Brokerage Agreement

Brokerage Agreement - A brokerage agreement is a legally binding contract between a client (owner, buyer, or tenant) and a real estate broker that authorizes the broker to facilitate or identify a contractual opportunity and, if successful, entitles the broker to a commission. Since December 2020, brokerage agreements for residential properties have been required by law to be in writing.

What exactly does a brokerage agreement entail?

The brokerage agreement is governed by Sections 652-656d of the German Civil Code (BGB) and forms the legal basis for the collaboration between the client and the broker. Unlike many other service contracts, the brokerage agreement is a contingency fee agreement: The commission is only due once the broker identifies or facilitates a contractual opportunity and the main contract (purchase or lease agreement) is actually concluded.

German real estate law distinguishes between three types of contracts. The simple brokerage agreement gives the client maximum flexibility-they may engage other brokers simultaneously and also search for buyers or tenants on their own. In return, the broker is not obligated to perform any specific brokerage activities. The exclusive agency agreement binds the client to a single broker but still allows them to find a contracting party on their own. In exchange, the broker commits to active marketing measures. The most binding arrangement is the qualified exclusive agency agreement: Here, the client additionally waives the right to act as their own agent and must refer all interested parties to the agent.

With the buyer-pays principle (§ 2 WoVermRG) introduced in June 2015, costs for the brokerage of rental apartments may only be charged to the party who commissioned the agent-in practice, almost always the landlord. For real estate purchases, the new provisions of §§ 656a-656d BGB have been in effect since December 23, 2020: A brokerage contract for the purchase of an apartment or a single-family home must be in written form (email, fax, or written form is sufficient; verbal agreements are invalid). In addition, the buyer may bear no more than half of the total commission if the seller has also engaged the broker (commission sharing).

The standard commission rate in Germany is 3.0 to 3.57 percent of the purchase price (including VAT) per party. Consumers have a 14-day right of withdrawal for distance contracts, which the real estate agent must inform them about-otherwise, the withdrawal period is extended to up to twelve months and 14 days.

Which contract type is the right choice?

The decision regarding a contract type depends on the individual situation. A simple agency agreement is suitable if the owner wants to market the property widely and does not wish to be bound by a contract. The downside: Agents often invest less in marketing for simple agency agreements because the commission risk is higher.

An exclusive agency agreement, on the other hand, offers the highest level of commitment for both parties. The agent is obligated to implement all agreed-upon marketing measures, and the owner ensures that marketing is coordinated from a single source. In practice, experience shows that this type of contract leads to shorter marketing times and often to better selling prices.

Regardless of the contract type, we recommend clearly defining the scope of services, the term, the notice periods, and the commission amount in the contract. A transparent brokerage contract protects both parties from misunderstandings.

Practical Tip for Property Owners in Nuremberg and Franconia

In the Nuremberg metropolitan region, the standard buyer’s commission is 3.57 percent of the purchase price (including VAT), with the buyer and seller typically splitting the total commission equally. Since the 2020 legislative changes, this model has become the standard in Franconia.

Our network of experts recommends obtaining several quotes before signing a contract and carefully comparing the scope of services. Make sure the brokerage agreement includes specific details regarding the marketing strategy-such as professional real estate photography, property brochure creation, online marketing, and the conduct of viewings. Property owners in Nuremberg, Fürth, and Erlangen benefit from agents with proven local knowledge and a robust network of pre-registered prospective buyers.

Frequently Asked Questions

Does a real estate brokerage contract have to be in writing?

Since December 2020, a legal requirement for written form has applied to brokerage contracts for the sale of apartments and single-family homes (Section 656a of the German Civil Code). A verbal agreement is no longer sufficient-the contract must be concluded at least via email, fax, or in writing. For rental properties and commercial real estate, this requirement does not formally apply; however, we recommend the written form in any case to preserve evidence.

Can I rescind a brokerage contract?

Yes, for contracts concluded outside of business premises or distance contracts, consumers have a 14-day right of rescission. This is contingent upon the broker providing proper instructions regarding the right of rescission. Without proper instructions, the period is extended to up to twelve months and 14 days. However, a commission claim that has already been earned cannot be reversed by revocation.

What happens if I find a buyer myself despite having an exclusive listing agreement?

With a simple exclusive listing agreement, you may act as a broker yourself without having to pay a commission. With a qualified exclusive agency agreement, however, you are obligated to refer every interested party to the real estate agent. If you sell the property on your own anyway, the real estate agent may claim damages in the amount of the lost commission. That is why it is important to carefully review the type of contract being agreed upon before signing.

How long should a real estate agency contract last?

The term of the brokerage contract is negotiable and should be realistically aligned with the expected marketing period. In the Nuremberg metropolitan area, the average marketing time for condominiums in sought-after locations was recently four to eight weeks-in challenging locations or in the higher price segment, it can range from six to twelve months. For exclusive listings, terms of three to six months have proven practical: they give the agent sufficient time for professional marketing without permanently binding the owner. It is also important to stipulate the notice periods: a reasonable contract provides for ordinary termination with two to four weeks’ notice after the expiration of a minimum term. After the brokerage contract expires, there is still a so-called post-contract clause: If the broker identified a prospective buyer during the term who then purchases the property after the contract ends, the broker’s commission claim may continue-the exact duration of this post-contract period should be clearly stipulated in the contract.

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