New regulation for the distribution of brokerage costs when selling real estate
The new distribution of brokerage costs was newly and uniformly regulated on May 14, 2020 with the resolution of the Bundestag.
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The law strictly regulates the distribution of brokerage costs in the sale of real estate and thus marks the end of a legislative process that has been going on for years to regulate the fair distribution of the broker’s commission. The previous law on brokerage costs did not provide for any requirements for the distribution of the ** broker commission ** and so different models have been practiced nationwide.
From December 23rd, 2020 - sharing of the brokerage fee
In the new “Act on the distribution of brokerage costs when brokering sales contracts for single-family houses and apartments”, the unilateral commission payment by the buyer when buying single-family houses and condominiums is eliminated. Market behavior with regard to real estate prices will show whether this will provide noticeable financial relief when buying real estate.
Differences between the federal states will no longer be possible in the future, as the half commission sharing between seller and buyer is now uniformly regulated nationwide. The regulation of commission, which has so far often been denounced, is no longer possible in the sense of the customer principle according to the new law.
Sharing of the broker’s commission - and the consequences
The new Real estate law will come into force on December 23, 2020 for new contracts from this point in time. In our estimation, the half division of the total commission will be used as the most common variant when selling condominiums and single-family houses. Two separate brokerage contracts are concluded, one with the seller and one with the prospective buyer, which must not differ in the amount of commission.
One thing in advance: We will not increase our total commission, as we continue to see ourselves as mediators at eye level and continue to have fairness as a principle.
The amount of the commission is not stipulated in the new law, the principle “everyone according to his own style” still applies. And so the * first consequence of the new law * can hardly be noticed by the buyer. If the commission is increased by 2 percent, for example, only one percent is apparently imposed on him.
This will certainly encourage some sellers to * another consequence *, to let their share flow into the selling price of the property, so the property becomes more expensive. On top of this higher price, the buyer pays the corresponding higher real estate transfer tax and more financing interest for his purchase loan.
It is also still possible to handle the commission as an “internal commission”, in which the buyer does not pay any commission from the outside, but the seller pays 100%. In this case it is very likely that the purchase price has been adjusted even further, because which seller would like to forego part of his proceeds?
Thus, the intended relief for the buyer is reversed. It will, albeit gradually, lead to a higher financial burden on the buyers.
Law only applies to “consumers”
The law only applies to property purchases where private consumers are one or both of the parties. Individual commission agreements can still be concluded for commercial property trading.
The law only applies to the sale of apartments and single-family houses to or from private consumers. Commercial real estate, apartment buildings and land ready for construction are not affected by the new regulation.
Brokerage agreements are only permitted in text form after they come into force. From this point in time, brokerage agreements regulating the sale of a condominium or a single-family house are only permitted in text form. However, this does not require any signatures and can be written down by email, for example.