Selling property without going out – you need to know about it

What choices do real estate owners have: Make money from real estate without having to go out – this is how it works

The Germans have great wealth. But a greater part of it is on your own property – not quite practical when the money is needed. Selling doesn’t have to be in this case, because there are various alternatives to gilding the property and you can still continue to live in it.

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The national wealth of the Federal Republic of Germany now amounts to nearly 15 trillion euros. Half of that amount is invested in real estate, and the other part in more or less liquid asset classes. Home ownership in Germany is around 51 percent. Most angels associate this with a sense of security and feeling its origin Relatively crisis-resistant. If you live in the property yourself and have completed the most necessary financing, you are protected from a rent increase and the loss of your residence. However, owner-occupied property in particular usually accounts for the majority or even the only asset.

So any necessary transfer, renewal or renewal is already a financial problem. Theoretically simple solution to selling an apartment or house and moving into a rented apartment is also not an option for many because they do not want to leave their familiar environment. Therefore, it is worth considering the various variables that allow you to stay in your home, sell parts of it or receive regular monthly payments.

Loan – the familiar way for realtors

Since many property owners have used financing to purchase, there is already experience with borrowing and registering a mortgage. If the property is not attached to it at the moment, you can look for a bank that will issue a mortgage to raise capital, even if there are no plans to buy or build. Usually, a loan of 50 percent of the specified market value is possible on favorable terms, including a special repayment option.

Even if interest rates are currently rising again very quickly, the level of interest rates is historically very low. If the property is in an urban area or in a desirable marginal location, the value must have increased in recent years. Then 50 percent of the present value often corresponds to the full purchase price 15 or 20 years ago. However, from a certain age, it can be difficult to find a lender, especially if the expectation of the pension or pension withdrawn is already low, it is difficult to get a suitable loan.

Partial Selling – Simple Execution with Regular Costing

For a few years now, Germany has also been able to use a variant that is already being implemented in Great Britain. Here the owner can sell up to 50 percent, but at least €100,000, of the market value determined by an expert to the partial buyer, provided the property is unrelated to it. You get the usufruct for life, which is registered in the Land Registry. The buyer becomes a silent partner. The seller retains complete decision-making authority over the property, but can still sell or rent the property.

Buying companies, such as Wertactor Immobilien GmbH or Engel & Völkers LiquidHome of Hamburg, charge a usage fee based on the amount paid, which is currently between 2.90 and 3.25 percent annually. This rate can be fixed for up to 10 years and depends on the long-term Federal Reserve interest rates in the case of Wertfaktor and on EURIBOR in the case of Engel & Völkers. Notary costs, land registry entries, and market value development are fully borne by the buyer.

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This gives you a larger amount that you can use to renew your personal desires, but also for a long-term investment with which you can generate regular income and improve your pension. Property can also be inherited. The heirs can then decide whether they want to sell the “free part” or “buy back” the other part if they want to take over the entire property.

Reverse Mortgage – Alternative Loan

If the focus is on regular payments, you can choose a type of annuity for real estate, in which a loan agreement is concluded with your own property as a guarantee. A reverse mortgage is ultimately a loan that does not result in a change of ownership when signed. This means that the previous owner continues to bear the costs of necessary renovations. The property acts as collateral for the lender, which is usually entered into the Land Registry by means of a land fee.

After the death of the owner, the loan is repaid by selling the property or the property becomes the property of the lender. In principle, a one-time payment can be made, a temporary pension or a life-long pension.

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Life Pension – Month by month income

An annuity for real estate gives older owners the opportunity to sell their home today without having to move out: the buyer acquires your property, but it gives the seller or previous owner the right to reside for life. However, the purchase price is not paid at the conclusion of the contract, as is usually the case, but as a monthly pension – either until the end of life or for a predetermined period. Optionally, an additional one-time payment can be agreed.

This entitlement to an annuity and the right of residence is first entered in the Land Registry. Only after the death of the seller can the new owner freely dispose of the property. Another requirement is that you live on the property yourself. Depending on the annuity provider, the object must have a value of at least 200,000 to 250,000 euros in order to be sold on an annuity basis.

Conclusion: It depends on the circumstances

You will definitely get the most financial flexibility if you receive a larger one-time amount. If you are still working and financial flexibility is important, you should check the mortgage on your property, as the overall costs are lower in this case. In addition, a mortgage can have a positive effect on the inheritance tax that may have to be paid, because the credit reduces the value of the property. In addition, nothing changes in terms of ownership. However, with a loan, it must be taken into account that there is a repayment that increases the monthly burden.

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For owners who are older, retired, or on lower incomes, a partial sale is more appropriate. However, in both cases, the money should not be fully spent, but a significant part of it should be invested in a well-regulated liquid securities portfolio. The monthly expense of credit costs or usufruct fees can be neutralized or mitigated through distributions and performance.

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