Brokers – House selling as heritage and future housing
In our editorial department this week we had the case that a reader had inherited a house and actually did not know what to do with her inheritance. That’s why we did some research and are now meeting the real estate expert Jan Rickel from Bingen. He explained to us in conversation what possibilities there are for real estate heirs if they do not want to live in the house themselves. We want to talk about the topic “selling a house”, but also about the future of living in general. What can housing look like in ten or even 20 years? Our real estate expert gives us answers to these questions today!
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.
Possibilities for real estate heirs
FIV: Let’s start with the exciting case “I inherit a house or an apartment and don’t want to live in it myself”. Renting, selling – what’s the best thing about it?
For this decision a lot of things play a really important role regarding the private situation of the heir and regarding the condition, location and size of the property. A simple “right or wrong” gibt´s with this thing unfortunately not.
Before that, however, an action is very important for the heir: The heir must be entered in the land register as a new owner within the framework of a “land register correction”. Incidentally, the simple handwritten will of the heir is not sufficient for this! You need a certificate of inheritance from the probate court or a testament of the testator drawn up by a notary. Anyone applying for the transfer within two years of the death of the previous owner does not pay any fees for the entry in the land register and no land transfer tax.
And something else is very important in the case of inheritance! Is the property of value or over-indebted? Is the house in need of renovation or are there already high land charges registered? After all, I can also refuse the inheritance if the costs or debts on the house are higher than its current market value. But in the end only a real estate expert can determine that.
FIV: What do you mean by private situation of the heir?
Anyone who is in acute financial difficulties as an heir, for example, and has possibly even taken over debts from the testator, will certainly immediately think of selling the property. An understandable thought, but not necessarily the best. Finally, there is also the possibility of borrowing on the property as collateral for a loan. With this credit you can repay your debts, for example. I then repay the loan from the rental income. This variant makes sense if I have very personal ties to the house as an heir and do not want to sell it without further ado. Maybe I can even imagine as an heir living in this house later on. In discussion with the banks, it can then be clarified whether the loan can be arranged in such a way that the house is available to me again debt free at the desired time.
Broker, Energy Performance Certificate & Tax Aspects
FIV: But how well do I have to know about real estate in such actions?
The estate agent or a proven real estate expert can also help with such questions. For example, there is a big difference between renting a detached house in the countryside and inheriting a large apartment building in a big city with, say, a dozen apartments. The question of whether the house already has an energy certificate or not is also important.
FIV: What does an energy certificate show and how do I get it for my inherited house?
Since 2010, the presentation of an energy certificate or passport at the request of the buyer or tenant is mandatory. Special guidelines apply to commercial properties or houses with a commercial share. Basically, this passport shows me how high the energy consumption in this object is in relation to an average comparable object. For this purpose, the consumption values for heat generation in different years are usually averaged and entered on a multi-level scale. For a better understanding, there is a classification into colour levels in addition to the energy efficiency classes with letters A to E or similar. Green is the best color. When it’s red, a lot of energy really goes out the window.
An alternative method is to calculate the energy demand of a property. The degree of insulation, the design and the age of the object are taken into account.
The energy passport is issued by companies or persons, the building specialists – engineers, master craftsmen, etc. – are. It doesn’t cost much, by the way.
Renting a detached house is a very demanding business. As a rule, the tenants themselves are very demanding when it comes to the quality of the property. The landlord is always required to maintain an optimal building condition. This costs money – and sometimes even nerves if the tenant regularly arrives with wishes.
Economically – i.e. in terms of rental income – letting a single-family house means that I have to take into account loss of rental income. At least if the house is in a less sought-after area. The first problem for the heir is finding tenants. When they move out again – because they are building or buying their own house – it becomes difficult to find new tenants. In metropolitan areas, of course, this is less of a problem…
My tip: If the house is within the reach of larger companies that regularly have to accommodate employees from abroad, the rental of single-family houses is going very well. In most cases, the leases are concluded by the company for two to three years. This gives you flexibility as the owner. In addition, the companies usually pay well above average, because they attach importance to rapid availability of the property. Of course, the house must be in perfect order for something like this!
FIV: Are there any tax aspects to inheriting a house?
Oh, yeah! Own use of a property can be tax advantageous. If the heir is the spouse of the deceased, for example, he does not have to pay inheritance tax on the property if he/she remains in it for at least ten years. This also applies to the testator’s children if the living space does not exceed 200 square metres.
If, on the other hand, the property is leased or is leased, then 90% of its value is subject to inheritance tax. By the way, the rental income is also taxable. On the other hand, you can of course credit certain expenses for tax purposes, but these are things that you discuss with your tax advisor.
FIV: Do I actually have to renovate an inherited property?
In a case like this, no one has to “have to” anything. If I want to sell the object, the price depends also completely crucially on the building condition of the house. The condition of the property as such is also important for a good selling price. The Basic Law states that property obliges the owner. So also obliged to maintain the property in good condition. It really depends on the individual case whether renovation is necessary or not.
Leverages & all about apartment buildings
FIV: Let’s go back to the subject of debt. How can I tell if my inherited property is in debt?
The insight into the land register is indispensable! Even those who believe they know if and what debts are encumbering the inherited property should ask for an extract from the land register. There may also be unknown encumbrances, such as rights of way to neighboring properties, third-party residential rights, redevelopment notices, etc. Since the heir enters into the inheritance with all rights and duties, one can also experience nasty surprises.
And finally it can be also that the inherited real estate is not yet paid off with the bank. If you want to sell hastily, you may have to include the fees for the early redemption of the loan in your bill when you redeem the loan. So it can be cheaper to enter the credit and wait for the remaining term until you sell. These are just a few aspects that need to be considered. But quite serious…
FIV: And what about an apartment building? Let’s start with renting out an apartment building.
Strictly speaking, renting an apartment building is something for professionals. But you can also become a professional over time. Also here I recommend – at least in the beginning time – to cooperate with a broker with the letting. For example, if there are vacancies in the house or if new tenants are to be sought.
The easiest way is, of course, if the house is well rented and the tenants do not cause any problems. If you don’t want to deal with the tenants yourself with regard to utility bills, renovation work, etc., you can fall back on property management.
FIV: Surely selling an apartment building is not easy?
I don’t necessarily want to call it the “supreme discipline”, but it takes a lot of experience to do something like that! This begins with the professional and market-oriented evaluation of the house, the appraisal of the building condition and continues with the preparation of the exposé, the coordination and execution of viewing appointments to the accompaniment of the sales process at the notary. Also real estate owners with a lot of experience like to use the help of real estate agents at this point.
All the other things we have talked about also apply to the sale or rental of an apartment building or an inherited flat.
Find help & use
But I would like to emphasize that nobody needs to be afraid of all these things. In addition to estate agents and real estate experts, there are tax specialists and lawyers who answer the heir’s questions. First aid can also be obtained from the appropriate websites. However, the individual appraisal of the inherited property should always be carried out personally by an expert.
FIV: That’s really encouraging! What is – to conclude the topic – if there are several heirs for the property?
Basically simple, but sometimes complicated in its effects: The individual co-heir cannot in any case dispose of the property alone. It is best if the community of heirs reaches an agreement and the property can be sold by private contract – i.e. in the normal course of business. However, I have often experienced that the heirs cannot agree on the sale. If that degenerates into a long dispute, then the property loses value day by day…
FIV: Then let’s talk about your job and living in general. Being a real estate agent means being available at all times. Buyers and sellers certainly often want immediate service, whether in the morning or – I exaggerate something – at night. With all the questions, calculations and valuations: What do you like most about the real estate business?
It’s not that exaggerated with the service even at night times – you add 22 o’clock to the night time… It’s really rare, but there are also customers who still have urgent questions at these times. In any case, weekends are often enough times for business with visits, inquiries about valuations and exposés, etc.
My parents already put the occupation with the building of houses, the trade with real estates into my cradle. But that doesn’t mean that I never wanted or could have done anything else! I really enjoy holding a really tangible and almost living product in my hands with the property. An apartment or a house is not just a simple enclosed space. Even if there are no people living in the property, the property has changed a lot over the years. By that I don’t mean the building condition, but the value. It changes with the value of the city, the district, the street.
But the main thing is the people who live, work and grow older in the property. They give every house, every apartment its individual character. I find it absolutely exciting to think about every property I build, sell or rent: How would I live and work here myself? Are the rooms cleverly arranged? Is there enough light at the right times of day? What type of person is this property best suited for?
All these are the questions and considerations that help to connect man and property. It is a real feeling of happiness for me when I notice that the customers I have searched for and found for the property are just as enthusiastic about the property as I am. Of course, this does not always succeed. But in the course of the years not only the customer file grows but also my experience. The seller and buyer of a property then also profit from this.
FIV: What philosophy do you follow in your advice when helping customers sell their property? Is there a kind of philosophy that you follow as a broker or do you calculate sober prices and square meters?
Sobriety with regard to the valuation of an object is absolutely part of the business. It is she who gives the real estate agent the opportunity to evaluate a house, an apartment etc. without a personal history with the object. But for me, real estate is not just the proverbial concrete gold. Real estate is a living and working environment that should suit its inhabitants. When I now say that I am bringing both – property and owner – together like a marriage broker, it sounds strange, but it is a good comparison.
FIV: If I look for a real estate agent now, what do I have to pay attention to? What makes a really honest and good broker?
Until today the professional title broker is not protected. Although there are trained and partly studied real estate specialists, in the end every real estate agent who wants to can call himself a real estate agent. Also the membership in one of the many professional associations of brokers is not necessarily a quality criterion for a good broker.
Everything starts with a good gut feeling towards the broker. If I get along with his individual nature, this is the basis for a trusting cooperation. Objective criteria are then further whether the real estate agent knows the area where the property is located. he should be able to provide comprehensible information about the current market situation for purchase, sale or lease. You can also ask other buyers in the broker’s vicinity – for example – how the cooperation went. References are of course also available in bulk via corresponding portals on the Internet.
Thank you so much for the interview.
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.