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Broker commission: How high should it be?
Anyone who Agents or sells a property through an Agents will come into contact with the broker's commission at the latest when the contract is signed. But how high is it usually? And are there regional differences? This article explains everything you need to know about the amount of broker's commission in a real estate transaction.
What is a broker's commission?
Before discussing the amount of the estate agent's commission and the factors that influence it, the question of what an estate agent's commission actually is should be clarified. It is also known as an estate agent's fee or broker's commission and represents the remuneration that estate agents receive for a successful brokerage.
There is, of course, a legal regulation for this. According to Section 652 of the German Civil Code (BGB), the brokerage of a property was successful if
Agents sellers or buyers conclude a valid contract with each other,
the Agents performs Agents agreed service and
this service creates an effective purchase contract.
A distinction is made between internal commission and external commission. Internal commission refers to the fees that the seller Agents to the Agents . It is set out in writing by both parties in the brokerage agreement.
The external commission is Agents by the buyer to the Agents . It is stated in the property description and is therefore communicated openly. At Sotheby's International Realty, too, the costs are clearly stated in the property description.
Requirements for the payment of a broker's commission
There are a few requirements that an Agents must Agents in order to receive their commission. First and foremost, a valid brokerage agreement must have been concluded before the service is provided. Real estate agents cannot conclude a contract retrospectively or demand payment without a contractual basis.
Real estate agents must also be able to provide evidence of their brokerage activities, as specified in Section 652 of the German Civil Code (BGB). According to this, there must be an active contribution to the conclusion of rental or purchase contracts for apartments and houses.
The concluded purchase or rental agreement must also be notarized in order for the real estate agent to receive payment. A further requirement is that the contract is concluded through the services of the estate agent.
If the Agents unable Agents find a buyer or tenant, there is no entitlement to payment of the brokerage fee. The agent is only entitled to the commission if a valid contract is signed.
Who pays the broker's commission in real estate transactions?
Many sellers and buyers do not know when which party must pay the brokerage commission. Since December 2020, there has been a law governing the distribution of the commission for the Agents the buyer and the seller.
It stipulates that the buyer may not pay more than the seller when a property is successfully brokered. This was the rule until the law came into force, but was handled differently in the following federal states:
- Berlin
- Brandenburg
- Hesse
- Bremen
- Hamburg
In the other federal states, the commission was split between the two parties.
How high is the broker's commission?
In Germany, it is not clearly regulated or specified how high the broker's commission should be for a real estate transaction. Real estate agents and sellers are therefore usually guided by the commission rates that are customary in the region. This is because there are major differences from state to state.
Many Agents the standard industry rate of 3% of the purchase price of the property for both parties, including 19% VAT.
How is the broker's commission calculated?
Once the percentage has been determined, it is quite easy to calculate the estate agent's commission. As it is a proportionate cost of the purchase price, the estate agent's commission on a property purchase always varies depending on how much the apartment or house costs.
If an Agents charges Agents seller 3.57 percent and the property is sold for €400,000, the brokerage commission is €14,280.
You should always keep these costs in mind when deciding to sell a property and hire an Agents an intermediary.
Is there a maximum commission amount?
Since German law does not clearly specify how high the brokerage commission should be, there is no upper limit. There is therefore no maximum commission amount. Agents therefore agree individually with the seller. For a real estate sale, however, it is advisable to follow the usual commission rates.
It is practical that the commission for Agents is Agents negotiable. This means that sellers who consider the brokerage fees to be too high can enter into negotiations. It is advisable to own a particularly attractive property. Then it is likely that Agents will be Agents to negotiate the commission amount.
For buyers, if you are interested in a property that is difficult to sell, you may be able to get a discount. However, when it comes to a sought-after property, buyers should be careful. After all, there is a risk that prospective buyers with a higher willingness to pay will be given preference.
Is there also a broker's commission for rentals?
Many people associate brokerage fees solely with the purchase of real estate. However, an Agents may also be Agents in a rental, which results in a corresponding commission. How high is the brokerage commission when renting a property?
Since June 2015, the so-called ordering principle has been in force in Germany. The person who commissions the real estate agent is referred to as the ordering party and must pay the agent's commission. As a rule, this is the landlord. Of course, the tenant can also Agents an Agents . In this case, the tenant is liable for the agent's fees if a property is successfully brokered.
When renting out a property, there is an upper limit for the estate agent's commission: it may not exceed two net cold rents plus VAT. The latter is 19 percent. The estate agent's commission can also be negotiated when renting out an apartment or house.
Conclusion: Negotiation of brokerage costs possible
When buying, selling or renting a property with the help of a real estate agent, an agent's commission is payable when the contract is concluded. The amount is usually based on the standard industry rates.
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