Market Value (Marktwert)
The current price your property would sell for
Market value (Marktwert or Verkehrswert) is what a property would sell for in the current market under normal conditions. It's the baseline for evaluating investment opportunities and securing financing.
How Market Value Is Determined
- Comparable sales (Vergleichswertverfahren): Most common—looks at recent sales of similar properties
- Income approach (Ertragswertverfahren): Based on rental income potential, common for investment properties
- Cost approach (Sachwertverfahren): Replacement cost minus depreciation, used for unique properties
Market Value vs. Purchase Price
Ideally, you want to buy below market value:
- At market value: Fair deal, standard investment
- 10% below market: Good deal, instant equity
- 20%+ below market: Exceptional opportunity (motivated seller, foreclosure, distressed property)
Real Example: Bank Valuation
Property Financing Scenario:
- Your agreed purchase price:€450,000
- Bank appraisal (Gutachten):€470,000
- Instant equity:€20,000
- 80% LTV based on:€450,000 (lower of appraisal or price)
- Maximum loan:€360,000
Note: Banks lend based on the LOWER of purchase price or appraised value
Market Value Fluctuations
German real estate markets show different volatility by location:
- Major cities (Tier 1): More volatile, 5-10% annual swings possible
- Mid-sized cities (Tier 2): Moderate stability, 2-5% fluctuations
- Rural areas: Very stable, minimal year-to-year changes
Why Market Value Matters
Financing leverage: Higher appraised value can mean larger loan amounts
Exit planning: Knowing current value helps time sales strategically
Refinancing: Increased market value enables pulling out equity
Portfolio tracking: Monitor unrealized gains for net worth calculations
Getting a Professional Valuation
- Bank-ordered appraisal: Required for financing, costs €800-1,500
- Independent appraiser: For due diligence or disputes, €1,500-3,000
- Online estimates: Free but less accurate (Immobilienscout24, ImmoWertV)
- Real estate agent BPO: Broker price opinion, often free but biased
Related Terms
Appreciation(Wertsteigerung)
Appreciation is the increase in property value over time due to market forces, inflation, and improvements. In Germany, real estate has historically appreciated at 3-4% annually.
Purchase Price(Kaufpreis)
The purchase price (Kaufpreis) is the agreed price for the property. This amount is split between building value (depreciable) and land value (not depreciable) for tax purposes.