Property valuation: realistic figures, not gut feeling

When a valuation is worth it

There is plenty of guesswork about property values: among neighbors, within the family, around the kitchen table. But as soon as real decisions are at stake, gut feeling is no longer enough. What is more, different occasions call for figures of different reliability. A rough estimate is fine for a first market overview, whereas only a full appraisal counts with the tax office or in court. In practice, four occasions stand out:

• Selling: If you want to sell, you need a realistic asking price as your starting point. For a step-by-step walkthrough of the entire sale, see our guide Selling your property.
• Inheritance and gifts: The tax office applies its own values for taxation. If you believe the actual value is lower, an appraisal can prove that lower value.
• Divorce and division of assets: When assets are divided, a reliable value creates a shared, transparent basis.
• Financing and mortgage lending: The value of a property also plays a central role when it is being financed or used as loan collateral.

The three valuation methods in plain terms

Professional valuations in Germany follow fixed rules: the German Property Valuation Ordinance (ImmoWertV) standardizes three methods. The names sound technical, but the underlying ideas are simple: What do others pay for comparable properties? What income does the property generate? And what is its physical substance worth? Which method fits depends above all on the type of property.

1. Sales comparison approach: the standard for condominiums and single-family homes

The sales comparison approach derives the value from the prices of comparable properties: What was actually paid for similar apartments or houses in comparable locations? For condominiums and single-family homes, this method is the standard, because enough comparable transactions are usually available.

2. Income approach: for rented properties

The income approach puts the property's earnings at the center: the income is capitalized, meaning converted into a present-day value. It is the standard for rented apartment buildings and investment properties, where buyers look primarily at the returns.

3. Cost approach: when comparables are missing

The cost approach asks what the property is worth in its substance: construction costs plus land value. It is used when comparable data is missing, for example for unusual single-family homes with hardly any similar sales on record.

In practice, the methods are not mutually exclusive: appraisers often combine them and use a second method to double-check the result of the first. Exactly this cross-check is what separates a sound valuation from mere guessing.

What really drives the value

Regardless of the method, the same factors ultimately determine what buyers are willing to pay. The most important value drivers at a glance:

• Location: It works on two levels. The macro location describes the city and region, the micro location the immediate surroundings: street, transport links, noise.
• Condition and year of construction: A well-maintained property is valued differently from a renovation case of the same age. Completed modernizations are factored into the valuation.
• Energy efficiency: Its importance is growing fast. The rating on the energy performance certificate influences price negotiations.
• Floor plan and fittings: The layout and the standard of fittings shape how attractive a property is to buyers.
• Outdoor space: A balcony, a garden and a parking space are among the features that support the value.

What counts for the valuation is not any single point but the overall picture formed by all factors. Energy in particular deserves a closer look, because its importance keeps growing. You can read more in our guide to the energy performance certificate.

The condominium special case: the WEG counts too

Anyone valuing a condominium is always also valuing the condominium owners' association (WEG) behind it. Two apartments with similar floor plans on the same street can differ in attractiveness, depending on the state of the association. Buyers and banks look closely at these points:

• Maintenance reserve: An adequately funded reserve shows that the association is providing for upcoming expenses.
• Monthly service charge (Hausgeld) relative to what it delivers: It is not the amount alone that matters, but what the association gets for it.
• Condition of the common property: The state of repair of the commonly owned parts feeds directly into the attractiveness of the apartment.
• Resolved or foreseeable works: The minutes of the owners' meetings show what lies ahead for the association. Buyers read them carefully.
• Number of units and structure of the association: These, too, shape the impression prospective buyers form of the property.
• Quality of the property management company: Buyers and banks read minutes and annual statements. Orderly affairs support the price.

The property management company is therefore an often underestimated factor: clean statements, complete minutes and a prudently managed reserve are exactly the documents that convince buyers when it comes to a sale. If the documents appear patchy or confusing, doubts can arise that show up in price negotiations. If you are permanently dissatisfied with your management company's work, you do not have to accept it. Our guide Switching your property management company shows how the change works.

Free sources for an initial estimate

Before you spend money on an appraisal, you can form a first impression using publicly available data. Three sources are particularly useful:

• Standard land values (Bodenrichtwerte): The local valuation committees (Gutachterausschüsse) determine official values for the land itself. They are available online via the federal states' standard land value portals.
• Property market reports: Also published by the valuation committees. They put activity on the regional property market into context.
• Online valuation calculators: They provide rough initial estimates based on comparable data. Useful as a starting point, but limited in accuracy: they do not replace an assessment of your individual case.

When an appraisal makes sense (and what it costs)

How professional the valuation needs to be depends on its purpose: the more that rides on the figure, the more reliable it should be. In practice, three levels have become established. All prices given here are a non-binding guide; the actual costs depend on the property and the scope.

A practical example: if the tax office assigns a value in an inheritance case that you consider too high, an appraisal can prove the lower actual value. Important for all purposes where the figure must hold up in court: choose publicly appointed and sworn or certified valuation experts.

Frequently asked questions about property valuation

This guide provides editorial orientation and does not replace an appraisal or individual advice (last updated: July 2026). For binding values, for example toward a court or the tax office, consult publicly appointed and sworn or certified valuation experts; for legal and tax questions, seek specialized professional advice.