March 18, 2024, 4:46 am | Read time: 2 minutes
When purchasing a property, a commission may be incurred. But what exactly is it, and who receives the amount?
For those who rarely deal with real estate in everyday life, buying or selling property can introduce terms that raise questions. This is often the case when a commission is involved. myHOMEBOOK explains what this entails.
What is a Commission?
The term “commission”–also spelled “courtage”–derives from the French word “courtier,” meaning broker or agent. Essentially, a commission is the compensation for a broker. When a broker facilitates a property transaction, they receive a commission upon contract fulfillment.
The amount is also due if the broker merely brings the buyer and seller together successfully. There are both one-time and ongoing compensations, known as follow-up commissions. Such ongoing compensations occur, for example, when contracts are managed and overseen.
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How Much is a Broker’s Commission?
A commission can be incurred not only when a broker facilitates the sale of a property but also in property rentals. The amount of the commission depends, among other things, on whether it is a sale or a rental. When a broker facilitates a property sale, the compensation depends on the purchase price. In Germany, it is customary for the broker’s commission to be three to seven percent of the purchase price–it can be negotiated.
For property rentals, it’s a bit different. The amount of the commission is regulated by the Housing Brokerage Act. According to § 3 sentence 2 of the WoVermRG, the compensation may not exceed two months’ rent excluding additional costs plus 19 percent VAT.
Who Pays the Commission?
This also depends on whether it is a purchase or rental property. For the sale of a property, there is no specific regulation on which party bears the commission. Usually, the buyer and seller share the broker’s compensation.
It’s different for property rentals. To relieve landlords from paying the commission, the Bestellerprinzip was introduced in 2015. As the name suggests, the party that commissions the broker must also bear the costs.