Status: 05/08/2022 09:01 a.m
Anyone who appoints a broker in a real estate transaction should also share in the costs: a new law is intended to ensure this. But in everyday life, the rule is often circumvented.
In May 2020, the Bundestag passed the law on the distribution of brokerage costs. Private buyers of a single-family house or a condominium only have to pay a maximum of half of the agent’s commission if the seller has commissioned the agent. The aim of the law is to bring more competition into the encrusted brokerage market. Previously, it was common, especially in high-demand regions and large cities, for buyers to bear the brokerage costs completely on their own.
But it is precisely in cities and metropolitan areas that real estate prices are rising at record speed, driving up brokerage costs. In 2012, a broker in Hamburg earned an average of around 20,200 euros from the sale of a single-family house with a living space of 120 square meters. Ten years later, brokers collect almost 49,400 euros when selling such a property – an increase of almost 145 percent.
Brokers circumvent the law with refunds
In the fight for lucrative sales orders, many real estate agents apparently do not comply with the legal regulations and make agreements with sellers: They secretly reimburse the sellers for the commission paid after the transaction is completed and thus circumvent the requirements of the law on the distribution of brokerage costs.
In addition to direct repayment agreements, brokers mainly use so-called tipster contracts to process the refunds via straw people. If sellers end up paying less commission than buyers, it would be a violation of the law.
However, the law on the distribution of brokerage costs does not provide for any sanctions for violations of the provision of equal commission sharing. Theoretically, buyers have the opportunity to demand the same “discount” from the broker that the broker gave to the seller. However, the problem here is that buyers have no chance of recognizing the illegal agreements between seller and broker. Dubious brokers can thus violate the provisions of the law with almost no risk and rely on this remaining undetected.
Experts call for the ordering principle
The Institute of German Economics in Cologne has analyzed the remuneration model for real estate agents in Europe in several studies. The real estate experts also recommend the introduction of the orderer principle for Germany, according to which the seller always pays the agent. This is the only way for effective price competition between brokers to get going; After all, hardly any homeowner would be willing to pay around 50,000 euros for the services of a broker.
This is also shown by examples from the Netherlands, the United Kingdom and Scandinavia. In these countries, the customer principle is common. And so the broker commissions there are often only one to two percent of the purchase price – even though the brokers sometimes have much more extensive tasks, such as the formulation of purchase contracts.
There are also positive experiences with the orderer principle on the German real estate market: it was introduced for rentals in June 2015 and has successfully reduced brokerage costs. Apartment seekers may no longer be obliged to pay the commission if they receive a rental contract. Constitutional complaints against this regulation were rejected by the Federal Constitutional Court.