Legal and financial challenges when selling a property to foreigners

The German property market is attracting an increasing number of foreign investors from various countries such as China, Italy, Spain, England, the USA, South Africa, France, Turkey, Sweden and Japan. Their interest includes both residential and commercial property, with the properties being used for their own use or as investments. The legal security and attractive potential returns make Germany a sought-after location for property investments.

Legal challenges

• Language barriers and contract documentation - One of the biggest legal challenges when selling property to foreign buyers is the language barrier. Contracts often need to be drafted in both German and the buyer's native language. This ensures that all parties understand the legal intricacies and obligations of the contract.
• Compliance with international and local regulations - Compliance with both German and international laws, such as money laundering regulations, is crucial. Sellers need to ensure that all legal requirements are met, which can make the process more complex and time consuming.
• Notarisation - In Germany, the purchase contract must be notarised by a notary. This can be a challenge for foreign buyers who may not be present in Germany. Powers of attorney and special arrangements often need to be made to enable the process to take place in their absence.

Financial challenges

• Financing and raising capital - Obtaining financing can be more difficult for foreign buyers as they may not have a local credit history. Working with international banks or specialist financial service providers who specialise in cross-border property financing is often necessary.
• Currency risks - Currency fluctuations can affect the purchase price and financing costs. Both buyers and sellers need to be aware of the risks that can arise from changes in exchange rates, especially when large sums are being transferred across borders.
• Credit check - A thorough check of the buyer's financial stability is essential to minimise the risk of non-payment. This can be a challenge when buyers come from countries where it is more difficult to obtain reliable financial information.

Frequently asked questions when selling to international buyers

• How do I find the right property expert for the international market?
• In which regions do potential buyers live and how do I reach them?
• Which aspects of my property are particularly attractive for investors or owner-occupiers?
• How can prospective international buyers find my property and decide in favour of it?
• How do I ensure that the buyer has the financial means to make the purchase?
• What are the risks of selling to international buyers?

Summary: The advantage of professional advice

Selling a property to foreign buyers can be easier than many assume. The experience and established processes of estate agents or consultants who are familiar with such transactions are important. A professional agent can help maximise the sales potential and minimise the risks. Sellers seeking access to a larger and international group of buyers should therefore consult an experienced estate agent.

At BLP, we have an international team that can advise clients in many different languages, including Mandarin for our Chinese clients. Nancy Yuan is specifically responsible for the Chinese market and brings extensive knowledge and experience to meet the specific needs and expectations of our Chinese clientele. No matter how big or small the property you want to sell is, turn to us with confidence. With our many years of experience in the international property market and around 50 units sold to foreigners every year, we are a reliable partner for all property matters at home and abroad.