Verkehrswert, market value, asking price – in everyday real estate dealings, these terms are often mentioned in the same breath, as if they meant the same thing. Legally, Verkehrswert and market value are in fact identical, whereas the asking price is something entirely different. We explain what each term means, where the dual designation comes from and why making a clear distinction when buying and selling can be worth real money.
What Is the Verkehrswert Under Section 194 of the BauGB?
The Verkehrswert is the central valuation term in German real estate law. Its definition is set out in Section 194 of the German Building Code (BauGB):
The Verkehrswert (market value) is determined by the price that, at the point in time to which the valuation relates, could be achieved in ordinary business dealings, taking into account the legal circumstances and actual characteristics, the other conditions and the location of the property or other object of the valuation, without regard to unusual or personal circumstances.
Put simply: The Verkehrswert is the price that could be achieved for a property on a specific valuation date under normal market conditions – without a forced sale, a family discount or a premium paid by an enthusiast. It is therefore not a specifically paid amount, but an objectively estimated value. The word “valuation date” is crucial: The Verkehrswert always applies only to a specific point in time because the market is constantly changing. Today’s value may already be outdated in a year.
Verkehrswert and Market Value: Two Words, One Value
The most frequently asked question is probably: Is market value something different from Verkehrswert? The clear answer: no. The statutory text itself places both terms directly next to each other – “Verkehrswert (Marktwert)”. They are therefore legally identical; there is no substantive difference.
The dual designation has a simple reason. “Verkehrswert” is the traditional German legal term. “Market value” (in English market value) is the internationally customary expression. When the Building Code was adapted to European law in 2004, the legislature expressly included the term “market value” in Section 194 to make clear that the German Verkehrswert and the European market value mean the same thing.
In practice, however, the words are used differently depending on the contextused. Anyone holding an appraisal or an official notice in their hands will usually read “market value” there. In bank documents, marketing, and international business, “market value” is more commonly used. In both cases, the same value under Section 194 of the German Building Code (BauGB) is meant.
How Is Market Value Determined? A Brief Look at the ImmoWertV
To ensure that market value remains comprehensible and comparable, the Real Estate Valuation Regulation (ImmoWertV) bindingly specifies how it is to be determined. The current version has been in force since January 1, 2022. It recognizes three approved methods:
- Comparative Value Method – the value is derived from the purchase prices actually achieved for comparable properties.
- Income Approach – the achievable rental income is decisive; this is common for rented properties and capital investments.
- Cost Approach – the value is derived from the land value and the construction costs of the building, less depreciation due to age.
We cover which method is used and how the calculation works in detail in a separate guide. For a straightforward clarification of terminology, it is sufficient to say: All three methods aim at one and the same figure – the market value, or market value.
Market Value Is Not the Asking Price
This is where two things that are constantly confused in everyday life diverge. The asking price – also called the offer or desired price – is the amount at which a property is advertised in the listing. It is not an objective measure of value, but a strategic decision by the seller and forms the basis for the subsequent negotiation.
As a rule, the asking price is derived from the market value, often with a moderate negotiation buffer added on top. The size of this premium depends on the location, demand, and sales strategy. An asking price set too high deters prospective buyers and leads to a lengthy marketing period; one set too low gives money away. The market value provides the objective basis for this – but it is not itself a fixed sale price.
Purchase Price and Mortgage Lending Value: Further Terms in This Context
Two further values arise in connection with property purchases that should be distinguished from market value:
- Purchase price: the amount that is ultimately stated in the notarized purchase agreement and paid. It is the result of supply, demand, and negotiation and may be above or below the Market value.
- Mortgage lending value: the value on which a bank bases its financing. Pursuant to Section 16 of the Pfandbrief Act (PfandBG), it may not exceed the market value and deliberately excludes speculative components of value. The mortgage lending value is a particularly cautious figure geared toward long-term marketability and is therefore generally below the market value in practice.
As a rule of thumb: The market value (= Verkehrswert) is the objective estimate, the asking price is the seller’s preference, the purchase price is the result of negotiations, and the mortgage lending value is the bank’s cautious perspective. Four terms, four different roles.
What the difference means for buyers and sellers
For sellers, the market value is a fair point of reference for not setting the asking price arbitrarily. Anyone who knows their market value can deliberately and justifiably choose a premium instead of deterring interested parties with an unrealistic figure. In negotiations, a professionally determined value also makes it possible to appear significantly more confident.
For buyers, the market value is the most important counterargument. If the asking price is clearly higher, this can be questioned objectively. And anyone who requires financing should keep the mortgage lending value in mind: If it is lower than the agreed purchase price, the difference must be covered with additional equity – a point that can quickly become a problem with a tight calculation.
FAQ about market value and market value
Are Verkehrswert and Marktwert the same thing?
Yes. Section 194 of the German Building Code expressly names both terms as synonymous (“The market value (Verkehrswert)”). There is no difference in content. “Verkehrswert” is the German legal term, while “Marktwert” is the internationally customary expression – they refer to the same value.
Is the market value the price I ultimately receive?
Not necessarily. The market value is an objective estimate of the price achievable under normal conditions on a specific valuation date. The purchase price actually paid may be higher or lower depending on demand, negotiating skill, and market conditions.
What is the difference between market value and asking price?
The market value is a value determined objectively according to established rules. The asking price is the freely chosen price in the listing and serves as a basis for negotiation. It is generally derived from the market value, often with a premium for negotiation.
Why is the lending value lower than the market value?
Because the bank deliberately calculates conservatively. The lending value should still be achievable even if the market collapses. It disregards speculative value components and may not exceed the market value (§ 16 PfandBG). That is why it is usually lower in practice.
Who officially determines the market value?
Legally valid market value appraisals are prepared by publicly appointed and sworn or certified experts, as well as by the valuation committees of municipalities. For an initial orientation, a rough valuation is often sufficient – a formal appraisal is particularly useful in cases of inheritance, divorce, or disputes in court.
Conclusion: One value, several names – and an important special case
Market value and traffic value refer to one and the same thing: the objectively estimated price of a property on a specified valuation date pursuant to § 194 BauGB. What you really need to distinguish, however, are the asking price (the seller’s desired price), the purchase price (the result of negotiations), and the lending value (the bank’s conservative view). Those who clearly distinguish between these terms will argue more confidently in negotiations and protect themselves against poor decisions – whether buying or selling.