Broker commission: Reform 2020

Who had to pay the broker's commission before 2020?

In most federal states, the broker's commission was already shared before the 2020 legislation. However, there was no binding regulation on the proportions in which the buyer and seller of a property shared the costs for the real estate agent. In the federal states of Berlin, Brandenburg, Hamburg, Bremen and Hesse, the buyer bore the entire commission before 2020.

Who will have to pay the estate agent's commission in future under the law?

The CDU/CSU and SPD Act on Estate Agent's Commissions of 2020 stipulates that the buyer and seller of a property share the commission equally throughout Germany. With this regulation, both parties thus share the costs of the commission equally. A regulation according to the buyer principle, according to which the party who has commissioned the real estate agent always pays, will be inadmissible in the future. However, if desired by the seller, the unilateral representation of interests for the seller may continue to exist.

Capital investors planning to invest in a residential and commercial building are not affected. The law on brokerage commission has no influence on this real estate segment, as residential and commercial buildings are not owner-occupied residential property but commercial real estate. Here the principle continues to apply: Which party bears all or part of the brokerage fee is a matter of negotiation or is determined by the market environment.

Advantages of the law: more professionalism and fairness

Especially for real estate buyers, the law on brokerage commission is a positive signal. In contrast to the buyer principle of some federal states, the new development represents a nationwide, uniform and fair regulation on the sharing of commission in order to reduce ancillary acquisition costs and to relieve property buyers. The regulation will further professionalise the real estate market. According to Engel & Völkers, providers who offer their brokerage services for free will not be able to stay in the market in the long run. Although estate agents will probably earn less on individual transactions, they will make more business in the long run, as only reputable service providers who act equally in the interest of buyers and sellers will prevail on the market.

Don't take any risks with the selling price!

Some buyers fear that the law on estate agents' commissions will mean that in future property sellers will add their share of the commission to the selling price of the property. We can reassure you in this respect: As experienced estate agents, we know that a purchase price that is too high can have a negative effect on the marketing of a property, resulting, for example, in an excessively long time on the market. However, the longer a property is offered on the market, the more its value decreases in the eyes of potential buyers.

Exception: When the broker's commission is not shared

Even if the division of the broker's commission applies nationwide, there is an exception in which only the seller is liable for the commission only the seller may pay the broker's commission if he explicitly wishes to do so.

Is it still worth hiring an estate agent?

Particularly in the federal states where until now only the property buyer had to pay the brokerage, sellers are asking themselves in the wake of the law on brokerage commission whether it is worth hiring an estate agent. After all, there are also numerous online providers who take over the marketing without commission. In our experience, however, there are still a number of good reasons for hiring a personal estate agent.

Do not underestimate the house sale

Many owners underestimate the effort involved in selling their own property. For example, numerous documents such as energy certificates, neighbouring owners' certificates or the land register must be submitted in order to successfully complete the house sale. Owners who fail to present one of these documents during negotiations risk incurring very high fines. Working with an estate agent provides security in this respect: On the one hand, an estate agent offers you the advantage of having a trustworthy advisor at your side who explains all questions about the sale of a property in a comprehensible way and knows where to obtain the required documents. Especially in a complex matter, which is the sale of a house, a personal advisor is therefore invaluable.

In addition, the assessment of the selling price of a property should always be carried out by a competent real estate agent. Only after a personal inspection of the property and a detailed consultation based on experience and sound market knowledge can the value of a property be realistically assessed. Automated online valuations, on the other hand, are not able to include all relevant factors that can influence the selling price of a property. These are just two of the reasons why it is worth hiring an estate agent.