New law aims to relieve the burden on homebuyers.

Good news for homebuyers: Starting in 2021, they can save considerably on ancillary costs. The new law on the redistribution of real estate agent fees for the sale of apartments and single-family homes stipulates that the seller of the property must bear at least half of the commission if they hire a real estate agent.

After lengthy discussions, the new law on the fair distribution of real estate agent commissions passed the Federal Council on June 5th, thus clearing its final hurdle. From the beginning of 2021 at the latest, the seller of an apartment or single-family home will pay half of the real estate agent's commission. This also eliminates the differing regulations in the individual federal states.

In Berlin, Bremen, Brandenburg, Hamburg, and Hesse, the real estate agent's commission has so far been borne solely by the buyer, even if the agent was hired by the seller. In the other federal states, the fees have always been shared. The new draft law aims to establish a uniform regulation nationwide, thus creating greater fairness in the distribution of costs. Only after the seller has demonstrably paid their share will the buyer be required to pay their portion, up to a maximum of 50 percent of the commission (§ 656d BGB).

The new law aims to significantly ease the burden on buyers of condominiums and single-family homes, as the high ancillary purchase costs, consisting of real estate transfer tax, land registry and notary fees, as well as real estate agent commissions, make property acquisition difficult in Germany. Depending on the federal state, these costs amount to between nine and 15 percent of the purchase price. Assuming a real estate agent commission of up to 7.14 percent, the ancillary costs of purchasing real estate will decrease by approximately 3.5 percent, which, for example, can translate into savings of €14,000 on a property costing €400,000.

Apartments from real estate agents are often cheaper

Interestingly, an analysis by the real estate portal Immowelt revealed that in nine out of eleven major German cities surveyed, apartments offered by real estate agents were cheaper than those offered directly by the owner, despite the agent's commission. The analysis examined existing apartments between 40 and 120 square meters listed on Immowelt in 2019. Cai-Nikolas Ziegler, CEO of the real estate platform, explains this by stating that "private sellers tend to overestimate the value of their property, while real estate agents set market-based prices from the outset." Viewed in this light, the new "half-buyer principle" now makes hiring a real estate agent doubly worthwhile.

Another advantage for homebuyers is that the sharing of the commission redefines the role of the real estate agent, who, as an intermediary, is now equally obligated to both parties. Perhaps this "impartial" role can also help prevent sellers from ultimately passing their share of the costs on to buyers through the back door of price increases, as skeptics of the new regulation fear.
Furthermore, Section 665a of the new German Civil Code (BGB) stipulates that a brokerage agreement for the sale of a single-family home or condominium must now be in written form (including email) to be legally valid. A verbal agreement or a handshake is no longer sufficient.

Sources: biallo.de, boerse-online.de, bundestag.de, haufe.com, immobilienwelt.de, sueddeutsche.de, wohnglueck.de