06 Jun Five Ways to Save On Real Estate Commissions in Germany
I didn’t translate the cartoon this time as it basically says The best way to make a smart home work
One of the biggest complaints about moving in Germany was the fact that the renter had to pay the agents commission (2 months rent plus VAT). In June 2015 there was an update to the tenancy law. A new principal called the “Bestellerprinzip” which Google translates as “orderer principle”. While there isn’t really a matching word in English the principal is that he who orders the piper must pay the piper. This means landlords can no longer hire an agent (Makler) and expect the tenant to foot the bill. Unfortunately, the change in the law applied only to residential leases and not to property purchases. This means, if you were to buy a property in a hot market like Berlin you could be looking at spending more than a 100,000€ before you even get to the down payment.
I suppose this is why this expat complained so bitterly about it.
Below are – ways to save on the Makler commission.
One point I should make before I start is the idea that the buyer not the seller should pay the commission is not set in law but is a cultural thing.
Search for Provisionsfrei or commission free on google. Not surprisingly considering how the commission can add tens of thousands to the cost of buying a place websites promoting commission free properties are doing a booming business. Of course the commission is on top of the taxes and fees you already have to pay. There’s no getting around taxes!
“He who pays the piper calls the tune”
When it comes to real estate transactions everything is negotiable, including who pays the commission. There is nothing in the law that says the buyer must pay or how much they should pay. If the buyer wants the sale they can pay the commission, or alternatively lower the price by the commission amount. It’s important to understand that this works best in a buyers or balanced market. Once a market tips over to a sellers market it becomes much hard to negotiate. It seems that the Germans are learning from the Canadians. Offer a short window for all interested parties and offers must be presented on the spot. Well this is mostly happening in the rental market (in Berlin or Munich) it is starting to carry over into the property market. I’ve talked to several buyers who all said they had to move at (for the Germans) lighting speed to get an offer in. In this situation it is very difficult to negotiate and doing such will probably mean you’ll lose out on a great deal.
Bring competing bids. This best when you’re in a quieter market and you’ve found several units that are of interest to you. You simply tell the agent or the owner that you have several other properties and you want either a 5% reduction or the seller to pay. Now be warned older German realtors my look down on this and simply pull you offer. Proceed with caution.
An Englishman’s Home Is His Castle
You rarely or ever hear a German comment that rent is paying the landlords mortgage but to those of us in the English world, the thought of paying rent horrifies us. But in Germany there is no shame in renting, a matter of fact it’s quite normal. In the above article, the person paid, probably, 120,000€ just in fees, and that’s before you even get to the downpayment. That sum of money would buy a decent rental property elsewhere. Rent and buy elsewhere.
Get an appraiser (Gutachter). I’m surprised this isn’t used more but a seller and especially a German seller probably won’t listen to you if you tell them the property is overpriced but a report from a Gutachter will go a long long way!
So dear readers what has your experience been with buying real estate?