Internal commission

An internal commission is the real estate agent’s commission paid to the agent by the client-usually the seller-without this amount being explicitly disclosed to the buyer. Unlike an external commission (which the buyer pays directly), the internal commission is included in the purchase price and is not immediately apparent to the buyer. The internal commission is particularly common in new construction projects and developer-owned properties; here, the real estate agent receives their compensation from the developer, who factors it into the asking price.

Internal Commission vs. External Commission

For traditional residential real estate sales, the statutory commission-sharing requirement has been in effect since December 2020: Agents may only charge the buyer and seller equal shares of the commission (Section 656c of the German Civil Code). As a result, the previous practice of charging exclusively buyer commissions (external commission) or exclusively seller commissions (internal commission) for single-family homes and condominiums sold to consumers has largely been eliminated.

For commercial real estate and land, different agreements are still possible-here, freedom of contract applies, so that both pure seller’s commissions (the seller pays everything) and pure buyer’s commissions (the buyer pays everything) or split models can be agreed upon. For new construction projects, where the developer commissions the real estate agent and compensates them for their services, the pure internal commission remains the norm.

Transparency and Pricing

The internal commission affects the purchase price, as it is included in the asking price. For buyers purchasing a property directly from the developer, it is therefore important to know whether-and to what extent-an internal commission is included. In practice, 3-5% of the purchase price is standard for the internal commission; for premium projects or those that are difficult to market, it can be as high as 6-8%.

Those who purchase a new-construction property directly from the developer without involving a real estate agent may, in individual cases, negotiate a price reduction equal to the saved commission-but only if the developer does not actually engage a real estate agent. Once a real estate agency agreement is in place, the commission is generally due regardless of whether the buyer and seller would have found each other even without the agent’s assistance.

Internal Commission and Real Estate Transfer Tax

An important point: If the internal commission is included in the purchase price, it increases the tax base for the real estate transfer tax. In Bavaria, the real estate transfer tax rate is 3.5%; for a purchase price of 400,000 euros (which includes an internal commission of 15,000 euros), real estate transfer tax is levied on this entire amount. A commission that is listed separately and paid directly to the real estate agent, on the other hand, is not part of the purchase price and is not subject to real estate transfer tax.

Buyers who know the amount of the internal commission and can provide proof of it should consider whether restructuring the payment (purchase price minus commission, plus direct payment to the broker) would be more tax-efficient. However, this is complex from a notarial and tax law perspective and requires the consent of all parties involved.

Tax Treatment of the Internal Commission

For the buyer, the internal commission is considered part of the incidental acquisition costs of the property (along with real estate transfer tax, notary fees, and land registry costs), even if it is hidden within the purchase price. Anyone who can provide proof of the internal commission (e.g., from a commission agreement between the broker and the developer) can capitalize it as part of the acquisition costs for rented properties and depreciate it via depreciation. No tax deductions are possible for owner-occupied properties.

Practical tip for owners in Nuremberg and Franconia

In Nuremberg and the metropolitan region, internal commission models are primarily found in new-construction condominiums marketed by developers. Buyers purchasing directly from a developer should specifically ask whether and to what extent the broker’s commission is included in the purchase price. An open answer is a sign of integrity; evasive or non-transparent answers should raise caution.

At my-home.de, we disclose all commission agreements and communicate transparently who commissions and compensates whom, and in what amount. Only then can buyers and sellers make an informed decision. When brokering existing properties, we follow the statutory commission-sharing model.

Frequently Asked Questions

Is the internal commission hidden and therefore illegal?

No, the internal commission is generally permissible. However, it must be correctly disclosed in the property listing and in the brokerage contract, to the extent that statutory disclosure requirements apply. Since 2020, the commission-sharing requirement has applied to residential properties, which restricts pure internal commission models for buyers.

As a buyer, can I ask about the amount of the internal commission?

Yes, you have the right to ask before the purchase whether and how much the real estate agent receives from the seller. In developer projects, the amount of the internal commission is often not publicly disclosed but must be disclosed upon request. Transparency is a hallmark of reputable real estate agents-anyone who gives evasive answers gives cause for skepticism.

As a buyer, do I also pay real estate transfer tax on the internal commission?

Real estate transfer tax is levied on the purchase price as the tax base. If the internal commission is included in the purchase price, it indirectly increases the real estate transfer tax base. A commission that is listed separately and paid directly to the real estate agent is not subject to real estate transfer tax.

Is there always an internal commission for developer-owned properties?

Not necessarily, but often. Developers market their projects partly directly (without external brokers) and partly through broker networks. In the latter case, the commission is factored into the purchase price. For large projects with many units, the total commission for the developer can be substantial-a factor they factor into their land acquisition and project calculations.

What developments are emerging in commission law following the 2020 reform?

The commission-sharing provision under Section 656c of the German Civil Code (BGB) has noticeably changed the market since 2020. Many sellers in the Nuremberg metropolitan region are now willing to bear half of the real estate agent’s commission-as they recognize that lower closing costs for buyers increase their willingness to pay and expand the pool of potential buyers. In practice, the total commission for residential real estate in Bavaria is often 7.14% (including VAT), split equally between the buyer and seller-that is, 3.57% each. For commercial real estate, freedom of contract remains in effect, so the commission amount and split continue to be negotiated individually. Anyone buying or selling a property in Nuremberg should clarify the commission issue early on in discussions with the real estate agent to avoid any surprises at closing.

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