Brokerage fee

Many new rules and laws have come into force in recent years concerning real estate. On 23 December 2020, another very significant new law was added. It deals with “the distribution of brokerage costs in the brokerage of sales contracts for flats and single-family houses”.

The media reports and even the real estate agents themselves do not really hear much about this, but nevertheless a lot of wrong things.

We would like to take this opportunity to give you a brief overview of the changes that are relevant for our clients.

Of course, as real estate agents we do not give legal advice. Nor can we guarantee that this is complete and correct, let alone applicable to your individual case.

In which cases does the new regulation apply?

The material scope of application refers to flats and single-family houses. A subordinate residential unit, namely a granny flat, is irrelevant in the consideration. Only buyers of these properties are to be protected by the new regulations.

Semi-detached houses or terraced houses are regularly to be treated as single-family houses.

The regulation also applies if the above-mentioned properties (i.e. detached houses, semi-detached houses, terraced houses or owner-occupied flats) are located on a heritable building plot.

It does not matter whether the property in question (regardless of whether it is a house or a flat) is rented or owner-occupied at the time of sale. So-called capital investments also fall within the scope of the new regulation. The word “one” is of particular importance in this regulation, because the regulation applies to a single-family house or to a flat. So-called flat packages (several flats of one owner that are sold together) are not affected by the new regulation.

The personal scope of application is briefly and succinctly defined in § 656b: The new regulations (§§ 656c and 656d) only apply if the buyer is a “consumer”. So if, for example, a GmbH (limited liability company) buys a condominium, the statutory regulation on the distribution of brokerage costs does not apply, since a GmbH as a legal entity cannot be a consumer.

What must brokerage contracts “look like” in the future? In legal terminology: “formal requirements”.

Previously, a brokerage contract could be concluded by implied (i.e. conclusive) action. With the new regulation, brokerage contracts that have as their object the proof of the opportunity to conclude a purchase contract for a flat or a single-family house or the brokerage of such a contract require the text form (§ 656a BGB new version).

And now things are getting complicated, because there are different ways in which the estate agent can justifiably earn his commission.

Variant 1: The double activity – the so-called parity half-sharing principle (§ 656c BGB new version)

According to the “new regulation on the distribution of estate agent’s commission”, the commission agreed between an estate agent and a seller (the so-called internal commission) is also decisive for a later agreement with the buyer. In concrete terms, this means that the amount of the commission must be identical for both contracting parties (seller / buyer) if the estate agent acts for both parties. Discounts in favour of one party then also apply to the other party. If the brokered purchase contract is concluded (the so-called main contract), the commission claim against the contracting parties becomes due as before.

If the seller and the buyer conclude a brokerage contract, both parties should pay the real estate agent the same amount (in any case only in the case of success, i.e. if the main contract is concluded). Both parties should benefit equally from any negotiated discounts on the broker’s commission.

Variant 2: The unilateral representation of interests in favour of the seller with the possibility of pro rata pass-on (§ 656d BGB new version)

In addition to the double action described above, the legislator also provides for a “passing on of the commission to the non-client”. Such a case exists, for example, if only the seller concludes a brokerage contract with the real estate agent and this contract provides that the buyer has to bear part of the brokerage costs (commission). With the new regulation coming into force, such an agreement may only be made in such a way that the buyer has to bear a maximum of half of the commission promised by the principal. This means that the second party (usually the buyer of a property) does not pay more than the first (usually the seller).

In this approach, the parties to the purchase contract enter into an agreement from which a claim by the real estate agent arises. You may have heard of a “contract for the benefit of third parties” in this or a similar context. In this case, that is the real estate agent. So the seller and the buyer agree that the estate agent should have a direct claim against the buyer. This claim becomes due as soon as it is proven that the seller has paid his share of the agent’s commission / agent’s fees.

Variant 3: The unilateral representation of interests in favour of the seller without pass-on

Of course, in future it will also be possible, as before, for the seller to bear the brokerage costs exclusively and for the buyer not to incur any costs. This can make sense for certain properties that are difficult to market. To what extent it will be increasingly applied in practice in the future remains to be seen. For it is presumably clear that the seller will pass on his costs to the buyer in the form of a higher sales price if the market allows this.

Conclusion: Gain added value!

Agents who basically only do for a sale what an owner can do himself will probably have a much harder time with the new regulation than before. This applies in particular to the so-called digital markers who can offer neither expertise, experience nor local knowledge, but ultimately only provide a marketing platform via the internet.

And this form of real estate marketing has existed at Maile Immobilien for almost two decades now, thanks to the very good internet presence and applications on numerous portals and search engines. However, it has been shown time and again that the human factor is indispensable in the sale and rental of real estate.

Ultimately, selling a property can only be delegated digitally to a limited extent. Neither to an exposé, nor to an e-mail, SMS, newsletter, real estate portal or letter. Dialogue is only possible in personal contact, face to face. Recognising emotions and controlling them does not work in one-way communication. You need feedback, verbal and non-verbal, to make people happy and satisfied in the long term.

Ultimately, the new regulation thus strengthens the genuine broker in his function as an important neutral link between buyer and seller. Expertise, reliability, seriousness and a high level of service quality and trust are very valuable for both parties, because it is not only the sellers who benefit from a strong local brand like Maile Immobilien: buyers also receive intensive advisory services that go beyond the pure property search and also include topics such as financing, renovation measures and furnishings.

Those who offer their customers measurable added value will thus be even more in demand in the future.

Do you have any questions or would you like to place a property search?