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What is the broker's commission on the sale of real estate?

Anyone who wants to sell a house often hires a real estate agent to do so. The commission is the success-related fee for the work of a real estate agent. If a prospective buyer buys the house or apartment brokered by the estate agent, a real estate agent's commission is due. When selling real estate, the commission is usually calculated as a percentage of the selling price of the property.

What does the estate agent receive his commission for?

The commission is paid to the estate agent for having been able to broker the seller's property or for having found a suitable property for a buyer. The property can be a house, an apartment or land. In order to be able to successfully broker the property, the real estate agent needs to take a number of steps: He inspects the property for sale, prepares an exposé, places advertisements in print or online media, advises interested parties, organizes viewing appointments and acquires knowledge of the property on offer in order to be able to advise interested parties competently. The real estate agent can be compensated for these efforts in the form of a commission.

Who commissions the estate agent?

In principle, the estate agent can be commissioned by both parties involved in the sale of a property. Buyers can hire an estate agent to assist them in finding and processing a desired property and the seller can hire an estate agent with the intention of finding a suitable buyer for his property.

How much is the brokerage commission?

The amount of the commission is only partially regulated by law. The broker can therefore determine and negotiate the commission individually. Mostly, the estate agent will charge a standard commission. The broker's commission is usually stated as a percentage and is usually between three and six percent of the purchase price plus VAT of 19 percent. An estate agent has three ways of charging his commission:

Internal commission - the seller pays

If buyers are offered a property free of commission through an estate agent, a so-called internal commission is often agreed. The amount of the commission is not apparent to the buyer, as it is only recorded in the brokerage agreement between the seller and the broker. However, the owner of the property often adds the commission to the price of the house.

External commission - the buyer pays

The external commission is the fee, which is for example shown in advertisements or exposés as commission. It is to be paid by the buyer. The buyer can, if he wishes, negotiate the amount with the real estate agent.

Mixed form of commission - both pay

This frequently used hybrid form divides the total commission between buyer and seller. The ratio in which the broker divides the commission varies from region to region. In most German regions it is now common practice for the seller and buyer to share the commission in a ratio to be negotiated. The exceptions here are Berlin, Brandenburg, Bremen, Hamburg and Hessen, where the buyer alone bears the costs.

Depending on the region between three per cent and seven per cent commission plus value added tax is normal. However, the broker can also ask a fixed amount as commission.

When can a broker demand a commission?

Real estate agents are entitled to a commission under certain conditions, these are set out in § 652 BGB. In principle, an effective brokerage contract must have been concluded. Furthermore, the broker's activities must have been the reason for the sale or rental of the real estate. This means that no commission is due if no purchase or rental contract has come into existence. If the real estate agent has not received an exclusive commission, the client can also conclude a brokerage agreement with other agents. In this case, only the broker who was able to sell the house receives the brokerage commission.

In case of doubt, the estate agent must prove that he/she has performed a brokerage activity that was decisive for the sale of the house or apartment. However, as soon as the estate agent has a vested interest, no commission is payable. For example, if the estate agent was himself a tenant, landlord or manager of the apartment or if he has a personal and business relationship with the real estate agent. In principle, no brokerage fee may be charged for the brokerage of social housing and publicly subsidised properties.

When must the broker's commission be paid?

The real estate agent's commission is payable after a period of seven to 14 days after the sale of the property or at the latest when the purchase price of the property has been credited to the seller's account. Estate agent's commission may still be due after the brokerage agreement expires if the owner later sells the land or building himself/herself. If the estate agent has contributed to this, for example through an earlier inspection with the later buyer, he can still claim his fee afterwards. Law assumes up to one year aftertermination of the brokerage agreement.