The key technical terms relating to market value, appraisals and valuation methods — clearly explained.
The German Building Code (Baugesetzbuch, BauGB) is the central statute governing building and planning law in Germany. Section 194 BauGB defines the market value (Verkehrswert), which serves as the authoritative measure of value for property valuation.
The mortgage lending value is the value of a property that a credit institution applies when granting a loan. It is regularly below the market value, as it takes account of long-term market fluctuations and risks.
The German Valuation Act (Bewertungsgesetz, BewG) governs the valuation of assets for tax purposes. Pursuant to Section 198 BewG, taxpayers may rebut the assessed real property value (Grundbesitzwert) determined by the tax office by proving a lower fair market value (gemeiner Wert).
Particularly relevant for inheritance and gift tax.
Standard land values are average locational values for land, derived by the expert committees (Gutachterausschüsse) from their collections of purchase prices and generally published every two years. They serve as a guideline value for determining the land value.
The land value is the value of the undeveloped plot. It is generally derived from standard land values (Bodenrichtwerte) published by the expert committees for land values (Gutachterausschüsse).
The heritable building right is the transferable and inheritable right to have a structure on or beneath the surface of another person's land. The holder of the heritable building right pays the landowner a recurring ground rent (Erbbauzins).
The income approach values a property on the basis of the sustainably achievable income (rents). It is used primarily for investment properties such as apartment buildings, office buildings and commercial real estate.
The real property value is determined by the tax office for tax purposes in accordance with the provisions of the Valuation Act (BewG), in particular for inheritance and gift tax. It can be rebutted by a market value appraisal pursuant to Section 198 BewG.
The Real Estate Valuation Ordinance (Immobilienwertermittlungsverordnung, ImmoWertV) governs the principles and methods for determining the market values of land. It establishes the recognised methods: the comparison approach, the income approach and the cost approach.
A deferred maintenance backlog describes the condition in which necessary maintenance or modernisation measures on a property have been neglected over an extended period. This generally results in a reduction in value that is taken into account in the appraisal.
Marktwert and Verkehrswert are synonymous. Both denote the price of a property achievable in the ordinary course of business pursuant to Section 194 of the German Building Code (BauGB). The term Marktwert is frequently used in an international context.
A rental value appraisal determines the customary market rent for a residential or commercial property. It is required, among other purposes, for rent increase requests, tenancy disputes, tax questions or the valuation of usufruct rights.
Usufruct is a right in rem that grants the beneficiary the comprehensive use of an asset (here: a property), including its income. In the case of real estate, this means that the usufructuary may occupy the property themselves or let it and collect the rental income.
Common in gifts and anticipated succession.
Public appointment and swearing-in pursuant to Section 36 of the German Trade Regulation Act (Gewerbeordnung) is the highest qualification level for expert appraisers in Germany. It requires proof of particular expertise before a panel of experts and is reviewed at regular intervals by the competent Chamber of Industry and Commerce.
Hauke Kruse has been publicly appointed and sworn by the Hamburg Chamber of Commerce since 2001.
The remaining useful life indicates how many years a building can be expected to remain economically usable, taking into account its condition, any modernisation measures carried out and its method of construction. It has a decisive influence on the income value and the cost value.
The cost approach determines the value of a property via the production costs of the structural facilities less depreciation for age, together with the land value. It is used above all for owner-occupied single- and two-family houses where comparison data is lacking.
An arbitration appraisal is a binding appraisal whose outcome the parties involved agree to accept in advance. It serves the out-of-court resolution of valuation disputes and can save time and costs compared with court proceedings.
The comparison approach determines the market value by comparison with purchase prices actually achieved for comparable land. It is preferred for condominiums, terraced houses and undeveloped land, where sufficient comparison data is available.
The market value (Verkehrswert) is defined in Section 194 of the German Building Code (BauGB) as the price that would be achievable in the ordinary course of business, based on the legal circumstances and actual characteristics, the general condition and the location of the land or other object of valuation, without regard to unusual or personal circumstances.
A central concept in property valuation and the basis for market value appraisals.
A market value appraisal is an expert valuation that derives the market value of a property in a methodologically traceable manner in accordance with the requirements of the German Building Code (BauGB) and the Real Estate Valuation Ordinance (ImmoWertV). It is prepared, among other purposes, for courts, tax offices, banks, the settlement of estates and purchase decisions.
Admissible in court and recognised by public authorities.
The right of residence (Section 1093 of the German Civil Code, BGB) entitles a person to use a building or parts thereof as a dwelling to the exclusion of the owner. Unlike usufruct, the beneficiary may not let the property.
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