It's all so confusing (or buying a house in a different country)

Yesterday's blog inspired a couple of questions about how the house buying process differs between the US and Germany, so I thought I would throw some comparisons and contrasts out there for the sake of amusing some of you who find these things of interest.
PLEASE NOTE that if you happened to stumble on this blog by accident while looking for reliable information about the process in either country that I am not in the least bit confident that I have a firm (or even loose) grasp on the procedure, so nothing here should be taken as reliable information for someone truly looking to invest hundreds of thousands of dollars or euros in a new home.

Ok, so with that disclaimer over, let's get to it, shall we?

Over the years we have bought and sold five (yes, really five!) homes in the USA.  One in each of the five states we have lived since we were married.  So, we have a fair bit of experience with how the process works across the pond.

The typical process, as a buyer, in the US is to choose a real estate agent to work with.  Meeting with a couple to see who seems to communicate well with you, or simply choosing one who has time to dedicate to taking you to multiple showings in the few days you are visiting a new area works pretty well--if you can get a word of mouth recommendation, all the better.
This agent will help you find available properties in the area that suit your criteria (but you can also look at "MLS" listings online and let them know what you want to see), line up showings of those properties and represent your interests right up until and through the final paperwork signing (called a closing).  This "buyer's agent" is looking out for YOUR interests throughout the process and not the sellers (unless you happen to buy a home that your agent has listed, in which case they need to be as neutral as possible--it is a situation we have never found ourselves in).

As the buyers, we actually do not pay that agent a thing.  She or he will receive half of the commission that the seller and seller's agent have agreed on (usually around 6 percent; I have seen as low as 4 and as high as 8).  And the SELLERs pay that commission out of their proceeds from the transaction (frequently, if you are moving as part of a corporate relocation, the company will agree to pay your Realtor commission for you to sell your current home so that you do not lose money in the move).

Here in Germany, buyers agents are rare and the buyer would have to pay them to help them look for a home.  In the modern age  of the internet, there seems to be no need whatsoever  for them.  I'm not really even sure why anyone would have a seller's (listing) agent (called Makler) here, listing by owner seems to garner more trust, allow the home to be shown more often, and make the home more attractive as it lowers the price for the buyer.  Yes, lowers the price for the buyer---in Germany each listing clearly states what the Makler's fee is (generally 3.5 to 6%) and the buyer is required to pay that on top of paying the purchase price of the home.  I find this buyer pays situation quite odd considering that the Makler does very, very little for the buyer (generally responding to a phone or email inquiry, often rather slowly, meeting the buyer at the house and showing it and possibly doing a second showing--that's about it), but that is the norm, and there is no way around it, other than buying from an owner who is selling without a Makler (still few and far between, but more and more).


In the USA, as a buyer you pay the purchase price agreed upon and some or all (it seems to be split 50/50 in most areas we have been) of the "closing costs" which are the fees needed to draw up all of the legal paperwork--they tend to total around $2000 for the buyer in a transaction.  That is pretty much it.

In Germany, as a buyer, you pay the agreed upon purchase price, the Makler's fee (generally 3.5 to 6 percent), the Notar's fee (similar to closing costs, this pays for all the legal paperwork, it is usually paid entirely by the buyer but in some areas split 50/50.  Each "state" has a set percentage of the purchase price that the Notar charges, here it is 2%) and property tax on the sale (again set by the state, somewhere from 4-7%, it is 5% here).

So, let's review:

In the USA the final cost to the buyer is the purchase price plus 2-3 thousand dollars in closing costs.

In Baden Würtemberg Germany the final cost to the buyer is the purchase price plus 2% for the Notar, 3.5% for the Makler (estimating low, but it seems to be the going rate around here, thankfully) and 5% in taxes-  Yes, that means there is an extra 9.5% over and above the purchase price that has to be brought to the table.  OMG the sticker shock!

On the plus side for buying in Germany, while the initial costs are high (which really discourages "flipping houses" by the way) the long term costs are lower.  Yearly property taxes in the US vary from one county to the next but are pretty much always in the thousands.  Here in Germany we have yet to look at any property with a yearly tax of more than 400€ and most are closer to 200€

--OK, that is probably more than enough financial information to bore you all for the day.  Lucky you, who are not trying to actually invest money wisely in a home and not trying to find this out in bits and pieces questioning neighbors and friends and searching online!

--Hadley