Real Estate Agents' Commission - Who Pays?
Broker's commission is now split equally between buyer and seller
Following new legislation, estate agents’ fees in Germany will have to be shared equally between the buyer and seller of a property, from 23 December 2021. This could bring relief to hundreds of thousands of homebuyers each year and save them billions of Euros.
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Traditionally, broker’s commission in Germany has not been regulated by law, but has instead become "naturalised" over the decades. The amount to be paid and its distribution differs from state to state. In Berlin and Brandenburg, for example, the entire broker’s commission - including VAT - of 7.14% was completely at the expense of the buyer. Similarly, in Hamburg (6.25%), Hesse (5.95%) and Bremen (5.95%) the buyer usually took over the whole amount of the commission.
Commission in Germany is often twice as high as in many other European countries (for example, in Austria it is 3-4%; in Belgium or Sweden, it is 3-5%). As a general rule, in places where the seller pays the broker’s commission, the rates are lower. This is because ensuring that the seller has to pay part of the commission gives them a stronger incentive to negotiate the fee down. So it is hoped that, not only will the new legislation clear up any issues over who has to pay the commission, it could also lead to lower rates of commission in many places.
With 500,000 real estate sales per year in Germany, it is thought that this new legislation could save buyers up to €3 billion. After the Bundesrat approved the law on 5th June 2020, it came into force on 23 December 2020, after a transitional period of six months. Read more about the new brokerage commission law here.