Someday it will be. If you are not currently working in the real estate industry yourself and find yourself in a situation that has to do with real estate, sooner or later you will ask yourself: “Wouldn’t it make more sense to hire an estate agent? On the one hand there is usually the cost argument and on the other hand everything should be done without complications, problems and stress. We have the right solution for you. We conducted an interview with a real estate expert.
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.
Hire a broker – costs & expiry
FIV: For many of our readers who have never used a broker before, the first question that arises is: Who actually pays the broker? For brokers the so-called ordering principle applies from now on. Recently, as I have understood, the client has to pay the brokerage fee or commission for the real estate brokerage. In a few sentences, who pays the broker?
There’s a saying “whoever orders the music has to pay for it”. Since 2015, the buyer principle has applied in all cases to the rental of apartments, houses, etc. In plain language: Whether landlord or tenant – whoever commissions the broker also pays the fees. As a rule, of course, this is the landlord, but more and more tenants are using a real estate agent to find a suitable apartment in the sometimes scarce market.
So if you want to buy a property with the aim of renting it out, you have to reckon with further costs as soon as you call in a real estate agent. This makes it all the nicer if the property developer from whom you buy your (new) apartment already has tenant contacts. This saves time, money and sometimes even trouble. First tip: ask the owner of the property you want to buy if he already has tenant contacts. This is very simple, of course, if you buy an existing property that is already rented…
FIV: And what is it like when buying or selling a property?
So far, there is no uniform ordering principle regulated by the federal government! A corresponding proposal of the party “The Greens” has not yet been discussed further or even decided. Buyers and sellers often share the broker’s commission, also known as broker’s commission. Only for the federal states of Bremen, Berlin, Brandenburg, Hesse and Hamburg does the rule apply that the buyer pays the commission.
Commission – How is this calculated?
FIV: And how sieht´s with the amount of fees or commission from? Can any real estate agent do what he wants when selling real estate?
Strictly speaking, yes! There are no legal regulations for the amount of the fees. In practice, however, buyers and sellers or brokers orientate themselves on the usual fee rates in the respective federal state. These range from 3.57% to 7.14% of the purchase price. So not necessarily always a little something. However, depending on the federal state – as I said – buyers and sellers share these costs.
For the money, a neat broker also does a lot! After all, for example, he prepares a meaningful exposé of the property, arranges and coordinates visits to the apartment, is actively involved in the drafting of contracts and negotiations, and so on. In addition to experience, you also need a great deal of knowledge about appropriate training or even studies.
Competencies of a good broker
FIV: What are the mistakes? How do I recognize a good and reputable broker? A doctor’s degree?
For God’s sake, no! Nobody needs a doctorate or similar to become a broker or to be recognized as a good broker! Until today it is even so that one may call oneself “real estate agent”, without having made a special training for it. This does not exist in the end either. With the training occupations “real estate specialist” and “real estate agent” there are meanwhile however recognized ways to be able to deal expertly with real estates.
Basically one needs numerical understanding, commercial knowledge or experience are advantageous. The only legal requirement is to have a trade licence or a broker’s license.
But a good realtor needs much more. This starts with a high level of social competence. That is, the ability to adapt to a wide variety of people and their needs. A real estate agent should not be shy of contact at all. Above all, however, he must be very familiar with the market in which he wants to buy or sell his property.
And as a customer, you quickly notice: does he know the cities, locations and property types and their special features very well? Can he refer to references in the environment? You can also talk to “neighbours” who have bought from the same broker. A good real estate agent also has all the documents for the property to be sold ready. Best in a meaningful and well-designed exposé. In addition, he should also be able to advise and accompany you in matters of contract law and notarial negotiations.
It is ultimately also the much quoted “gut feeling” towards the broker that gives an indication of “good” or “bad”. If the broker puts too much pressure on the decision, for example, he always speaks in superlatives, this does not necessarily speak for a good broker. For example, he should also talk openly about possible disadvantages of the property.
Tasks of a broker
FIV: Many people think at first only of the viewing date, what exactly does a broker do for the client?
It’s nice that we’re going to go into that again. Already above with the fees I have already mentioned what the client gets for his money. The inspection date is only a part of the many achievements of an estate agent, even if a completely particularly important one!
Before the inspection, the first inspection of the real estate, a professional evaluation and the determination of the correct sales price stand however. This requires a great deal of sensitivity on the part of the broker. Because the seller usually has completely different ideas about the value of his property than the market allows. Of course, the broker is first and foremost on the customer’s side, but that also means that he informs him fairly about what the current and future market prices really are.
Then the exposé comes to the property. This is not just a glossy brochure for better sales. The aim is to highlight the characteristics of the property in an appealing way, to put every detail in the right light. Photos and texts should reflect reality, but at the same time create an incentive to buy. All information regarding energy consumption, ancillary costs, etc. must also be listed and procured beforehand.
Coordinating viewing appointments with the seller and buyer is often a demanding issue. All parties must agree on an appointment. In addition, both sides have a different view of the sales process. The seller wants to achieve the highest possible price, the buyer the exact opposite. Here again the social competence of the good broker is in demand. He must have an eye on both sides and be able to communicate accordingly.
After all, the broker also accompanies the actual sales process. By either conducting the negotiations completely alone, if the seller does not want to see the individual buyers at all, or vice versa.
Real estate purchase – These three points are important
FIV: What are the 3 most important points I need to consider when buying a property?
First and foremost is the state of construction of the property! But please always take a deep look behind the scenes! Roof, walls, windows, garden, cellar etc. should not require renovation or will be deducted from the purchase price.
In the second place is the answer to the question of whether I want to use the property myself or buy it as a capital investment. The third point that depends on this is how good the residential location is for the rental theme. A bad living environment – let’s leave it open for the moment what that can be – usually means a high risk of loss of rent and thus problems with financing. If I want to live in the property myself, I should look at the additional costs (additional cost calculator), so that I do not wake up badly later.
FIV: Would you recommend the purchase at the current prices?
The current prices can also discourage you from buying. After all, they are also driven by rising demand – at least in conurbations. But also from the still sensationally low interest rate level! There are enough sellers who want to add more or less “fat” to the actual selling price.
But because of the currently still low interest rates, buying really makes a lot of sense! I recommend kann´s, but I would also advise you to consider the duration of the financing! After the expiration of the credit period – and most buyers need bank financing – so much debt is already paid off that a changed interest landscape cannot endanger the entire project. So: either agree on a high repayment at the favourable interest rates, or agree on as long a term of the loan as possible with favourable interest rates and standard repayment (2%).
Invest in a condominium – When is the right time?
FIV: When should I invest in a condominium and when should I think about buying a house – what would the expert recommend?
That’s basically quite simple: First of all geht´s about what I can afford with my possibilities at all. A house is usually more expensive than an apartment.
But the answer also depends on what purpose I am pursuing with the property. As a capital investment or yield object with immediate effect, the apartment is usually the better model. The apartment is or will be rented and brings me immediate income. Of course, I can only “take” the increase in value with me when I sell the apartment again and the market environment has led to an increase in value.
Buying an apartment house is only for real estate professionals! Buying and renting a single-family house as a yield property is also a complex matter. As a rule, the tenants of single-family houses are very attractive in terms of repairs and maintenance of the house. Because then prefer to think of their own home for their own use and consider it as an investment “for later”.
FIV: I want to sell! In your opinion, what are the 3 central topics in the sale of real estate?
I’ll give it a try:
- Question whether you want to control the sale yourself, or if you prefer to hire a real estate agent to serve you the right buyers.
- maintain that the elementary parts of the property are in good condition.
- Question if your ideas of the selling price depend on personal and emotional things.
Thanks for the interview.
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.