Broker commission - everything you need to know about broker commission

Reform of the real estate agent commission in 2020

Until 2020, there was no legal requirement in Germany as to who had to pay the commission for the real estate agent and how high it should be. The requirements for brokerage fees differed from federal state to federal state. This changed with a decision by the federal cabinet of the CDU/CSU and SPD in May 2020. In this article, we created a summary of the explanations of the brokerage commission law and what this reform entails for buyers and sellers of a property.

Who pays the broker's commission?

With the decision of the Federal Cabinet, the CDU/CSU and the SPD are sending the signal that in the future buyers and sellers of a property will each share the costs of the broker's commission equally throughout the whole of Germany. In doing so, the cabinet is abandoning a regulation based on the so-called "buyer pays principle", whereby the party that has commissioned the real estate agent is responsible for paying the agent's fee. The decision is intended to strengthen the position of the real estate agent as an intermediary between buyer and seller and to contribute to relieving the burden on real estate buyers in conurbations.

How high is the agent's commission when buying a property?

There is no uniform guideline throughout Germany as to how high the agent's commission is for the sale of a flat or house. In practice, the commission in Germany is usually 7% of the selling price of the property. With the new regulation, this commission will be divided fairly and equally between buyer and seller throughout Germany.

Calculation example:

If a property costs 350,000 euros and the broker's commission is 7.14%, the seller and the buyer each have to pay 3.57%, which will be 12,495 euros each.

How to avoid paying too much broker's commission

In practice, according to Engel & Völkers, it makes most sense if the agreement on the brokerage fee is given by a search client order on the part of the buyer or in the form of a qualified sole order on the part of the seller. As a consequence, both parties are equally and immediately liable to pay. In the discussion about the buyer principle, a contractual regulation on commission by the notary is recommended. The aim is the binding and transparent documentation of payment obligations and the exact commission amount in the notary contract in order to ensure the legal certainty of the parties involved.

Don't leave your sales success to just anyone

Both seller and buyer benefit from the cost-sharing provided by the new law on estate agent commission. By splitting the brokerage fee fairly, they can be sure of neutral and professional advice that acts in the interests of both parties equally. At Engel & Völkers, clients also benefit from our global network, which gives them access to a worldwide client base and millions of exclusive properties. Thanks to this unique network, we are able to match the prospective buyer to the right property.

Who pays the agent?

The estate agent is commissioned by one of the two parties. Proof of the commissioning is a document in text form (e.g. e-mail)

Conclusion of the contract

Thanks to the expertise of the estate agent and the utilisation of the Engel & Völkers network, the buyer and the seller are introduced and a contract is then concluded between both parties.