Keeping an eye on closing costs: What property buyers should expect

Prospective buyers often overlook the fact that additional costs arise when purchasing real estate, besides the purchase price itself. These additional costs are not always immediately apparent and can increase the overall expenses.

Additional purchase costs are all expenses beyond the purchase price of the property, which are often underestimated. In Germany, these costs are high compared to other countries and can amount to 10–15% of the purchase price.

How much should buyers expect to pay in closing costs?

The ancillary costs of buying real estate in Germany consist of several fees that depend heavily on the purchase price, the location (federal state), and other factors such as whether it's a new build or an existing property. The largest items are the real estate transfer tax, which varies between 3.5% and 6.5% depending on the federal state, and notary and land registry fees, which usually amount to about 1.5% to 2% of the purchase price.
Ancillary costs are additional expenses on top of the property purchase price and can reach up to 10–15% in Germany, which is quite high compared to other countries. As a rough estimate, for a property with a sale price of €300,000, you can expect ancillary costs of approximately €30,000–€45,000.

What are the typical additional purchase costs?

The ancillary purchase costs consist of various items, calculated as a percentage of the purchase price. The most important cost factors are:
• Real estate transfer tax: between 3.5% and 6.5% of the purchase price, depending on the federal state.
• Notary fees and land registry entry : generally about 1.5% to 2.0% of the purchase price.
• Real estate agent commission: often up to 3.57% of the purchase price.
Additionally, prospective homeowners should expect further costs, such as:
• Building permit fees: these are about 0.5% of the construction costs.
• Development costs: these depend on the specific building area.
• Homeowner's liability insurance : approximately 0.1% of the purchase price.
• Construction insurance: approximately 0.12% of the purchase price.
• Ancillary purchase costs and external financing.

These additional costs can add up to a considerable amount depending on the situation and should be taken into account in financial planning.

What else is important

Banks generally do not finance closing costs, which can pose a significant challenge, especially for mortgage-financed property purchases. Buyers are therefore well advised to have the necessary funds for these costs available as equity.

Thorough preparation is important: A local real estate agent helps to realistically assess the market value and provides support with planning and the purchase process.

Are you interested in buying a property? Let us, your local quality real estate agent, advise you. Contact us. We'd be happy to help!

Note:
For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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