Brokerage Fees

Many new rules and laws concerning real estate have come into force in recent years. On December 23, 2020, another very significant new law was added. It concerns “the distribution of brokerage fees in the brokerage of purchase agreements for apartments and single-family homes.”

The media coverage and even real estate agents themselves generally do not hear very much about this, but still a lot of incorrect information.

We would like to provide a brief overview of the changes relevant to our customers at this point.

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

The factual scope refers to apartments and single-family homes. A subordinate residential unit, namely an attached apartment, 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 treated as single-family homes.

The regulation also applies if the aforementioned properties (i.e., single-family homes, semi-detached houses, terraced houses, or condominiums) are located on a leasehold property.

It does not matter whether the property in question (whether house or apartment) is rented out or owner-occupied at the time of sale. Thus, so-called investment properties also fall within the scope of the new regulation. The word “a/an” is of particular importance in this regulation, because the regulation applies to a single-family home or an apartment. So-called apartment packages (several apartments of one owner that are sold together) are not affected by the new regulation.

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

Previously, the brokerage agreement could come into effect through conclusive (i.e., implicit) action. With the new regulation, brokerage agreements that have as their object the verification of the opportunity to conclude a purchase agreement for an apartment or a single-family home or the brokerage of such an agreement require the text form (§ 656a BGB new version).

And now it’s slowly getting complicated, because there are different ways in which the broker can justifiably earn his commission.

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

Thus, if sellers and buyers conclude a brokerage agreement, both parties should pay the same amount to the real estate agent (only in the event of success, i.e., when the main agreement is concluded). Both parties should benefit equally from any negotiated discounts on the brokerage commission.

In addition to the dual agency described above, the legislator also provides for an “allocation of the commission to the non-client.” Such a case exists, for example, if only the seller concludes a brokerage agreement with the real estate agent and this agreement provides that the buyer has to bear part of the brokerage costs (commission). With the entry into force of the new regulation, 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 client. Thus, the second party (usually the buyer of a property) does not pay more than the first (usually the seller).

In this procedure, the parties to the purchase agreement make an agreement from which a claim of the real estate agent arises. Perhaps you 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. Seller and buyer agree that the broker should receive a direct claim against the buyer. This claim becomes due as soon as proof is provided that the seller has paid his share of the brokerage commission / brokerage costs.

Of course, it is also possible in the future, as before, that only the seller bears the brokerage costs and no costs are incurred for the buyer. This can be useful 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. Because it is supposedly clear that the seller will pass on his costs to the buyer in the form of a higher selling price if the market allows it.

Brokers who basically only do what an owner can do himself for a sale will probably have a much harder time with the new regulation than before. This also applies in particular to the so-called digital markers who can offer neither specialist knowledge, 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 through its very good Internet presence, through applications on numerous portals and search engines. However, it is becoming increasingly clear that the human factor is indispensable in the sale and rental of real estate.

The sale of a property is ultimately only conditionally delegable digitally. Neither to expose, nor to e-mail, SMS, newsletter, real estate portal or letter. Only in personal contact, face to face, is a dialogue possible. Recognizing emotions and controlling them does not work in one-way communication. You need the feedback, verbal and nonverbal, to make people sustainably happy and satisfied.

Ultimately, the new regulation thus strengthens the real brokerage agent in his function as an important neutral link between buyer and seller. Expertise, reliability, seriousness and a high degree 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 consulting services that go beyond the pure property search and also include topics such as financing, renovation measures and even furnishing.

Anyone who offers measurable added value for his customers will therefore be even more in demand in the future.