Commission for the broker – The most important regulations
Brokerage commission – More than 80 percent of all properties intended for sale or rent are brokered. This means that the owner commissions a real estate agent to advertise the offer and to carry out all tasks up to the conclusion of the contract on his behalf. Professional brokerage is a service that is agreed between the client and the real estate agent. After the service has been rendered, a commission, the so-called brokerage fee, is due. Who pays the commission depends on the type of commission and the reason for the commission. If you sell your property through an estate agent, the buyer usually pays. In the case of lettings, the buyer principle has applied since 2015, so that the invoice recipient and commission payer is identical to the person who has commissioned a brokerage service.
Orderer principle – currently only valid for rentals
Since the introduction of the buyer principle, potential tenants are relieved of paying a broker’s commission. Previously, this fee was payable in addition to the rent deposit, which is also payable on conclusion of the contract and provides the owner with security against loss of rent. If you are buying a property, include the commission for the estate agent in your incidental purchase costs. Although the buyer principle has long been under discussion for house purchases, it is currently impossible to predict if and when it will come.
At the same time, politicians have voiced a proposal to incorporate into law a limit on the brokerage fee to a maximum of 2 percent of the purchase price. In both cases, the ancillary purchase costs for potential owners would be reduced, but if the principal pays, fewer sales would be made via estate agents. Buyers have been waiting for some time for the introduction of the purchaser principle, which has significantly reduced upfront costs for tenants.
Calculation of the brokerage commission
The commission, i.e. the broker’s fee, is a calculated percentage amount that depends on the purchase price. When selling a house, there is no legal regulation on the amount of the broker’s commission, so it is a freely negotiable value.
The usual commission payments to the real estate agent range from 3.45 to 7.14 percent of the offer price and are a component of the ancillary purchase costs. On the Internet you will find a lot of information about the fact that in most federal states the commission is shared and not borne solely by the buyer. In reality, the owner usually does not share in the commission and leaves the payment of the brokerage solely to the buyer. The percentage of the commission depends on the demand of the real estate agent and the usual brokerage fees in the federal state.
Negotiation of the commission
Negotiations about the commission are possible, but usually only lead to success if it is a difficult-to-broker property with low demand. Before you purchase a property and confirm the conclusion of a contract for brokerage services, you can compare the different commissions by state, as well as the different practices in the payment of the brokerage.
When must commission be paid?
In general, a brokerage contract always consists of two agreements, one of which is concluded with the owner, and the other agreement is made with the prospective buyer. According to §126 BGB, a brokerage contract and thus the basis for the commission payment is only valid in written form. Verbal agreements remain unaffected and have no binding position for either the client or the buyer. Many prospective buyers wonder when the contract between them and the real estate agent actually comes into being and how it can be valid before a handwritten signature is made. The fact is that you must agree to the contract before a real estate agent will act on your behalf. This consent does not require a written signature, but is confirmed by the buyer by accepting the agent’s terms and conditions.
German Civil Code (BGB) § 126 Written form
(1) If written form is prescribed by law, the document must be signed by the maker in his own hand by his name or by a notarially certified hand sign.
(2) In the case of a contract, the signature of the parties must be on the same document. If the contract is recorded several identical documents, it is sufficient for each party to sign the document intended for the other.
(3) The written form may be replaced by electronic form, unless the law provides otherwise.
(4) The written form shall be replaced by notarial certification.
A commission is only due when the purchase contract is concluded and the real estate agent’s services have been fully rendered. If you decide against the favoured property after a viewing, no fees are due for the brokerage service provided up to that point. Only when you sign the purchase contract are you bound to the brokerage fee known from the first glance at the exposé and pay the commission within a period of 7 to 14 days after the due date of the property price.
Broker commission for private purchase: New law
The broker’s commission is not clearly regulated in Germany. In recent decades, it has become customary for the buyer to pay the broker’s commission when purchasing real estate. This means that 100% of the costs are passed on to the buyer.
The new law, effective December 23, 2020, now decides that the seller must bear at least half of the broker’s commission.
Private purchase, non-commercial real estate trade
However, the new regulation only applies to private purchases. So if you buy a property commercially, you are not subject to this innovation in the BGB. The §§ 656c and 656d only apply if the buyer is a consumer. Read more, including BGB innovations, about the broker’s commission here : New law (external).
For private real estate buyers, this changes a lot, after all, the brokerage fee makes up a large part of the ancillary purchase costs. With the house purchase in addition, with the flat purchase and property purchase, with it up to 7.14% for the buyer become due.
Broker commission usually at 7.14%.
- Find out more about the broker’s commission for private purchases here.