties are usually priced very high, pre-owned condominiums are often less expensive. Apart from that, used condominiums are often located in already established neighborhoods. In contrast, newly built houses are usually part of a neighborhood that is still under construction. The environment usually still feels sterile and no milieu has yet been established. With pre-owned condominiums, buyers can usually expect a residential area in which the community and infrastructure have grown over many decades.
Checklist: Important questions and aspects when buying a used condominium
Buying a second-hand home also means that people have already lived here and this may be evident from the condition of the property. Holes in the walls, signs of wear on doors and windows, damage to the pipes or sanitary facilities in need of renovation can lower the final price apart from the cost of the purchase. Furthermore, the relevant documents must always be checked carefully.
Our checklist for buyers of used condominiums:
- When was the property last renovated and refurbished?
- Is renovation work planned and necessary?
- What about monument protection?
- Who takes care of maintenance and administration?
- Who all lives in the same house?
- Which documents are available for inspection?
- In which neighborhood is the used condominium located?
- Is the location of the used apartment favorable for the increase in value?
- What about the local infrastructure?
- What ancillary costs (waste disposal, water, cleaning, heating, administration, property tax) have to be budgeted for the condominium?
- What maintenance work is due according to the business plan and what reserves does the building have?
The condition of the condominium
By far the most important aspect to look out for when buying a second-hand condominium is the physical condition of the property. If there are major defects and damage, this can have a detrimental effect on the potential increase in value. You also need to make sure that the asking price really corresponds to the actual value of the apartment.
So first arrange an appointment with the estate agent to view the condominium for sale and ideally take your own expert with you at this stage. This expert will also be able to locate typical defects and, above all, identify hidden damage and defects. Critical points can include the piping and electrics.
Apart from this, you must determine whether there is a need for renovation. If this is the case, the question arises as to whether you as the new owner should plan for the costs of this work or whether this will be covered by the previous owner.
Hidden defects
One of the most common pitfalls when buying used condominiums is overlooking hidden defects, which then result in additional costs. In principle, the seller must of course disclose all defects. If he fails to do so, he is obliged to pay compensation. However, this only applies if the seller was aware of the hidden defects. The buyer would therefore have to prove to the former owner that he concealed damage and defects against his better judgment in order to receive compensation, withdraw from the purchase or obtain a reduction in the purchase price.
Documents and legal reviews
The first contact with the used apartment will usually be the estate agent’s exposé. Here you will see all the basic details and the proposed purchase price.
Here you can ask directly why the property should be sold in the first place. Do the current owners want to make a speculative profit, are they moving out because of damage or because they can no longer finance the loan?
You will then receive exact information about the property via the extract from the land register, which should be available to the estate agent. The names of the current owners are recorded there as well as any priority rights to the property. If, for example, a priority notice of conveyance for the takeover of the property by another person is entered here, this would first have to be deleted.
The owner or seller is also obliged to provide an energy performance certificate. This document contains information about the energy quality of the entire house or apartment. The better the walls are insulated, for example, the lower the energy consumption and the associated costs will be. The building specification can also provide some information on this.
The declaration of division will in turn tell you which areas of the building belong to the community of owners and which are considered separate property. You can find out which resolutions the community of owners has passed in the past from the building’s collection of resolutions.
It is also relevant to find out whether the property is currently still encumbered with a mortgage loan. If the previous owners have not yet paid this off, a debtor exchange may be possible. You then only pay the seller the installments that have already been repaid and take over the existing loan agreement without any additional fees. The condominium remains as security for the loan.
Pay particular attention to the following documents when buying a used condominium:
- Exposé
- Land register extract and registered rights
- Energy certificate
- Building description
- Declaration of division of the community of owners
- Collection of resolutions
- Information on current loan
Knowing additional costs when buying real estate
If you want to plan the financial aspects of buying a second-hand condominium properly, you need to keep an eye on the fees and other costs for the purchase process, administration and any renovation work that may be required.
You can prevent the latter from skyrocketing with an expert inspection and a look at the building description and the energy performance certificate. This way, you will know in advance where there may be defects that need to be rectified. If the potential renovation costs are too high, you may not want to go ahead with the purchase.
If you buy a property that has not been modernized, you will have to expect higher energy costs, especially for heating. In addition, shared charges in the community of owners, for example the house fee for administration and maintenance as well as connections for water and electricity, will be due.
You also need to consider notary fees during the purchase process. As a rule, these are borne by the buyer, as is a share of the estate agent’s commission. Around one percent of the purchase price must be budgeted for the notary appointment itself and 0.5 percent for the entry in the land register. Commissions of three to eight percent are common for estate agents. The Berlin estate agent’s commission averages 7.14 percent and is split between the buyer and seller.
With an exemplary purchase price of 400,000 euros, the pure notary and land registry costs can be estimated at around 6,000 euros. At 7.14 percent, the estate agent would charge 28,560 euros, which you would share with the seller. This means that you would have to pay 14,280 euros in estate agent fees. In Berlin, you will also have to plan on paying six percent land transfer tax. This means that you will have to pay a further 24,000 euros to the tax office after purchasing the second-hand condominium.
Example calculation for the additional costs when buying a second-hand condominium at a purchase price of 400,000 euros:
- Real estate transfer tax: 24,000 euros
- Half of the broker’s fee: 14,280 euros
- Notary fees and land register entry: 6,000 euros
- Total additional costs: 44,280 euros
The importance of location
Anyone looking to buy a second-hand condominium should not underestimate the importance of location. In today’s real estate market, it has a significant influence on price and value appreciation. Choosing a popular neighborhood can therefore be an investment for the future.
An increase in value can be expected for almost all properties, especially in large cities. Many investors who buy used condominiums speculatively choose a location that is still cheap, but could see growth in the coming decades. In this way, you invest cheaply and can get a relatively high return on your investment later on.
A good location is not only dependent on trends, but is also primarily determined by factors such as public transport connections, the resident structure, the surrounding area and the cultural offerings nearby. The type of location of a company, technology center or public administration can also be an incentive to move to the district in question. Planning with foresight in terms of location is therefore a recommended tip when buying second-hand apartments.
Secure a long-term increase in value with used real estate
In order to increase the value over several years, it is not only possible to take advantage of the location and popularity of a neighborhood. Renovations, refurbishments and modernizations are sensible measures to maintain and increase the value of the property. Above all, see such steps as an investment in the future, which in many cases you can even deduct from tax.
However, such investments should always be seen as long-term and only make sense if you want to keep the property for a period of around ten years or more. It is worth thinking about the possible renovation and modernization costs at an early stage and possibly drawing up a plan for the coming years after the purchase of the used condominium.
Financing the purchase of a used condominium
The question of financing is always at the top of the checklist when buying a second-hand home. The very first thing you need to ask yourself is whether you can afford the purchase at all and how the bank would support you.
One advantage of buying a second-hand home can be that the previous owner’s loan can possibly be taken over. Under certain circumstances, this is in the interests of all parties involved. The seller could avoid paying a prepayment penalty in the event of an early exit from the contract and the buyer could benefit from favorable loan conditions. Of course, the decisive factor in all of this is whether the interest rate set at the time the contract was concluded is lower or higher than for a new loan agreement.
The best way to find the best financing solution is to talk to your estate agent and bank. They will be able to give you further tips, including on state subsidy programs for property owners. Families in particular can count on state support in many cases. Home loan and savings contracts and investment grants are also important instruments in real estate financing.
These financing options for buying a property are particularly relevant in practice:
- Real estate loan with the condominium as security
- Extensive or high self-financing in order to reduce loan installments
- State funding offers
- Takeover of the real estate loan from the previous owner (change of debtor)
Checklist: The process of buying a second-hand condominium
Here is an overview of the most important steps when buying a used condominium:
- Find the right offer through an estate agent and agree on a price.
- Check the financial feasibility in consultation with your bank.
- Search for funding opportunities.
- Have the financing confirmed by the bank (with land charge/mortgage) (if a corresponding financing option is chosen).
- Drawing up the purchase contract
- Arrangement of a joint appointment with the seller at the notary’s office
- Signing the purchase contract at the notary
- Settlement of the purchase price including ancillary purchase costs
- Transfer of ownership in the land register
Offer preparation and negotiations
You can usually find apartment listings with all asking prices through real estate agents. However, you can also commission an estate agent yourself to find the perfect condominium according to your individual specifications. If the estate agent finds what you are looking for, they will work with you to create an individual offer, which the seller can then accept or reject.
After a comprehensive inspection of the property, negotiations are conceivable in which the estate agent can act as an intermediary and make realistic proposals.
Once you have reached an agreement with the seller, have the purchase contract professionally drawn up by the estate agent. In the meantime, you as the buyer should obtain the financing documents, which must be taken to the notary as mandatory documents. The seller should allow you to inspect the energy certificate.
Notary appointment: Conclusion of the purchase contract and entry in the land register
Overall, the notary appointment, which is mandatory when purchasing a property, is relatively short. You present all the necessary documents such as the financing confirmation and the land charge/mortgage. The latter will be entered in the land register later, depending on the contractual situation.
First, however, a so-called priority notice of conveyance is recorded in the land register in favor of the buyer. This guarantees that the property cannot simply be sold again and that ownership of it will really be transferred to you as the buyer. The priority notice of conveyance takes precedence over all other rights and obligations.
After signing the contract, you will also receive a request for payment. This must be complied with within the agreed payment period so that the purchase can be completed. Once everything, including the ancillary purchase costs, has been paid, the notary will now apply to change the entry in the land register. You will then be recorded as the new owner in the land register and receive the keys to your newly acquired condominium.
After the purchase of a used condominium
Even after the purchase of the used apartment has been completed, there are still some organizational matters to be dealt with. These include the payment of fees and costs within the community of owners. They will inform you of all costs such as cleaning, maintenance, connections, etc. You can then set up standing orders, for example, to meet these financial obligations.
As a rule, you have a free choice of electricity and gas suppliers. To do this, you contact the providers in question and agree a supply contract. However, the previous owner must first withdraw from their contract with the operating company and free up the connection in the property for you.
Summary: What should I bear in mind when buying a second-hand condominium?
If you look at the price-performance ratio, buying a second-hand condominium has a lot of advantages. The price is often lower and you may be able to “buy into” an established location. On the other hand, there are many details – from the actual handover procedures with the seller to hidden defects – that need to be clarified.
Only those who get a comprehensive and professional picture of the situation and condition of the apartment can understand whether it is actually being offered at a reasonable purchase price. If the price is fair and the apartment has the potential to increase in value, you can make a profit from such a purchase in the long term with the right financing.
FAQ: Frequently asked questions about buying a used condominium
What should I look out for when buying a used condominium?
First of all, the condition and location of the property should be right. It is above all the hidden defects that can pose a problem for the future. If costly renovations are required in the long term that even the previous owner was unaware of, this can result in considerable follow-up costs. Furthermore, the condominium must be realistically affordable. Bank loans, mortgages and state subsidies can be components of the financing.
What costs will I have to pay for a second-hand apartment?
In the case of second-hand apartments, you may also have to plan for the costs of a renovation or refurbishment in the near future. As a member of the community of owners, you also pay a share into the maintenance reserve. This is used to pay for necessary repairs. You should also think about the property management fee. Of course, you also pay for your water, gas and electricity supply.
