The broker clause in the real estate purchase agreement – what is important for the buyer

The conclusion of a real estate purchase often takes place with the involvement of a real estate agent. As a rule, the estate agent’s commission claim is regulated in a separate agreement. In addition, estate agents want to secure their entitlement to the commission in a separate clause in the purchase contract. Buyers of real estate should be extremely careful here. If the clause in the purchase agreement is worded incorrectly, there is a risk of additional costs for the buyer.

What wording of an estate agent agreement can appear in a purchase contract, for example?

A frequently used estate agent clause appears harmless at first glance:

“The buyer undertakes to pay the estate agent’s commission in the amount of X percent of the purchase price or a fixed sum of money to the estate agent.”

A closer look reveals the following consequences for the buyer:

• The basis for calculating the contract value is increased by the agreed broker’s commission.
• The fees to be paid by the buyer for the notarized purchase contract increase.
• The assessment basis for the land transfer tax to be paid increases.

Much more critical from the buyer’s point of view is the agreement of even more far-reaching brokerage clauses in the purchase contract. These include the “foreclosure clause on the buyer’s assets” or the waiver of “any claims for damages arising from prospectus liability”. Such agreements are dubious and should not be accepted by the buyer.

What wording for the estate agent clause in a purchase agreement is problem-free for the buyer?

If the seller and estate agent insist on a separate clause in the purchase agreement, there is a possible solution for the buyer with regard to the estate agent agreement:

“This purchase agreement has been concluded through the mediation of brokerage firm X.”

This wording means that there are no additional costs for the buyer of the property. At the same time, the estate agent has a legal basis for asserting his commission claim once the service has been rendered.

Growing importance of real estate agents in Germany

The role of real estate agents in Germany has become significantly more important in recent years. Statistics from the Federal Statistical Office show a remarkable increase in the number of real estate agents since 2011. By 2017, the number of agents had risen to over 70,000, an increase of almost 19% since the introduction of the ordering principle. At the same time, the sector’s turnover developed positively, increasing by around 26% to 8.5 billion euros. These figures illustrate the increasing relevance of estate agents in the real estate market, which also underlines the importance of the estate agent clause in purchase contracts.

Why should you as the buyer work towards waiving a broker clause in the purchase agreement?

The parties to a notarized purchase agreement are:

• Buyer
• Seller
• Notary

The estate agent is not part of this agreement, which is why you as the buyer should also ensure that an estate agent agreement is regulated separately. This will help you avoid potential pitfalls from the outset in the event of an unfortunate agreement.

It is particularly important to make the notary aware of his duties when concluding the purchase agreement. He must provide detailed advice during the recording and inform both parties of the legal consequences of each clause in the purchase agreement.

The broker clause in the contract and all other (sometimes disadvantageous) clauses will be checked by our lawyers as part of the review of your purchase contract.

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