Are you planning to sell a property and wondering who pays the estate agent's commission? Unlike with houses, more flexible rules often apply here, allowing for up to 100% buyer contribution. This article explores the details.
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The topic briefly and concisely
The statutory 50/50 split of the broker's commission typically does not apply to plots of land, providing sellers with more flexibility in covering the costs.
When selling properties, especially to commercial buyers, the broker's commission can often be fully borne by the buyer.
The amount of the estate agent's commission for properties is negotiable and should always be recorded in writing in the agency contract; rates between 3% and 7% plus VAT are common.
The sale of a plot often raises questions about the broker's commission for the property. Since the legal amendment at the end of 2020 regarding the splitting of broker costs in residential properties, there has been uncertainty. Many sellers and buyers do not know that this new regulation applies to land only to a limited extent or not at all. Understanding the specific commission regulations for plots is crucial to avoid financial disadvantages and lead negotiations optimally. This article explains the current legal situation, common commission rates from 3% to over 7% and how you as a seller can benefit.
The essentials at a glance: Key points on brokerage commission for properties
The brokerage commission in land sales differs significantly from the regulations for residential houses or condominiums. Since the law on the distribution of brokerage costs came into force on 23 December 2020 (§§ 656 a-d BGB), buyers and sellers of residential properties must typically share the commission equally, usually 3.57% of the purchase price each. However, this regulation explicitly does not apply to the sale of undeveloped land, multi-family houses, or sales to commercial buyers. For land, the agreement on commission payment remains flexible and must be specified in the brokerage contract. This often offers significant advantages for private sellers, as the commission can sometimes be fully borne by the buyer, particularly if the buyer is a property developer.
Legal Foundations: Why Land is an Exception
The much-discussed "Act on the Distribution of Agent Fees in the Brokerage of Purchase Contracts for Apartments and Single-Family Houses" aims to provide financial relief to private buyers of residential property. It stipulates that the person who commissions the agent (usually the seller) must bear at least 50% of the costs if the buyer is a consumer. Sections 656a to 656d of the German Civil Code (BGB) form the central legal basis for this. However, this regulation does not apply to agent fees for plots of land. The legislator has exempted undeveloped plots and sales to entrepreneurs from this 50/50 split. Thus, the general provisions of the BGB concerning brokerage contracts continue to apply here, particularly Section 652 BGB, which regulates the agent's remuneration claim. This distinction is crucial for land sellers and buyers, as it allows more flexibility in structuring the commission agreement. A professional land valuation can provide a solid basis for negotiations.
Who pays the estate agent's commission when selling a property? The different models
Since the new law on commission distribution for properties does not apply, there are various models for who bears the broker commission for a property. The specific arrangement depends on the agreement in the broker contract. The following configurations are common:
Buyer Commission (External Commission): The buyer covers the entire commission. This is often the case if the buyer has hired the broker to search or if the property was found through the broker. This is common practice for sales to developers or commercial investors, often saving private sellers costs of several thousand euros.
Seller Commission (Internal Commission): The seller bears all the broker costs. This model can increase the property’s attractiveness to buyers, as no direct broker fees are incurred for them.
Shared Commission: The buyer and seller share the commission. The split ratio is freely negotiable and not bound to the 50/50 rule for residential properties. However, a 50/50 split is also a commonly chosen option in this case.
The decision for a model should be made strategically. A private property sale without a broker is also an option to completely avoid commission costs, but it requires considerable personal effort.
Broker commission: What is typical for property sales?
The amount of the brokerage commission for plots of land is not legally fixed and is therefore freely negotiable. In practice, however, the rates often align with the regionally customary ranges for property sales. These are usually between 3% and 7% of the documented purchase price throughout Germany, plus the statutory VAT of 19%. In many federal states, a total commission of, for example, 7.14% (including VAT) or 5.95% (including VAT) has become established. Since the statutory sharing obligation for plots of land is waived, the entire local commission can also be charged solely to the buyer, if this has been agreed. A clear agreement in the brokerage contract, which has required text form since 2020, is essential. The exact amount can depend on factors such as the location, size, and development potential of the plot, as well as market demand conditions. Consider whether a sale with or without a broker is the better choice for your situation.
Special case: Plot with existing structure or demolition house
A special situation arises when a plot of land is not undeveloped but has existing structures that may be earmarked for demolition (demolition property). Here, the question is whether the regulations for shared brokerage fees as with a plot of land or the stricter regulations for residential properties apply. According to asgari immobilien (Source), it depends on the details: If the existing structure is a single-family house that could theoretically still be renovated and could be acquired by a consumer, the law on commission distribution might apply. However, if the plot with a demolition object is sold to a commercial buyer (such as a project developer), the obligation to divide the commission equally is waived. In such cases, the commission can often be entirely borne by the buyer. A thorough examination of the individual case and a clear contractual agreement are particularly important here. The costs when selling a plot can thus be optimised.
Negotiation tips and strategic considerations for sellers
As a seller of a plot of land, you often have better room for negotiation on the broker's commission for your land than when selling residential properties. Take advantage of this situation! Here are some tips:
Analyse the target buyer group: Are you selling to a private individual or a commercial developer? For the latter, having the buyer cover the full commission is often standard and easy to enforce, which reduces your costs.
Know the market value: A well-founded valuation of your land, such as the one offered by Auctoa using AI support, strengthens your position. Knowing the value allows you to negotiate the commission rate and distribution more confidently.
Obtain multiple offers: Talk to different estate agents and compare their terms and service offerings. Some agents are more willing to deviate from usual rates when it comes to land.
Define the scope of services: Clearly outline which services the agent provides and whether the commission amount is reasonable for these. With high land value, even a small percentage can represent a significant sum.
Written agreement: Record all agreements regarding the commission, particularly the payment terms and who bears them, in detail in the broker contract. Since December 2020, text form is required for this.
Remember that even a commission borne by the buyer can indirectly reduce your proceeds, as investors factor this into their overall calculations. Neutral advice, for example through the Auctoa ImmoGPT chat, can help you develop the best strategy for selling your land.
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The complexity of brokerage commission for real estate and the often high amounts involved require careful planning. A data-driven evaluation is the first step towards a successful sale. Auctoa offers you quick and neutral, AI-supported property valuations that provide you with a solid foundation for price negotiations and discussions about the brokerage commission. Our analyses take into account current market data and specific property characteristics. For an initial assessment or specific questions about commission structuring in your property sale, our ImmoGPT chat is available to you free of charge. This way, you can make informed decisions and avoid unnecessary broker fees.
Conclusion: Clear advantages for property sellers with the brokerage commission
Is there always a broker commission fee for a property?
No, a broker commission fee is only charged when a broker has successfully arranged the sale of the property and a corresponding broker agreement has been made. If you sell privately without a broker, there are no commission costs.
What is the difference in broker commission between a house and a property?
In the sale of single-family homes and apartments to consumers, there has generally been a halving of the broker commission between the buyer and seller since the end of 2020 (§§ 656a-d BGB). This regulation does not apply to properties; here, the distribution of the commission is freely negotiable and can be entirely borne by the buyer or seller.
How can I negotiate the broker commission in a property sale?
Research the market value of your property, obtain offers from various brokers, and clearly define the scope of services. In sales to commercial buyers, it is often negotiable for the buyer to fully cover the costs.
Does the broker agreement for a property need to be in writing?
Yes, since the law of 23 December 2020, a broker agreement that pertains to the proof or arrangement of a purchase contract must be made at least in text form (e.g., email). This also applies to property broker agreements.
Who pays the broker commission if a developer buys my property?
When a developer (commercial buyer) purchases your property, the broker commission can typically be borne entirely by the developer. The legal obligation to equally split the costs does not apply here.
Are there significant regional differences in broker commissions for properties?
Yes, the usual commission rates can vary by federal state and region, typically ranging between 3% and 7% of the purchase price plus VAT. Since the distribution for properties is flexible, the actual costs for buyers or sellers can differ greatly.
Additional useful links
The Bundestag archive document provides insights into the discussions about estate agent fees.
The Federal Chamber of Notaries provides information on the law regarding the distribution of estate agent fees in the mediation of contracts for the purchase of flats and single-family homes.
Wikipedia offers a comprehensive article on estate agents, particularly on the subject of commission fees.
The Sparkasse provides advisory information about commission fees in the sale of property.
Haufe discusses real estate law and the client-pays principle in property purchases in an article.
Buzer offers access to the German legal text regarding the mediation of residential properties.
The German Notary Institute (DNotI) provides information on the promulgation of the law on the distribution of estate agent fees.
FAQ
Is there always a brokerage fee for a property?
No, a brokerage commission is only due if an estate agent has successfully facilitated the sale of the property and a corresponding brokerage contract has been concluded. If you sell privately without an agent, there are no commission costs.
What is the difference in broker commission between a house and a piece of land?
When selling single-family homes and apartments to consumers, since the end of 2020, the broker commission is usually split equally between the buyer and the seller (§§ 656a-d BGB). This regulation does not apply to plots of land; here, the commission distribution is freely negotiable and can be borne entirely by either the buyer or the seller.
How can I negotiate the broker's commission when selling a property?
Find out the market value of your property, obtain offers from different estate agents, and clearly define the scope of services. In sales to commercial buyers, full cost coverage by the buyer is often negotiable.
Does the brokerage contract for a property need to be in writing?
Yes, since the law of 23 December 2020, a brokerage contract that involves the proof or negotiation of a purchase agreement must be concluded at least in text form (e.g. email). This also applies to real estate brokerage contracts.
Who pays the broker's commission when a developer buys my property?
If a developer (commercial buyer) purchases your land, the brokerage fee can usually be entirely covered by the developer. The legal obligation to split the costs equally does not apply here.
Are the regional differences in real estate commission for plots significant?
Yes, the usual commission rates can vary depending on the federal state and region, typically between 3% and 7% of the purchase price plus VAT. Since the distribution for properties is flexible, the actual costs for buyers or sellers can differ significantly.
