Second purchase

Secondary purchase refers to the purchase of a property that has already been occupied by at least one previous owner since it was first built-in contrast to a primary purchase (purchase from a developer as the first occupant). Secondary purchase is the most common form of real estate acquisition in Germany: The vast majority of the transaction market consists of existing properties that have already been used, where the buyer and seller are private individuals or investors, not project developers or property developers. The term is particularly relevant in building savings law and in purchase price structure analysis.

Secondary Purchase versus Primary Purchase: Key Differences

In a first-time purchase, the buyer purchases directly from the developer-typically a new-construction apartment or a newly built house. Here, the Real Estate Brokerage and Developer Ordinance (MaBV) applies, as does warranty law under the law governing contracts for work and services (§ 634 BGB), and the buyer can often benefit more from subsidies for new construction. In the case of a secondary purchase, the Sale of Goods Act (§§ 433 ff. BGB) applies; warranties are often contractually excluded (“sold as is”), and the buyer must carefully inspect the property’s actual condition themselves. The two forms also differ in tax terms-for example, regarding the depreciation base and subsidy programs.

A key practical difference: In a first-time purchase, the buyer is entitled to a defect-free delivery under the rules of the law governing contracts for work and services. The developer is liable for construction defects for five years. In a resale, the seller is usually a private individual, and the statutory warranty is typically excluded entirely in the purchase contract. Liability remains only in the case of defects fraudulently concealed, despite the exclusion. For buyers in a secondary purchase, this means: Their own duty of care is significantly higher-a neutral condition assessment by an independent expert is indispensable.

Significance in Building Savings Law and Financing

In building savings law, the term “secondary purchase” is explicitly defined: Building savings loans may be used for residential purposes-this expressly includes the secondary purchase of residential real estate (Section 1 of the Building Savings Bank Act). Some KfW subsidy programs also distinguish between first-time purchases and secondary purchases: Buyers of existing properties can take advantage of subsidized loans for energy-efficient renovations, but not all new construction programs. In bank-financed construction loans, this distinction plays a role in determining the loan-to-value ratio and selecting the valuation method.

When banks determine the loan-to-value ratio for second-home purchases, they generally use the cost approach or the income approach-depending on the type of property. For existing properties, age, condition, and level of modernization are directly factored into the loan-to-value ratio. Banks set the loan-to-value ratio for unrenovated existing properties significantly more conservatively than for new construction-which can increase the required equity investment.

Opportunities and Risks of Second-Hand Purchases

Second-hand purchases generally offer lower purchase prices than comparable new constructions and often provide immediately available residential properties (no waiting for completion). In the Nuremberg metropolitan region, new-construction apartments currently often cost 20-35% more than comparable existing properties-a significant price difference that speaks in favor of second-hand purchases.

On the other hand, there is the risk of hidden defects, higher maintenance costs, and limitations on design freedom. A thorough inspection, a condition report from an independent expert, and a realistic cost estimate for foreseeable modernization measures are essential when purchasing a pre-owned property. The most common mistake buyers make when purchasing a second property: they underestimate the backlog of maintenance and make overly optimistic calculations. A rule of thumb states that for buildings over 30 years old that have not been fully renovated, maintenance costs of at least 300-500 euros per square meter of living space should be expected over the next 10 years.

Depreciation Base for Secondary Acquisitions

For investors, the depreciation base (AfA) is a relevant tax factor in secondary acquisitions. The straight-line depreciation rate for buildings is 2% per annum (for buildings constructed after 1925). Starting in 2023, the new depreciation rate upon acquisition is 3% for new buildings constructed in or after 2023-for the secondary acquisition of older properties, the rate remains at 2%. The tax basis is the portion of the purchase price attributable to the building (excluding land value). This must be determined in the purchase agreement or through an expert appraisal-a fair allocation between land value and building value is tax-advantageous but must not be arbitrary.

Practical Tip for Property Owners in Nuremberg and Franconia

The Nuremberg market is dominated by secondary acquisitions: Wilhelminian-style buildings, post-war structures, and properties from the 1970s to the 1990s make up the majority of the properties on the market. We support our clients in second-hand purchases with a structured review process: land registry check, condition inspection, cost estimate for renovation measures, and purchase price negotiation based on real market data. This ensures you don’t pay for hidden defects.

In neighborhoods such as Gostenhof, Steinbühl, or Langwasser, there is a wide range of existing properties of varying quality. Those who know the market can find attractive properties here with genuine potential for appreciation-provided renovation costs are realistically factored in. Those who buy without this due diligence risk paying too high a price for a property with a significant backlog of renovation work.

Frequently Asked Questions

Does a statutory warranty apply to a second-hand purchase?

In private second-hand purchases, the warranty is generally excluded in the purchase agreement (“Sale with exclusion of any warranty”). However, this does not apply to defects that were fraudulently concealed: If the seller knowingly concealed a defect-such as known moisture damage, a structural issue that was repaired but not fully resolved, or mold hidden behind paneling-the buyer can assert claims despite the warranty exclusion.

Can I apply for KfW subsidies when purchasing a second-hand property?

Yes, for energy-efficient renovation measures on existing properties (e.g., KfW Federal Subsidy for Efficient Buildings-BEG), buyers of second-hand properties are also eligible for subsidized loans and repayment grants. Important: The subsidy must be applied for before the work begins-retroactive subsidies are generally not possible.

What is the difference between a resale property and a used new construction?

A new construction can also become a resale property if it is resold for the first time after initial construction-such as a recently built townhouse that the original buyer sells after two years. The decisive factor is whether a previous tenancy existed, not the year of construction. This has consequences for the buyer’s warranty rights: In the case of a first purchase from a developer, the rules of a contract for work and services apply; in the case of a second-hand purchase of the same townhouse from a private individual, sales law applies-often with an exclusion of warranty.

How do I determine whether the purchase price is reasonable in a secondary purchase?

The most reliable method is an independent market value appraisal by a publicly appointed expert. Regional price indices (Nuremberg Appraisal Committee, IVD market reports) as well as comparable listings on real estate portals also serve as a guide. Important: The comparative price alone is not very meaningful-only by taking into account location, condition of the building, renovation needs, and rental yield (for investment properties) can a complete picture be obtained.

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