Wirtz has chosen to join Liverpool ahead of Bayern Munich, another of Babbel's former clubs, with the Reds agreeing to pay a fee rising to £125m.
Asked about developments, Babbel says he has no doubts about the talent and potential of the Germany international.
He told Tribalfootball.com: "Look, he's a great player. We don't have that many great players in Germany at the moment. So it's a shame, on the one hand, that he leaves the Bundesliga. On the other hand, I was of course really happy that he would join Liverpool FC.
"Although I was very surprised. I was surprised that he, and that shows his character, he could have made it easy for himself. He could have gone to Bayern Munich. Because it's a big club, he knew a lot of players from the national team.
"It would have been relatively quick for him to feel comfortable, he had no problem with the language anyway. And he plays for a global club. He didn't do that. He goes to Liverpool. And that shows me his character."
On the fee, Babbel continued: "So you get a top player. I don't want to answer the question of the price. Who is worth 120 or 150 million (euros)? So I can't and I don't want to judge.
"I just say purely in terms of sport, give up on this move to go to a league that is another sport for the Bundesliga it is faster it is harder the intensity is higher and he says 'I want that, I want to go there' and that shows his character. So Liverpool has got a top character."
Where will Slot play him?
On how and where Wirtz will play in manager Arne Slot's system, Babbel admits he'll be keen to see how the attacker is utilised.
He said, "What I'm a little curious about is how Arne Slot wants to set him up. Because in this typical 4-1-4-1 he lets him play as an 8-pointer, lets him play on the left side, he sets up a system so that a 10-pointer comes in.
"Who does he take out for him? Because again, a (Dominik) Szoboszlai, a (Cody) Gakpo and whoever else is called, they had a great season behind them, they delivered great games. But it also shows me how ambitious the club is. They want to get the best people.
"And I'm very, very excited to see how Arne Slot will position them, where he will put all of them. But the fans should be happy about one thing, they will get a great player."
- Markus Babbel was speaking to Tribalfootball.com on behalf of Sport Wetten Ohne Verifizierung