08.11.2024 • 5 min. reading time
Content of this article
The estate agent's commission is an important part of many real estate transactions. The broker's commission, also known as a brokerage fee, is the fee that a real estate agent receives for proving the opportunity to conclude a main contract (purchase contract or rental agreement) or for brokering a property. It is usually agreed as a percentage of the purchase price and can vary depending on the region and type of property. The commission also covers the costs of services provided by the estate agent, such as the valuation of the property, marketing, viewings and contract processing.
New regulation of estate agent commission: who pays how much?
Until December 23, 2020, it was common for the commission to be paid by the buyer alone. This often led to high costs for the buyer.
With the new regulation of estate agent commission at the end of 2020, this practice has changed in many cases. Since then, the distribution of the broker's commission has been regulated by the so-called half-share principle. This is the result of the 'Act on the Distribution of Brokerage Costs in the Mediation of Purchase Contracts for Apartments and Single-Family Houses', which was agreed by the Bundestag and Bundesrat. In addition to a tightening and extension of the rent cap until 2025, a package of laws (known as the "housing package") also includes new regulations on estate agent commission. The amount of the estate agent's commission is still freely negotiable when selling a property. However, if the subject of the transaction is an apartment or a detached house and the buyer is a consumer within the meaning of the law and the estate agent is acting for both the seller and the buyer (so-called dual estate agent), the seller's and buyer's commission must be the same. There are standard regional commission levels, which, depending on the federal state, are between 5.95 and 7.14 percent for the sum of both commissions.
This half-sharing principle (also known as parity) is intended to reduce the burden on buyers and make the real estate market fairer.
For property buyers, the new regulation means that they now only have to pay practically half of the total commission. This can mean considerable savings, especially for expensive properties. The new regulation only applies if the property buyer is acting as a consumer and not as part of a commercial activity.
The new regulation also has implications for property sellers. The fact that the seller also has to pay an estate agent's commission can have an impact on the selling price and the time it takes to market the property. Sellers should therefore always consider the effects of this no longer entirely new regulation on their sales strategy and pricing.
When is the estate agent's commission due?
The estate agent's commission is due as soon as the purchase contract for the property has been signed.
Realtor commission when renting out a property: What needs to be taken into account:
The following aspects need to be taken into account for the agent's commission when renting out a property:
- Amount of commission: The amount of the agent's commission when renting out a property is limited when the search client (tenant) commissions the agent. In this case, the commission may not exceed two months' rent plus VAT in accordance with Section 3 (2) of the German Residential Brokerage Act (WoVermittG).
- Who bears the costs: As a rule, the person who has commissioned the broker also bears the commission (buyer principle).
- Transparency: The broker is obliged to inform the tenant transparently about the amount of the commission and their own services. This means that the tenant must be informed of all costs incurred before the tenancy agreement is concluded.
- Brokerage agreement: A brokerage agreement must be concluded before the broker is commissioned to broker a rental apartment. This must be in text form (e.g. email). Among other things, this contract specifies the amount of the commission, the broker's services and the terms of payment.
