Building defects in the foreclosure appraisal report: what 1,109 reports say and what it costs

Anyone who buys a property at a German foreclosure auction buys it as it stands. There is no seller who answers for hidden damage and no right to withdraw. The appraisal report is therefore the only place where defects appear in writing before you bid. This article shows which building defects the court-appointed experts actually list in current proceedings, how large the deductions from value are, and how to check the list of defects in your report before you bid.

Are the court or the debtor liable for building defects at a foreclosure auction?

No. Under § 56 sentence 3 of the German Act on Forced Sales (ZVG), there are no claims for defects in a foreclosure auction. The successful bidder takes the property with all its defects, including those missing from the appraisal report. Neither the court nor the former owner has to answer for damage that comes to light after the award.

What this means for bidders

• No withdrawal. Water damage discovered after the award does not change the highest bid.
• No price reduction. The price is not adjusted afterwards, not even for serious damage.
• The appraised market value is not a promise. It is an expert's assessment on the valuation date. Anyone who disagrees with the value set by the court has to raise it before the award. Under § 74a (5) sentence 4 ZVG, an appeal against the award cannot be based on the argument that the value was set incorrectly.
• The expert's liability is narrow. § 839a of the German Civil Code (BGB) only applies in cases of intent or gross negligence. Damage that nobody could see from the outside does not fall under it.

Checking defects is therefore entirely the bidder's job, and it starts with the report. How the document is structured as a whole is explained in Reading and understanding the appraisal report.

How often do appraisal reports list building defects?

In more than four out of five reports. Of 1,109 fully evaluated appraisal reports from current proceedings, 895 list at least one defect, which is 80.7 per cent. In 432 reports, or 39.0 per cent, the expert rates at least one defect as serious. Reports with defects list a median of four. As of 13 September 2026.

Klaava is a German platform for forced-sale auction dates and evaluates the appraisal reports of current proceedings in a structured way. All figures in this article are based on 3,652 upcoming auction dates at 429 local courts across all 16 federal states, including 1,109 fully evaluated reports with a combined 4,318 individually recorded defects.

Minor, moderate, serious

The rating follows the description in the report: minor covers things like worn paintwork or cracked wallpaper, moderate covers damage that needs repair in the foreseeable future, and serious covers damage to the structure, weather tightness or safety.

Houses are hit more often than flats

Condominiums sitting at the bottom does not mean the buildings are in better shape. A condominium report mainly assesses the individual unit. The roof, facade and basement belong to the common property and are often described only briefly. For the condition of the whole building, the minutes of the owners' meetings are the better source, see Foreclosure auction of a condominium.

Which building defects appear most often in appraisal reports?

Defects most often concern interior fittings, the facade and outdoor areas. The more serious damage lies elsewhere: of the reports with a defect in the heating, building services, basement or roof, between one in three and almost one in two include a serious one. Frequent does not mean expensive, and rare does not mean harmless. As of 13 September 2026.

"Of which serious" gives the share of reports with a defect in that area in which at least one of those defects is rated serious.

The keywords behind the figures

A search of the 4,318 defect descriptions shows which types of damage lie behind them:

• Damp in 330 reports (29.8 per cent), mostly in basements, on external walls or below windows
• Cracks in 250 reports (22.5 per cent), from plaster cracks to settlement cracks in the masonry
• Planning permission issues in 99 reports (8.9 per cent), such as a converted attic without a building permit
• Mould in 95 reports (8.6 per cent)
• Leaks in the roof, pipes or windows in 84 reports (7.6 per cent)
• Asbestos in 49 reports (4.4 per cent), usually facade panels, roof coverings or floor coverings from before the German ban of 1993
• Fire safety in 15 and dry rot in 12 reports

Damp is the most important word on this list. It is rarely just a cosmetic flaw, because the cause almost always lies outside the visible stain: missing waterproofing, a faulty backflow valve, a leaking roof. If the report mentions damp but no cause, that is the first open question.

How much do experts deduct from the appraised value for building damage?

A median of 22,000 euros. In 365 reports, a deduction for building damage is shown as a separate item with an amount. The middle half of these deductions lies between 9,000 and 50,000 euros. Relative to the appraised market value set by the court, that is a median of 9.2 per cent. As of 13 September 2026.

Where the deduction appears in the report

The German property valuation ordinance treats building defects and damage as special property-specific characteristics (§ 8 (3) ImmoWertV). The expert first determines a provisional value as if the building were in normal condition, and then deducts the damage separately. You will therefore find the item at the end of the valuation, shortly before the result, usually under headings such as "besondere objektspezifische Grundstücksmerkmale" or "boG".

In 550 of the 1,109 reports, such deductions are shown individually. Besides building damage, other reasons appear there:

Across all items, the total deduction in 500 reports with an appraised value is a median of 26,000 euros, or 12.0 per cent of the value set by the court.

When deductions exceed the value

In 51 reports, the deductions are higher than the appraised value that remains at the end. One example from current proceedings: a detached house of 352 square metres for which the expert assumes a complete refurbishment at 300 euros per square metre, so 110,000 euros, against an appraised value of 91,000 euros. Properties like this are not automatically bad. The value then lies in the land, however, and the bid has to carry the full refurbishment.

Why the deduction is not the contractor's bill

A deduction reflects how much the market value falls because of the damage. It is not a cost estimate. Many experts apply flat rates based on experience, because they are not allowed to open up building elements and, without access to the interior, cannot see how far the damage extends. For your calculation, this means reading the deduction as a floor, not as a budget.

Why reports without an interior inspection list fewer defects

Because nobody was inside. Reports with an interior inspection list an average of 5.6 defects, reports without access only 2.6. For 94.6 per cent of inspected properties the report lists at least one defect, for those assessed only from the outside it is 73.5 per cent. The houses are not in better condition; the defects simply stayed out of sight.

This gap is the most important figure in this article. A report without an interior inspection that lists hardly any defects is not a good sign but an incomplete one. Assume at least as many defects as a comparable inspected property. How to gather information anyway and what risk markup is reasonable is covered in Viewing a property before a foreclosure auction.

How to check the defects in your appraisal report

Checking defects takes half an hour and always follows the same order. What matters is not how many defects the report lists, but whether the list can be complete and whether the deduction fits the damage.

1. Establish access. If the report states that the interior was not inspected, every statement about bathrooms, heating, pipes and interior fittings is an assumption. This is usually noted on the first pages under the site visit.
2. Compare the list of defects with the description of building elements. The description of roof, facade, windows, heating and basement has to match the defects listed. A boiler from 1989 without any comment is a gap.
3. Look for causes. Damp, cracks and mould are symptoms. If the cause is missing, the cost estimate is missing too.
4. Find and assess the deduction. If it appears as an amount under the special property-specific characteristics, weigh it against the damage. A flat deduction of 10,000 euros next to a leaking flat roof and a wet basement does not hold up.
5. Note the age of the report. In current proceedings, the median time between valuation date and auction date is 395 days. An open water leak grows during that time; it does not shrink.
6. Check obligations under the Buildings Energy Act. An oil or gas boiler older than 30 years may have to be replaced under § 72 GEG. For certain one- and two-family houses, the obligation only applies when ownership changes, with a two-year deadline. If the report does not give the boiler's year, budget for replacement to be safe.
7. Inspect the court file. Under § 42 ZVG, anyone may inspect the case file. It sometimes contains photos, annexes or letters from the parties that are missing from the published report.
8. Build the costs into your maximum bid. Estimated refurbishment costs plus a risk markup should come off the value before you set your limit. How the limit is set is explained in Bidding successfully.

Which properties are coming up and which reports have been evaluated is shown in the property overview.

Frequently asked questions

Can I withdraw from the purchase after the award because of building defects? No. § 56 sentence 3 ZVG rules out claims for defects in a foreclosure auction. This also covers defects that are not mentioned in the report. Neither withdrawal nor a price reduction is possible after the award.

How often do foreclosure appraisal reports list serious defects? In 432 of 1,109 evaluated reports, or 39.0 per cent, the expert rates at least one defect as serious (as of 13 September 2026). For apartment buildings it is every second report, for condominiums just over one in four.

How large is the deduction for building damage in the report? In 365 reports with a separately shown deduction for building damage, the median is 22,000 euros, with the middle half between 9,000 and 50,000 euros. That is a median of 9.2 per cent of the appraised value set by the court. The deduction is a reduction in value, not a repair cost estimate.

Is the expert liable if they missed some damage? Only within narrow limits. § 839a BGB requires intent or gross negligence. Damage that could not be seen during an external inspection does not usually give rise to liability. Whether a claim exists in a specific case is a question for a lawyer.

Why does my report list almost no defects? Often because the expert could not get into the building. Reports without an interior inspection list an average of 2.6 defects, reports with one list 5.6. Few defects in a report based on the file alone therefore say little about the condition of the property.

Which building defects are especially expensive at a foreclosure auction? Damp with an unclear cause, damage to roof and basement, a heating system at the end of its life and hazardous materials such as asbestos. Of the evaluated reports with a heating defect, 41.0 per cent include a serious one; for building services it is 44.3 per cent.

---

How the appraised market value comes about overall is explained in The appraised market value in the report. How the remaining useful life reacts to damage is covered in Remaining useful life in the appraisal report. The full process is described in How a foreclosure auction works.

This article is general information. It does not replace legal advice from a qualified lawyer.