Real estate valuation in insolvency proceedings
Market value, liquidation value and compulsory auction value for the insolvency estate, for security and for realisation – under the ImmoWertV, fit for court, with clearly derived discounts for time pressure, condition and realisation route.
What a valuation report has to achieve in insolvency proceedings
An insolvency report has several audiences at once: the insolvency court, the creditors' committee, the secured creditor – and later bidders who will question the value. It is produced under time pressure, often without complete documents and without the debtor's cooperation. And it has to answer a question that an ordinary market value report does not ask: what is the property worth in this particular realisation situation ?
That is why, alongside the market value under § 194 BauGB, our reports always state the liquidation or realisation value as well – and, where continuation is an issue, the going-concern value based on a property cash flow. All values come from one set of figures, and every discount is individually reasoned.
Features of insolvency properties that we price in
- Realisation period and realisation route (private sale, compulsory auction, portfolio sale)
- Condition without maintenance, deferred repairs, closure of operations
- Rent arrears, vacancy, terminations, special termination rights
- Encumbrances in sections II and III: land charges, usufruct, rights of residence, priority notices
- Building encumbrances, contaminated land, heritable building rights, developers' security mortgages (§ 650e BGB)
- Missing documents and limited access for inspection
- Third-party usability of operational and special-purpose properties
- Stigma effects in the bidding process and demand in the sub-market
Valuation services for insolvency, enforcement and estate proceedings
Market value report
A full report under § 194 BauGB and ImmoWertV 2021 – for private realisation, negotiations with secured creditors, the creditors' committee and the report meeting.
- Comparison, income and cost approaches
- Usable as a private expert report under the ZPO
- Rights and encumbrances relevant to value
Liquidation and realisation value
The proceeds achievable under insolvency conditions: discounts for the realisation period, condition, lack of cooperation and realisation route – derived individually, not as a flat rate.
- Both values under § 151 (2) InsO
- Private sale vs. compulsory auction scenario
- Individual vs. portfolio realisation
Value indication / short report
A quick statement of value for recording the estate, for cover of the costs of the proceedings (§ 26 InsO) or for the first decision in the preliminary proceedings – in days rather than weeks.
- 3–5 business days after documents
- Desktop or with a brief inspection
- Can be extended to a full report
Compulsory auction & receivership
Valuation for proceedings under § 165 InsO and the ZVG: market value as the reference for the 5/10 and 7/10 thresholds, valuation of rights that survive the auction, statement on the court's determination of value.
- Lowest bid, rights that survive the auction
- Second opinion on the court's report
- Property cash flow for cold receivership
Portfolios & property companies
Portfolio holders in insolvency: valuation of entire portfolios using desktop methods plus sample inspections, clustering by suitability for realisation, portfolio and individual sale scenarios.
- A single data basis for all properties
- Order and timing of realisation
- Ready to feed into the cash flow model
Operational and special-purpose properties
Production, logistics, hotel, care, retail, leisure: valuation taking into account third-party usability, conversion options and the difference between the value of the business and the value of the property.
- Continuation vs. conversion vs. demolition
- Operator-dependent income values
- A basis for a transfer restructuring
Unfinished construction projects: We value the market value in the current state, the cost to complete and the residual value as a package together with the completion business plan. To developer and project insolvency
How the values are arrived at
Market value. Using the standardised methods of the ImmoWertV – comparison, income and cost approach – with market adjustment, standard land values and current data from the valuation committees. Particular property-specific characteristics (construction defects, structural damage, deferred maintenance, rights and encumbrances) are valued and shown separately.
Liquidation value. Starting from the market value we derive the proceeds achievable under insolvency conditions: marketing period (typically 3–9 months instead of 12–18), a restricted pool of bidders, condition risks without warranty, transaction costs and – in a compulsory auction – the empirical bid ratios of the relevant sub-market. Every discount is reasoned and included in the report as a sensitivity.
Going-concern value. Where continuation (letting, management, completion) is an option, we add a property cash flow model: rents, vacancy, maintenance, debt service, exit. The result is a present value that can be compared directly with the liquidation value.
What we need – and what we obtain ourselves
With the administrator's power of attorney we obtain extracts and official information ourselves. Address, property type and your deadline are enough to get started.
- Land register extract (sections I–III) – we obtain this
- Cadastral map, register of building encumbrances – we obtain this
- Building file, building permits, plans – we obtain these
- Leases, tenant schedule, arrears
- Service charge and house money statements
- Energy performance certificate, reports, damage reports
- Purchase and financing agreements, security
- For developers: purchaser contracts, construction status, construction contracts
Frequently asked questions from administrators and creditors
How large is the discount from market value to liquidation value?
There is no flat rate – and a report that works with "minus 30%" will not survive scrutiny. The spread depends on the marketing period, the sub-market, condition, encumbrances and the realisation route. For readily lettable residential properties in sought-after locations it is often in the single-digit to low double-digit percentage range; for special-purpose properties with limited third-party use it can be considerably higher. We derive every discount individually and show sensitivities.
Can you value a property if no internal inspection is possible?
Yes. We document the external inspection, evaluate all available documents and disclose the assumptions about the internal condition. As soon as an internal inspection becomes possible we update the report – usually as a short addendum. A transparent assumption is enough for recording the estate; for a sale we recommend a full survey.
Is your report suitable for the court and the creditors' committee?
Our reports meet the formal requirements for a private expert report under the ZPO: complete documentation, a comprehensible derivation, disclosure of data sources and assumptions. They are suitable for the report meeting, the creditors' committee, negotiations with secured creditors and as an appendix to an insolvency plan. On request we explain the report in person.
Do you also value heritable building rights, condominium units and partial areas?
Yes – heritable building rights and the underlying land, residential and commercial units, co-ownership shares, agricultural land and undeveloped plots including a review of development rights. For condominium units we take account of arrears of service charges and the priority under § 10 (1) no. 2 ZVG.
The value of an insolvency property – robust in days, not weeks
Tell us the property, the stage of the proceedings and your deadline. Within one business day you receive an assessment of feasibility and a fixed price offer.