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It is well known that Germans have a particularly strong drive to save.

Real estate agents have also felt the effects of this in some cities recently.

Since there was a new rule about the distribution of the broker's commission when selling residential property, many sellers have taken matters into their own hands and forego a professional intermediary.

According to a market study by real estate service provider Sprengnetter, the rate of direct private sales without brokers rose sharply in many places at the beginning of the year.

So brokers often go empty-handed, and sellers and buyers save thousands of euros in brokerage fees.

"An analysis of offered condominiums in real estate portals in Germany from January 1, 2020 to February 28, 2021 shows fewer properties offered by real estate agents and more properties offered by private sellers," says Sprengnetter.

"This means that the supply volume remains stable, but the private seller quota increases significantly."

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The background to this is a change in the law that came into force on December 23, 2020.

Since then, private buyers only have to pay a maximum of half the brokerage fee when buying apartments and single-family houses if the seller has hired the broker.

In addition, the buyer is only obliged to pay the costs if the seller can prove that he has paid his share.

It's about many thousands of euros.

Because most property buyers in Germany only buy their own home once or twice in their lives, the commission amounts that are usual here will at some point be suppressed and forgotten.

Source: Getty;

Infographic WORLD

But they are high overall, in an international comparison.

Buyers and sellers together pay up to six or even 7.14 percent of the purchase price.

For a property that costs 400,000 euros, that's almost 30,000 euros - an amount that could be used to buy both a fitted kitchen and a new car.

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In no other member state of the European Union are brokerage fees so high and, in view of rising real estate prices, an insurmountable hurdle for more and more buyers.

Sellers are obliged to pay half of the payment

So the change in the law was no accident.

In some federal states and occasionally in larger cities, the agents had enforced over time that only buyers pay the commission.

The market was there - in view of the booming demand, sellers had (and are still sitting) more leverage.

In some federal states, including Berlin, Brandenburg and Hamburg, it had been customary for decades for buyers to pay the full commission.

In some federal states, for example in North Rhine-Westphalia, it was customary for the parties to share the commission.

But local market observers, such as the Institut der deutschen Wirtschaft (IW) Cologne, found that in high-demand cities brokers advertised that sellers waived brokerage fees, while buyers had to pay their part in full.

Even the half of the commission of 3.57 percent, which is common in North Rhine-Westphalia, was apparently enough for the agents.

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According to the new rule, sellers are now obliged to pay half of the payment throughout Germany.

Many of them are dealing with a brokerage fee for the first time - and are apparently not entirely satisfied with the price-performance ratio.

"Why pay a five-digit amount when potential buyers are queuing anyway" - many people might ask.

Sprengnetter's specialists have analyzed the market in the ten major cities of Berlin, Dortmund, Düsseldorf, Essen, Frankfurt am Main, Hamburg, Cologne, Leipzig, Munich and Stuttgart.

On average, 66 percent of the properties for sale there were offered with brokers in the past year.

In February 2021 it was significantly less at 54 percent.

"Hamburg shows the strongest negative change here with a decrease in properties offered by brokers of 28 percentage points," according to the analysis.

"In Stuttgart it is ten percentage points less, in Munich seven and in Cologne five."

The data specialist Pricehubble also took a closer look at the market and also differentiated according to who has usually paid the commission up to now.

The effect of the seller's participation can be clearly seen: where sellers were supposed to pay brokers up to now, they were also less frequently engaged.

According to Pricehubble, the new law has increased the rate of do-it-yourself sellers from around 15 to 25 to 35 percent.

Prices could be based on national borders

"Our analysis shows that in some federal states the change in the broker commission regulation and its announcement last year has led to a sharp increase in private advertisements," says Pricehubble managing director Christian Crain.

For many real estate agents, the prospect of negotiating with sellers in booming regions was anything but rosy.

In the meantime, the federal government had even considered a real ordering principle, in which the client pays the full commission.

The industry was in a storm.

Sellers would add the commission to the purchase price, it was said, for example.

This makes everything even more expensive for buyers.

The fact that sellers are now supposed to pay half as a rule no longer seems so bad.

And there is no longer any question of this half being added to the purchase price.

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“According to our observations, the new regulation has been well received by the market,” reports the Real Estate Association Germany (IVD).

"The equal division is also fair, since both benefit from the brokerage service," says IVD Vice President Christian Osthus.

Basically, it seems as if brokers want to continue charging the commission rates customary in the country.

Thus, as in the past, the price would not be based on the effort and costs involved in brokering, but rather on national borders, i.e. on whether a real estate agent brokered a property in Bavaria or Hesse.

It would still have little to do with the market and more to do with habit.

From the point of view of Roland Kampmeyer, head of the brokerage company of the same name in Cologne, the market is also in a state of emergency.

To what extent the new law will actually be reflected in the amount of commission or in the commissioning cannot be said exactly.

The demand from buyers is gigantic.

"Overall, this makes it more difficult to assess the reaction of salespeople to the new regulation today," says Kampmeyer.

In addition, there is another typically German characteristic that is apparently stronger than the aforementioned savings drive: The willingness to negotiate is not particularly great.

"It can be observed that most owners do not feel a particularly pronounced need for negotiation and follow the commission sharing prescribed by the broker," says Kampmeyer.

On the other hand, some providers, including so-called hybrid brokers such as Homeday (the company, like WELT, belongs to Axel Springer SE), would have set the prices down on their own initiative.

That is why “more and more colleagues see themselves being forced to act,” says Kampmeyer.

So it could be that the broker's commission can be negotiated further down in the future.

Kampmeyer himself arranges the commission flexibly, depending on the type of property and the brokerage effort.

Steffen Wicker, founder and managing director of Homeday, is counting on the fact that the price awareness among the sellers will increase - so that the German drive to save money will still develop properly.

The hybrid broker, which operates nationwide, offers a seller (and therefore buyer's commission) of 1.95 percent and is thus below all national commission rates.

“The increase in the proportion of private advertisements suggests that price awareness has risen,” says Wicker.

And adds: “I would like customers to take a closer look at price and performance.

There is considerable savings potential for consumers here, which many do not take advantage of. "

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So looking for a cheap broker, or at least negotiating, is the least that sellers should do.

After all, you will save thousands of euros, depending on the price.

And if buyers also save commission as a result, they can in turn afford a slightly higher purchase price.

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