Broker Commission 2023: Who Pays What?

The number one controversial question when selling a house

Key Facts

• The broker commission only has to be paid upon a successful transaction.

• The commission can no longer be fully shifted to the buyer.

• You can use a commission calculator to determine the Maklercourtage amount.

Who Pays the Broker Fees?

• Brokers want to be paid for a successful sale of your property.

• But how much is the commission? Who has to pay it? Can it be avoided?

• What if your property does not sell?

• All questions about broker commissions are clarified below.

How much does a broker cost?

• The broker commission is a success-based fee.

• This means: the broker is only entitled to a commission if a successful contract results from their work.

• “If the broker does not sell your property, you do not have to pay.”

• Rules differ between sales and rentals.

Broker commission for property sales

• Commission is negotiable.

• Typically, regional norms apply, ranging from 5.95% to 7.14% of the sale price.

Total commission by federal state:

Broker commission for rentals

• Under the “Bestellerprinzip” (2015), the person who hires the broker must pay.

• Usually, this is the landlord. Tenants do not pay.

• If the tenant hires a broker: maximum 2 months cold rent + VAT, often 2.38 months cold rent.

Formula:
2 * Rent + 2 * 19% VAT

Can you negotiate the commission?

• Commission is negotiable, but brokers rarely agree, especially for rentals.

• Reason: the commission covers costs and risk if the property isn’t sold.

• Properties that are easy to sell may allow brokers to reduce fees.

Who must pay the broker?

• Before 23/12/2020: buyers often paid most.

• New law: buyers pay a maximum of 50%, the rest is covered by the seller.

• Rentals: follows the Bestellerprinzip, the client who hires the broker pays.

Types of Commission Agreements

1. Double Commission (Doppelprovision):

   • Broker contracts with both buyer and seller.

   • Commission is split 50/50.

   • If broker works for free with one party, the other party is not charged.

2. Commission with Refund:

   • Usually the seller pays but can be partially reimbursed.

   • Seller must pay at least 50%, buyer covers the rest.

3. Full Commission Paid by One Party:

   • Still allowed by agreement; not mandatory to split.

   • Can be internal commission (seller only) or external commission (buyer only).

When does the broker get paid?

• Broker is entitled to commission if:

1. A valid broker contract exists.

2. Broker performs introduction or mediation activities.

3. There is a valid purchase/rental contract between owner and client.

4. There is a causal link between broker activities and contract conclusion.

• Commission is only due after a successful sale.

• Advantage for sellers: the broker will work hard since payment depends on sale success.

Selling a house with a broker: what to do?

• Compare multiple brokers in your area.

• Use free online comparison tools to find the right broker and receive a preliminary property valuation.

How a broker comparison works:

1. Describe your property: type, year built, address.

2. Submit request: system finds suitable brokers near you.

3. Receive proposals: up to 3 brokers, including a preliminary property valuation, 100% free and non-binding.

Do you have to pay immediately?

• Usually per broker terms: 1–2 weeks after contract signing.

• Sellers can often wait until they actually receive the sales proceeds.

Can broker fees be avoided?

• No commission is due if:

1. No right to mediate: e.g., economic or family relationship with the broker.

2. Incorrect property information: broker does not verify, but cannot conceal or falsify.

3. Missing contract information: broker must inform about commission and due date.

4. Excessive commission: may be considered “unethical” and contract void (OLG Frankfurt 2007).

5. Invalid main contract: if purchase contract is invalid, no commission is owed.

Can broker commission be deducted for taxes?

• In some cases:

  • Landlords can deduct fees as advertising expenses on income tax.

  • Buyers who rent out property: include commission in acquisition costs, depreciate over time.

  • Relocating tenants for work can deduct fees on tax return.

• Profits from property sales are taxed if not mainly owner-occupied and sold within <10 years. Commission can reduce taxable profit.