There are about 35,000 real estate agents in Germany. Not all of them work independently, but are often times in employment relationships. The industry association IVD (Federal Association of Real Estate for Consultants, Brokers, Administrators and Experts) comprises about 6,000 member companies. The real estate brokerage business in Germany is heavily influenced by the financial services industry, since the property brokerage business is related to real estate financing.
Accordingly, many brokerage companies are associated with banks and savings banks. As a whole, the saving-bank group is the largest real estate broker in Germany. However, most savings banks operate the agency business on their own. In addition to brokers affiliated with financial institutions, there are also many independent brokers.
Broker commission
It causes commission fee to hire a broker, because there is a causal connection between the brokerage activity and the conclusion of the contract. This condition must be proved by the brokers in the event of a dispute with a written proof of real estate. The amount of the brokerage commission can in principle be freely negotiated within certain legal limits and depends on the market situation, the price of the real estate as well as on the market usual conditions. It is usually
- in the case of private real estate sales in Germany regularly between 5.95 and 7.14% of the purchase price (including VAT),
- for private real estate leases, up to two net monthly cold rent (plus VAT) (limited by the Housing Act) and
- in commercial real estate transactions according to the individual arrangements between broker and client.
The market-standard percentages of brokerage commissions on real estate sales vary from state to state. These are not legally binding commissions, but they serve as a guide for brokers and customers.
Depending on the regional practices for the private real estate brokerage business, the commission will be charged
- shared between buyer and seller (often in equal parts),
- carried solely by the seller or
The commission of the seller is referred to in the industry as internal commission, the buyer's as external commission. A complete internal commission, also known under the keyword ordering principle, has the advantages that
- the property can be offered to the buyer without additional brokerage commission (i.e. factually included in the purchase price, if the market situation permits),
- the buyer thus has lower additional acquisition costs in the context of real estate financing and
- this is an economically efficient cost allocation, since the person who decides on the appointment of a broker and its selection also pays for it, so that there is real competition for quality and price.
A complete internal commission has the apparent disadvantage that the acquisition costs, such as the real estate transfer tax and the notarization costs are higher, because they are usually calculated on the basis of the value of the certificate or the value of the consideration, and these values may increase due to the included brokerage. However, this view fails to do so because, in a functioning market, real estate that is marketed without brokers competes with those where a broker acts, so that if a seller decides not to hire a broker the value of the commission can be applied to the purchase price and thus be able to collect it itself.
In rare cases, an additional payment agreement is made between the seller and the broker. In addition to a commission, if a certain purchase price is exceeded, the additional proceeds are divided between the broker and the seller according to a certain pre-agreed pattern.
Brokerage commission in the notarised purchase agreement
If real estate agents protect their rights to brokerages in the purchase contract, one speaks of the so-called broker clause. The broker clause states that the mediation of the property by the broker has come about. If the broker clause is used in a wording that subjects the purchaser to immediate foreclosure of his assets in the event of non-payment of brokerage fees, the Chamber of Representatives considers that this is inappropriate and contrary to "good morals".
If, contrary to the recommendation of the Notary Chamber, real estate buyers accept such a clause, they should note that the mention of the broker and his commission in the notarised contract of sale will only result in an increase of the notarial registration fee if the seller agrees to pay the commission to the broker but the obligation was then assumed by the buyer. If only the buyer has to pay a brokerage fee, this does not increase the value of the property that is subject to the withholding tax if the buyer has commissioned the broker. For this purpose, the simple sentence in the brokerage clause of the purchase contract suffices: "The buyer has commissioned the broker." If this sentence is missing, then the brokerage commission may increase the real estate transfer tax.