More consumer protection in the real estate sector

Mistakes mean high losses

Acquiring real estate involves significant financial investments, and the legal situation is not always clearly defined. To protect consumers, the German government intends to tighten the requirements for professional licensing for real estate agents and property managers.

The draft law from the Federal Ministry for Economic Affairs and Energy contains two key new regulations: the certificate of competence and professional liability insurance for real estate agents and property managers.

Under current legislation, neither real estate agents nor property managers are required to possess specific knowledge. Unlike real estate agents, commercial condominium association (WEG) managers do not even require official authorization. In the future, both professions will be required to demonstrate their expertise and professional competence before a Chamber of Industry and Commerce (IHK) . Real estate agents with less than six years of experience and no recognized qualification will be required to complete the competency examination within six months of the amendment coming into effect.

We very much welcome this new regulation. Owning property is an important component of individual wealth accumulation and retirement planning. Both the property buyer, who invests their savings or takes out large loans, and the seller, whose capital is tied up in the property, must be able to rely on the expertise of the real estate agent.

Comprehensive proof of expertise required

However, we support the German Real Estate Association (IVD) in demanding improvements to the draft legislation. "The certificate of competence should not only be based on an expanded interpretation of Section 34c, but should encompass the entire spectrum of a real estate agent's field of work, including contract and notary law." In our opinion, in addition to the Chambers of Industry and Commerce (IHK), professional associations such as the IVD are also suitable as examining bodies.

We also welcome the mandatory introduction of professional liability insurance. "If a broker makes a mistake, it means significant losses for their clients. That's why professional liability insurance has always been a requirement at RE/MAX." So far, it's unclear what the coverage amount should be, nor have the content and requirements of the proficiency examination been defined in more detail.

What qualification is sufficient?

Real estate agent training provides a solid foundation for a career in the field. At our company, newcomers and career changers supported from the very beginning by experienced instructors and trainers throughout their professional development, all the way to the Chamber of Industry and Commerce (IHK) exam. During their practical experience, they receive guidance from the respective office owner. Highly ambitious newcomers and career changers can also pursue further academic qualifications: "In cooperation with the Nürtingen-Geislingen University of Applied Sciences, RE/MAX Südwest offers a qualification as a Real Estate Manager (WAF). These graduates are exceptionally well-trained."

Source: Federal Ministry for Economic Affairs and Energy