Buying at Auction

[berlinbrit]

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

[bialikma]

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.

[Rambo]

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.....)

[K.Fahey]

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

[bialikma]

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 ))

[Rambo]

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....

[bialikma]

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 ?

[Rambo]

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.

Have a look in Immobilien Scout24 or immowelt for investment properties, and try to get a feel for it.

Enjoy....

[K.Fahey]

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]

[bialikma]

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