Commission

The amount of commissions may vary considerably. Read the terms concerning the commission before you make a brokerage contract.

The commission must be stated inclusive of value added tax. The commission must be reasonable taking into account the quality of the brokerage service, accomplished work, economically appropriate manner of performance of the brokerage service as well as the other circumstances.
There is often room for negotiation in the list prices provided.

Most real estate agents charge their commission as a percentage of the sales price or debt-free sales price of the apartment. Many also set a minimum level for their commission that should be paid at least.

Some agents may indicate a percentage that is lower than most others’, but will then charge extra for the costs of advertising and preparing documents. If you choose an agent with this type of pricing structure, make sure that the assignment documents include an exact breakdown of costs and the estimated total fee amount.

The commission is usually paid at the time of purchase

The fee may only be charged from the party which has entered into a brokerage agreement – in most cases the seller.

A real estate agent may also be commissioned by a buyer to find a suitable apartment in a particular area. If both the seller and the buyer have a contract with the agent, the agency may only charge commission from one of them.

If the apartment is bought by a member of the real estate agency’s staff, commission may not be charged.

The real estate agent must always have a valid assignment to have an entitlement for commission. The real estate agent is entitled to commission only when the sale is concluded, unless otherwise agreed in the assignment. The standard contracts used by agents usually include a clause that the commission must, however, be paid if a so-called full price offer has been made and the offer meets the conditions regarding price and other aspects as specified in the brokerage contract.

Take notice of other possible costs

The parties may agree that the real estate agent charges also other costs in addition to commission, including marketing, photography and/or styling costs, or the costs of acquiring the documents. The parties may also agree that the costs must be reimbursed even if the real estate agent hasn’t entitlement to the commission.

Exclusive brokerage contracts give exclusive rights to the agent

Contracts with real estate agents are generally always of the exclusive type: only the agent in question can offer the apartment to prospective buyers. The seller must pay the agreed commission even if he ends up selling the apartment himself during the validity of the assignment.

Sometimes a neighbour or relative might be interested in the apartment. If you are aware of this possibility, add a special provision to the brokerage contract which states that a particular prospective buyer – specified by name – is excluded from the contract. By doing this, you will avoid having to pay commission if the person in question buys the apartment directly from you.

The real estate agent’s entitlement to compensation after expiration of assignment

Brokerage contracts usually include a standard provision on compensation after expiration of assignment. This is meant to prevent sellers from circumventing the need to pay commission by postponing the conclusion of the sale to a date after the brokerage contract has expired.

Compensation after expiration of assignment may be collected by the agent when he has played a material role in the conclusion of the sale.
If an offer has been made and negotiations over the sale have taken place, the agent is entitled to compensation after expiration of assignment.

Also, if the real estate agent has provided a brochure of the apartment, taken prospective buyers to inspect the apartment and negotiated over the sale, are usually constituted as having played a material role in the conclusion of the sale. Merely supplying information about the apartment does not entitle to compensation after expiration of assignment if negotiations over the sale haven’t taken place. Essential meaning for having played a material role in the conclusion of the sale is the negotiation connection between the buyer and the seller due to performance of the real estate agent.

When the brokerage contract expires, you may ask for the real estate agent a list of prospective buyers who meet the conditions of the compensation after expiration of assignment.

Compensation after expiration of assignment must be collected within a period of six months.