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Quo vadis brokerage fees.

Quo vadis brokerage fees. Will the Germany-wide adjustment of the brokerage commission also implemented for the purchase of real estate?

"The draft law on the distribution of brokerage costs in the mediation of sales contracts for apartments and single-family houses" is the name of the current draft law of the federal government, which is expected to be discussed in the Bundestag in mid-February and very likely to be passed, and will then be submitted to the Federal Council by March at the latest. After that, it can be expected that the new regulation will come into force after a short transition phase towards the end of 2020 and thus regulate the division of commissions across Germany.

Since 2015, the so-called ordering principle has been in effect when arranging rental apartments. Thus, the person who orders the agent pays the broker. After a first turmoil, the situation calmed down and the market got used to the new conditions. In my opinion, you can see more private rentals, especially in tense rental markets like Berlin, where rental apartments are very sought after and under big demand. However, I also have the experience that landlords like to underestimate the job of renting an apartment and are then overwhelmed by the amount of work. Often it is precisely these private landlords who then take the help of a professional rental agent to help them not only rent the apartment at the best rental price but also to the most suitable tenant.

Nevertheless, the rental market has adapted and so the sales market will also accept the new regulation and adapt. For the consumer (the buyer), especially in metropolitan areas, where - as in Berlin - the entire commission is often paid by the buyer, the cost situation will relax somewhat. We will continue to see brokerage fees of up to 7.14%, but the split will significantly reduce the costs for the buyer. Foreign customers in particular are often "scared" by the sometimes very high commission rates, since in many foreign markets far lower commissions are paid. In the origin, the bill went even further and should actually cover the amount of the commission. The 2% introduced in the draft found no majority are therefore no longer up for debate. From my point of view, this would also be a too large, legally regulated incision, which would have led to major distortions and would have shaken an entire industry to its foundations. In recent years, it has already been observed that the market is starting to regulate itself, which has already led to a reduction in broker's commission in some cases. Marketing-intensive properties that have a longer sales time and require international marketing continue to be sold with high commission rates. In my view absolutely justifiable.

I welcome the fact that a solution now seems to have been found and hope that the forthcoming new regulation will not only calm the market, but also bring more transparency. Even if the planned new regulation leads to a significantly increased administrative effort for brokerage firms, associations and companies can now concentrate on their day-to-day business.

What's the future like? In my opinion, the planned new regulation will only be a transitional regulation, because the German market will also have to adapt to international standards and sooner or later the ordering principle will also be extended to the sales market. In my opinion, this is a well-represented practice that will further promote and strengthen the quality of the brokerage branch.

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RABITZ PROPERTY CONSULTING

Peter Rabitz

Universitätsstraße 2-3A, 10117 Berlin

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