Germany: To buy or not to buy?

by Annie Valentine
Contributing writer

shutterstock_73444150_beaCivilians and active-duty members stationed in the Ramstein area have a tough decision to make: Should I buy a home in Germany?

Whether you plan to be here for three years or indefinitely, buying a house is something to carefully consider. Maj. Jared Thompson of the 37th Airlift Squadron said buying a home three years ago was definitely worth it.

“Initially, there’s a little fear in dealing with a German mortgage and not speaking the language, but if you shop around, there are a lot of lenders who speak great English,” he said.

When the Thompsons arrived in Germany in 2010, they started looking for a rental. The lack of suitable places made them consider buying as a viable option.

“Once we started crunching the numbers, it made more sense to invest our housing allowance into something that we could keep,” Thompson said.

But if you’re thinking buying a house in Germany is similar to buying in the states, think again. It is an entirely different process. For instance, in the states, real estate agents can show any home listed for sale, regardless of who listed it. In Germany, agents can only show homes they have personally listed. “For sale” signs don’t exist around here.

Tim Vohar, a community readiness consultant on Ramstein, said potential buyers should be wary if they’re working with more than one agent. If two agents show you the same house and you choose to buy it, you will be obligated to pay a double agent fee. “Over here, there are no multi-listings. (Real estate agents) can only sell homes they are under contract with, and more than one agent can contract for the same house. You have to do your own research,” Vohar said.

In the states, real estate agents handle the contract and paperwork. Here in Germany, their job usually ends once you pick a home. But since Germans have no pre-sale agreement, it can get tricky.

Thomas Saulters, an American and local real estate agent in the area, said smart buyers put their intentions in writing and have the seller sign an agreement in order to hold the home.

“Germans typically do not do a hard copy offer sheet,” he said. “If you want to freeze the property, you just have to ask for it. It gives the potential buyer time to do what they want to do and not worry that the house is going to be sold.”

The upfront cost is an unexpected expense for Americans. Traditionally in the states, the seller pays the realtor, but in Germany, it falls to the buyer. That means you should prepare to fork over an additional 3 to 4 percent of the purchase price for the agent.

The big question for Americans buying a home in Germany is financing. To purchase a home over here, buyers need roughly 110 percent financing to cover all the additional fees. There is some speculation as to whether or not Americans can procure that kind of money in a loan, but it seems those who do their research can still find the necessary funding even in today’s economy.
Saulters said the biggest fallacy over here is mortgages.

“People believe that they can get pre-approved here. Germans don’t typically pre-approve you for anything,” Saulters said. “They take the property first because they don’t sell their loans. It stays in their books so they’re much more liable for losses and wins.” Making sure you do your research when it comes to procuring a mortgage is critical. If you are planning to leave after three years and your mortgage is not adjustable, it can come back to bite you. “More people get stuck on the mortgage because they leave here upside down with a fixed mortgage of €2,600 because while they were in the home it was fine,” Saulters said. “But when they leave, it only rents for €2,100 and they leave with $1,000 more out of pocket each month. It defeats the whole purpose of what you did it for.”

The key to striking a deal with the banker is to ask for things and get them in writing. If your banker promises an adjustable mortgage, be sure it is part of your contract. That way, your payment can be adjusted when it’s time to rent your home. There are other unexpected differences in the cost of homes. For instance, buyers are usually hit with a hefty local tax bill shortly after their home purchase that can cost up to €10,000. Having that on hand is critical.

Whatever you choose, the most important thing Americans buying in Germany can do is to carefully research. The more people you talk to the more pieces of the puzzle will present themselves. It is not a cut and dry process, but if you’re interested in a smart, long-term investment, buying a home in Germany is absolutely doable.