Partial sale of real estate: Often not the best choice

Staying in your own property and still having money for modernization, travel or age-appropriate renovations - this is what the partial sale of real estate should make possible. The providers' advertising claims sound promising, but the problem often lies in the details. The Lower Saxony Consumer Center recommends carefully examining alternatives and contract contents. In many cases, partial sales are not the best option. If you decide to do this, you should consult your own lawyer or notary to have the contract and its legal consequences evaluated.

Increasing need for advice on partial sales of real estate

“More and more consumers are coming to our advice because they are thinking about selling part of their property,” explains Marco Eilers, financial expert at the Lower Saxony Consumer Center. The motivations are different. It's often about closing the pension gap and getting money for purchases, trips or necessary home improvements. “But the main reason is almost always the worry of having to move out of your own house because it will no longer be affordable as you get older,” says Eilers.

Providers promise a simple solution here: by buying part of the property, money comes into the account. A lifelong right of use guarantees the sellers that they can continue to live in the entire property. However, a monthly fee must be paid for this.

“But the main reason behind it is almost always the worry of having to move out of your own house because it will no longer be affordable as you get older.”

Marco Eilers, financial expert at the Lower Saxony Consumer Center

Keep an eye on costs

“The model sounds simple at first, but the contractual structure is very complex. “It’s the details that matter,” warns Eilers. The costs are also often underestimated. In addition to the monthly fee that sellers have to plan for in the long term, there is also property tax, for example. It usually still has to be paid in full. Consumers also sometimes bear the costs for the necessary maintenance alone. Other fees sometimes only become apparent when the property is to be sold.

“If consumers later decide to sell their house completely, the provider usually receives a certain percentage of the purchase price as an implementation fee. And the value protection clause contained in many contracts assumes a defined increase in the value of the property. If it doesn’t happen, customers pay the difference out of their own pocket,” explains the financial expert.

Tips from the Lower Saxony Consumer Center

In many cases, there are better options - such as a normal bank loan or a partial loan up to a certain amount of the property value. If you do not receive a loan or decide to sell part of the property for other reasons, you should definitely have the contract details checked independently. “We recommend that you always consult your own lawyer or notary to have the contract and its legal consequences evaluated,” says Eilers. Because experience shows that it's the details that matter.

“We recommend that you always consult your own lawyer or notary to have the contract and its legal consequences evaluated.”

Marco Eilers, financial expert at the Lower Saxony Consumer Center

In the opinion of the Lower Saxony Consumer Center, a binding minimum standard should apply to partial sales. In addition, providers should transparently inform consumers about their rights and obligations as well as the risks of a partial sale - for example using an information sheet as is required for building financing.

Source:

Lower Saxony Consumer Center

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