The new Brokerage Act: what is changing?

On December 23, 2020, a new law on the regulation of brokerage costs will come into force. It essentially contains a uniform regulation for the whole of Germany on how the estate agent's commission is to be split between the seller and buyer. In future, both parties will each pay half of the commission.

In some regions, the equal sharing of commission was already common in the past, but especially in major cities such as Cologne, Hamburg and Berlin, only the buyers usually paid. The new law now completely abolishes this so-called external commission - at least for residential properties. The aim is to prevent brokerage costs from being passed on to the buyer unilaterally. The legislator's primary aim is to reduce the ancillary purchase costs for buyers of owner-occupied residential properties. Incidentally, trading in apartment buildings, commercial properties, building plots, logistics or office space is not affected by the new real estate agent law. The new regulation only applies to the sale of an apartment or single-family home to owner-occupiers.

Internal commission

The only permissible exception to a parity model will continue to be an internal commission in which the brokerage costs are borne in full by the seller. In this case, the estate agent is fully committed to his client. This is a model that may well have advantages for sellers, as the estate agent is no longer bound by his role as a neutral intermediary. This means, for example, that he can work in the interests of his client without restriction when negotiating the purchase price.

What else does the law say?

With the new law, it is now also mandatory to document the agreed brokerage services in writing in all cases. Verbal agreements between real estate sellers and estate agents are therefore no longer valid. The agreements made must be recorded in text form. The new law does not contain any regulations on the specific amount of the estate agent's commission. This will therefore continue to be freely negotiated in future and set out accordingly in the brokerage contract. This has the advantage of transparency for all parties involved - because the buyer can also check what commission the seller and estate agent have negotiated from the outset.

Why is it worth selling with an estate agent right now?

It may be that the new legislation is tempting some sellers to sell on their own and do without an estate agent. However, this is still not a good idea, as many years of market knowledge and experience are the decisive factors for success in all phases of a property sale. The added value of a real estate professional who supports the seller with their experience and expertise from the property valuation to the conclusion of the purchase contract will remain undisputed in the future. Selling on your own, without professional support, is firstly only possible with a very high investment of time and effort and secondly means a much higher risk that the desired sales success will either not materialize at all or that the sales price achieved will fall far short of the market's potential.

Are you looking for someone to provide you with professional support when selling your property? Get in touch with us! We will be happy to advise you.

Didn't find what you were looking for here? Then read here:

https://ivd.net/fachthemen/provisionsteilung/

https://www.bvfi.de/bundestag-beschliesst-das-neue-maklergesetz

https://www.die-wirtschaftszeitung.de/aktuelles/neues-maklergesetz-sorgt-fuer-diskussionen/

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.

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