How the new commission rules spoil the business of real estate agents
When buying real estate, brokers in Germany often charge high five-digit sums as brokerage fees. Since these have to be shared between buyers and sellers, buyers can save money. WORLD explains how much.
Dhe new broker rules for real estate purchases are having an effect. Since the client has to contribute at least half of the brokerage fee, there has been a noticeable relief on the buyer’s side, especially in regions with high demand. This is the result of a study by Immowelt (like WELT, belongs to the Axel Springer Group), which was carried out in cooperation with the University of Economics and Environment in Nürtingen-Geislingen.
In Germany, the ancillary costs when buying real estate are unprecedentedly high. In addition to the real estate transfer tax of up to 6.5 percent, a 7.14 percent broker commission was often added by the end of last year. Since December 23, 2020 there has been a so-called half-life regulation. Anyone who hires a broker – usually the seller – must now contribute at least half of the costs.
This makes it a little easier to start owning a home, as the study shows. 42 percent of the brokerage offices surveyed by the University of Economics and Environment stated that they had to adjust their brokerage fee to the legal situation – in other words: less crediting the buyers, demanding more from the sellers. With a purchase price of 500,000 euros, that means savings of almost 18,000 euros for buyers.
Many brokers are apparently not prepared to lower the total commission amount, but instead demand 3.57 percent of the purchase price from each side. The result: the sellers drop out, hire a broker less often and sell on their own. The number of brokerage contracts with salespeople fell nationwide at more than 40 percent of brokerage offices.
44 percent also report that the pressure of competition has increased significantly in some cases. The reason for this is probably that sellers have more leverage in view of the high demand for real estate. Unlike buyers, you can freely choose a broker and also go according to the amount of commission.
The brokers had to change their market behavior
Only a few are likely to accept five-digit amounts. Many brokers have to deal with market mechanisms on the seller side for the first time.
It is interesting to take a look at a similar market study by the University of Economics and Environment last year. At the time, 53 percent said they would pass the full commission on to buyers, and another 16 percent said they would charge most of the commission to the buyer. The intermediaries now had to change their market behavior on a similar scale.
According to observations by economists such as the Institut der deutschen Wirtschaft (IW) or online brokers such as Homeday (Axel Springer), due to the growing demand for real estate in recent years, the full commission being passed on to buyers has continued to increase. Some brokers have argued that buyers could simply move on to another property if they didn’t like the commission.
Even in federal states in which, according to market tradition, the commission is supposedly always shared, buyers had to pay the high brokerage fees of up to 7.14 percent more and more often. In other EU countries, such as the Netherlands or Denmark, commission rates of two to three percent are common – all in all.
Lobby associations of real estate agents in Germany, such as the IVD, had always claimed that in 75 percent of the cases the commission was freely negotiated between buyer and seller. The observations of other market experts as well as the figures published by Immowelt show that this has apparently not been the case for a long time.
After all, the current survey also shows positive aspects: While 23 percent of the brokers indicated a decreased or greatly decreased satisfaction on the seller side, with 30 percent of the buyers the satisfaction increased.
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