Total Price
Total Price is the actual amount a buyer must handle on taking over a home: the purchase sum plus costs plus any share of common debt for a borettslag (housing co-operative) and share flats. The total price can differ considerably from the "price quote" shown at the top of a property advertisement, and it is the total price that actually matters for financing, loan-to-value ratio and future monthly costs.
For a freehold home the calculation is simple in principle. Total Price = purchase sum + costs. The costs consist mainly of document duty at 2.5% of the purchase sum, registration fees for the deed and the mortgage deed, plus smaller administrative charges. In total, the costs come to 2.8 to 3.0% of the purchase sum. A freehold flat advertised at 5,000,000 kroner therefore has a total price of just over 5,140,000 kroner.
For a borettslag the structure is significantly different. Here you buy a share of a co-operative that owns the building; the share has a deposit value (what you pay now) and a proportional share of the co-operative's common debt (loans the co-operative has taken out on behalf of all share owners). Total Price = deposit + share of common debt + costs. The costs are low because no document duty applies, but the common debt can make up a considerable part of the total price, particularly in newly built co-operatives. A co-operative flat advertised at 3,000,000 kroner with 2,000,000 kroner in common debt can have a total price of around 5,010,000 kroner. The important point is that the monthly shared costs in the co-operative flat cover both operations and repayment of the common debt, and that the common debt counts on the same terms as a mortgage in the bank's assessment of your overall debt level.
The Estate Agency Act section 6-7 and the regulations on estate agency require the total price to be stated clearly to buyers, including in the sales prospectus and the bid form. Since 2018 the industry has standardised the format "Price Quote x kr | Total Price y kr" in advertisements, where y is the price quote + costs. For a borettslag, "Share of common debt" and "Total Price incl. common debt" are added.
The total price is the basis banks use when they assess the loan-to-value ratio under the mortgage lending regulations: a maximum of 85% of market value for a primary home and 70% for a secondary home (as at 2024; check Finanstilsynet for the current rate). For a borettslag, the common debt forms part of total debt, so the total price is more than a financing consideration: it is your debt burden.
For commercial property, "total price" is used less formally. There, people talk about enterprise value, purchase sum + debt taken over, purchase sum adjusted for a tax discount on share purchases, and other structural elements. The market value of commercial property is typically calculated using the yield method, and the purchase sum can differ, depending on how the transaction is structured legally and for tax purposes.
When you compare homes across ownership forms, always compare total price, not price quote. A freehold home at 5 million and a borettslag home at 3 million + 2 million in common debt are financially equivalent.
From Placepoint's dictionary: Total Price
More information: Lovdata: The Estate Agency Act section 6-7, Lovdata: Regulations on estate agency, Skatteetaten: Dokumentavgift
English: Total purchase price (asking price plus closing costs and any share of common debt).
Frequently asked questions
What is the difference between price quote and total price?
The price quote is what the seller wants for the home. The total price is the price quote plus costs and any share of common debt. The total price is the actual amount you as a buyer must handle on taking over.
Why does the total price include common debt for a borettslag?
A share of common debt is a debt the share owner is liable for proportionally. It forms part of the total price because in practice it is part of the purchase sum that has been moved into a loan in the borettslag. Banks count it as debt for the buyer.
Is the total price the same as the total financing requirement?
No. The equity requirement (typically 15% for a primary home) is calculated on the basis of the total price. The remainder can be financed with a mortgage. For a borettslag, the common debt also counts as debt in the bank's overall assessment.
How is the total price stated in the advertisement?
The Estate Agency Act requires the total price to be shown clearly together with the price quote. The standard format is "Price Quote x kr | Total Price y kr", and for a borettslag also "Share of common debt" and "Total Price incl. common debt".
Does the total price change during the bidding round?
Yes. When the purchase sum rises in a bidding round, the costs rise too (document duty at 2.5% of the purchase sum depends on the purchase sum) and so does the total price. The Broker updates the calculation continuously in the bid log.