Buying at Auction

Discussion in 'German Property' started by berlinbrit, Jul 20, 2007.

  1. berlinbrit

    berlinbrit New Member

    Hi there all,

    I'm a Brit living and working in Berlin. I have bought 2 properties at auction here in Berlin - one of them i live in. I would strongly recommend the auctions as you can pick up some great bargins. Note, these are public auctions open to anyone, and are run by the court (Amtsgerichte). Each district in Berlin has a court - though the auctions are centrallised in 3-4 different court houses. The properties coming up for auction are posted on a website. Unfortunately I can't post the URL to this, but it's strangely not a de domain, but a com and is composed of three initials which are an abreviation for zwangsversteigerung - ie zvg.

    Each property has a reference number eg K03-232-06. If you take this reference number to the court you can get to se a copy of the survey report (Gutachten). They have a reading room for this purpose - but you may need to leave your ID while you read it. The Gutachten will be in German. You can get a copy of it for a small charge. Before the aution you need to transfer 10% of the valued price to the court. This is your deposit - withut it you will not be able to bid. In the past you cold take the 10% as cash - not any more. Note, this should be transferred about 2 weeks before the auction date.The auction itself mut last a minimum of 30 minutes. The gutachten will be available for you to read during the auction. If you win, you will need to give a date when you will transfer the rest of the funds and pay 4% interest until it's transferred. There will be an additional "stamp-duty" tax too.

    If you need any further info, let me know ..

    Ash
     
  2. bialikma

    bialikma New Member

    Thanks for info Ash,
    I've seen their advertising on the website and contacted agent that is ready to represent me on auction ( I live and work in Israel) , but I can't understand what is catch here : why the properties are priced so low ? and what is the uncertainty here ?
    I'm also trying to avaluate how far the final price will go from the basic offer, since may be there a lot of pretenders like me.
     
  3. Rambo

    Rambo New Member

    auction

    Bialik.... be careful, because if you will continue ahead you will be better off making poems like the poet Bialik rather than buying property:)

    The prices for starters at courts are no good at all (the others i wouldnt recommend at all), and are not to be relied upon as the way wertgutachten are calculated are not the way you would make valuation as a buyer.

    why the properties are priced so low ? they are not, be aware (at least not zvg).

    and what is the uncertainty here ? as I said (and the court warns you also) you shouldnt rely on the guide price provided....

    I'm also trying to avaluate how far the final price will go from the basic offer, since may be there a lot of pretenders like me - you can never know, depends upon public interest in the property. a house in frankfurt will generate more interest than a house in saarbrucken. and there are not a lot of pretenders, my dear - people come to buy, otherwise go to Vegas.

    And a agent? the guy needs full POA from you, and another list of demands, to bid for you. so be careful, as you might end up as a lucky owner of some rotten shed your guy acquired in your name (you might be better off buying land in your lovely neighbours, Gaza, than buying on ZVG with closed eyes.....)
     
  4. K.Fahey

    K.Fahey New Member

    German Auctions

    Hi Ash, cannot say i understand all you said.I have looked at ZGV but it is in German.Are the prices quoted not the real prices you can buy before Auction?Is it safe to do what this other person is asking you and to appoint a person to act for him?I see some 3 floor buildings advertised for about 100,000 euro-what does one do with them and are there hidden maintainance charges.What about tenanted buildings?Do the tenants just stay put.I dont know Germany at all, but prices seem interesting.Many thanks, Katherine
     
  5. bialikma

    bialikma New Member

    Hi Rambo !
    Thanks for the advice. Still Berlin's property looks very attractive so I'll concentrate on conventional offers.
    P.S Gaza RE will probably get bum one day :)))
     
  6. Rambo

    Rambo New Member

    berlin

    bialikma, I disagree with you re Berlin, from experience.

    check out Frankfurt, Munich, Stuttgart and Hamburg before you jump into the overheated Berlin Market - Dont follow the American and UK herd....
     
  7. bialikma

    bialikma New Member

    Well,

    6 months ago I had purchased apartment in Frankfurt , I have to mention that I spent months of field research before it, but today ,sitting on 6.5 % yield , I can say that it doesn't worth it.

    Munchen's prices are too high, and rents are similiar to Frankfurt, so it's not interesting as well.

    The only place that I found in Germany with potential to rise prices and yields between 7 to 10 % is Berlin .

    May be I'm wrong , but this is my impression from daily passing through offers of the last 2 months. So I plan to go for it.
    By the way, what can you say about Wilmersdorf and Zehlendorf districts ?
     
  8. Rambo

    Rambo New Member

    Berlin?

    Hi,

    First of all, you made a grave mistake - sorry to say so - by buying a single apartment anywhere. as soon as there will be capex expenses decided by the majority, even if you will think it is not needed at all - you will have to pay up... so as a first rule - always go for a MFH (Mehrfamilienhaus) and not for apartments within a MFH, and I am talking from experience.

    the reason why you got this yield is simply by buying no good, and has nothing to do with the market in Frankfurt. by looking well into the marketplace, you can find great deals - if you have patience.

    Munich is expensive but highly safe, and so is Hamburg and other established centers. these cities are economic powerhouses, whilst Berlin - with all due respect to the Capital - has no economic presence which acts as a magnet for people to live there besides those who need the proximity to the government, so dont make a mistake: Berlin is NOT London or Paris, who have the national economy in them. Siemens is in Munich, Hamburg has the shipping, Bonn has the Telekom (who pulled in AFTER the Gov left to Berlin... and Bonn is thriving today) and so further.

    So, look at the economic fundamentals of a region - the local research houses do the job very well - and there you can safely expect capital growth which is real, no based on outsiders who pile into the market and run for cover as soon as anything (interest rates?) goes wrong.

    Once you have done your macro homework, go and look deeper for the right location micro, the right property and yield. but as stage one, define what are you looking for in this market: for long term solid stuff, do as I said.

    And as someone who is active there since 2003 and already completed many deals in Germany, I can tell you something personal (because you mentioned that you are Israeli):

    1) Many crooks are roaming the market, reaching everywhere, and looking for some unexperienced fellow who will donate his savings - and they are reaching your country also in search for prey, so keep your eyes open and ASK THE LOCAL EXPERTS (not brokers).

    2) I see Israeli companies who raise cash on the TA stockmarket for investment in property in Germany, and I also see the **** they buy in order to get the high yields and write in the newspapers about the bargains they buy. you should learn from them and avoid this short term strategy, because many of them will not - in my opinion - pull another financial year unless a miracle happens, maybe that will be a lesson to all speculators with other peoples money.



    Enjoy....
     
    Last edited by a moderator: Mar 22, 2014
  9. K.Fahey

    K.Fahey New Member

    Berlin property

    Hi Rambo.I found your advice very interesting as i know very little about property markey but was looking to buy something with small investment in this area.Is there any promising areas around here?How about greenbely land near the coast.Would thAT BE A GOOD IDEA?hAVE FOUND THE AGENT THAT YOU MENTION BUT THE SITE IS IN gERMAN SO I CANNOT READ IT.aNY ADVICE/SUGGESTIONS WOULD BE APPRECIATED.tHANKS.



    Enjoy....[/QUOTE]
     
  10. bialikma

    bialikma New Member

    WOW ...
    Probably the best advice I've got on the subject, so - thank you !
    If you have patience just few more questions :
    Except the disadvantage of so called capex expensies there any other problems with bying single properties ? (like, selling it later ? )

    And the most interesting isue (at least for me) , why majority in German prefers to rent and not to own the RE ?
    If this is the common policy, the best tactic is buy-to-let .

    Thanks again .
    Mark
     
  11. Rambo

    Rambo New Member

    Answers

    Hi,

    bialikma - I just popped in here, unfortunately I am extremely busy right now but I will get back with clear answers to your questions - which merit a decent answer - in due course.

    fahey - I didnt get your question: what are you looking for? please be specific and clear, because my time is extremely limited... but I am trying to help as much as I can.


    Your

    Rambo
     
    Last edited by a moderator: Mar 22, 2014
  12. bialikma

    bialikma New Member

    Hi !
    the million $ question is : why they are renting instead of buying ? if it's common practice ,does it mean that every property in West Germany potentialy can be rented ? So no fear to buy-renovate- let ,since everything goes ?

    Sorry for the mess .
    Mark
     
  13. Rambo

    Rambo New Member

    Buy-to-let

    Marc,

    Let me explain you in short, as I see you are slightly confused with the issue of letting vs buying:

    The German market is indeed mostly a rent market (only 43 percent are owner-occupiers, one of the lowest in Europe - the European average is 60 percent owners, according to Eurostat), this creates a enviroment of renting but has no effect upon demand for rental property.....

    But you should take into account a few critical facts:

    1) the rents have hardly risen compared to inflation, so at the end of the day you will have to rely upon value increase as part of a long term strategy.

    2) active management does improve the property (refurbishment etc.) but there is NO guarantee that this will have an effect upon rents compared to the amount invested.

    3) i hope you are fully aware of the law which is quite unfriendly to the owners in case problems of defaulting tenants come up, and it could drive you nuts - whilst you are paying your morgage back with own capital.... this depends upon management and location, but take this into account.

    4) demography is not very good for the long term (but you, as a small investor - not a portfolio holder of thousands of units - should not bother to much about it).

    5) there is about 15% of vacant stock in the East, for example, so location could be critical.

    To end with, I dont see the UK with 70% owners having less demand for rental than Germany, and this has no real effect on your decision making, but the property - tenancy structure - location are the most critical factors when it comes to investment.

    And if I am already at it, your question on Apts Vs houses can be answered the same way: you can sell it in the future? yes. There will be less demand for it? yes. and remember: if I have a house with 10 apartments and someone leaves, my income goes down with just 10% until I find new tenants, but your apartment can be vacant and you will have ZERO income... this creates a high risk which you should avoid if possible.

    Hope this helps,

    Rambo
     
  14. Rambo

    Rambo New Member

     
  15. bialikma

    bialikma New Member

    Thanks a lot Rambo !

    It puts light on a lot of things.

    Mark
     
  16. Lewis

    Lewis New Member

    German auctions

    Gentlemen,
    I am a real estate agent and broker with offices in Germany. The days when an amateur could benefit from the State or court auctions are over. This is not a place to purchase unless you have local knowledge.
    In many cases the bidding is going way over the window price in the local agents. It is like sharks at a feeding, everyone just goes crazy at the false idea they are bidding on a bargain.
    Once you have bought the property, What are you going to do with it? Put it back in the auction and hope for a bigger fool than you in the next auction because most of these properties are unsellable for various reasons.
    I have and will continue to buy at auction but not without getting my local experts involved. Like I said the good times are over - I could, not so long ago, walk away with maybe a dozen good properties at good prices - not today - I would be lucky to find one or maybe two at each auction and because plane loads of people have been fooled into going over to attend these auctions I will be bidding against too many dreamers with no idea of the local value, laws, restriction, taxes etc so I tend to drop out quite early in the process knowing I can make a phone call to a local agent and find a similar property listed with them.
    There will be those who may come onto this forum and argue against this posting - You choose who to listen to.
    There are bargains to be had in Germany and as a long/mid term investment it is hard to beat when you consider the safety net and the changes coming in German law, but - the auctions - be afraid, very afraid.
     
  17. Lewis

    Lewis New Member

    The reasons most Germans currently rent as opposed to buying are legion. I will try to briefly cover a couple of important ones. Renting in many areas is cheaper than having the corresponding mortgage payments for any particular property. - The German administration would prefer to have Germans as house owners so this imbalance is being considered and will be addressed in several ways. For example in the East large numbers of vacant, non listed properties are to be demolished ( I believe this is at least a quarter of a million properties (I do not have the exact figures to hand))
    The German mortgage industry is being dragged into the 21 century and mortgages will be more readily available next year.
    There is a cultural aspect to their attitudes - They have always rented as did their parents so they continue to do so - Only they won't because just as the law changing in the UK changed British attitudes toward home owning so it will in Germany.
     
  18. bialikma

    bialikma New Member

    and still most of them prefer to rent . So may be there are some financial aspects ? like rent expenses are recognizable by tax law and mortgage returns are not? But somehow the rents prices are not rising rapidly from year to year.
     
  19. Lewis

    Lewis New Member

    It is not possible to raise rents rapidly in Germany. Presently there are restrictions to how long you must own the property and how much you can raise rents by.
    Further to this the sheer number of rental availability in many areas means competition is such that raising rents to the max permissable might mean the renter heading toward the competition.

    Those of you around the UK before the Thatcher era will recognize the restrictions above. It was much the same in the UK - everything favoured the renter and in many occassions the only way a landlord could get rid of an erring tenent was by illicit means. Then the pendulum moved back toward the centre, and home owning/property owning became attractive again and turned us into buyers and not renters.
    The same process is happening in Germany, it won't happen overnight (it took a while to take roots here also) but social housing is being sold off as are unwanted government buildings, post office, churches, railway properties etc etc
    I have a very good friend working for a large housing agency - they are slowly but surely re-furbing their apartments and selling them off one by one.
    This association, I'm sure, will not be the only organization glimpsing the future. Reforms are only a short while off. I suggest you position yourself to take advantage of these changed now.
     
  20. bialikma

    bialikma New Member

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