additional revenue

Surplus proceeds - Surplus proceeds refer to the amount by which the actual sale price of a property exceeds the originally set or expected price. The term is primarily used in two contexts: in brokerage agreements (the difference between the agreed minimum price and the actual sale price) and in foreclosure auctions (the difference between the market value and the hammer price). Additional proceeds can affect the real estate agent’s commission and the distribution of the auction proceeds.

Additional Proceeds in Real Estate Agency Agreements

Some real estate agency agreements include an additional proceeds clause: In addition to the regular commission, the agent receives a share of the additional proceeds that exceed an agreed-upon minimum price. Example: With a minimum price of 400,000 euros and a sale price of 450,000 euros, the excess proceeds amount to 50,000 euros-the broker receives, for example, 30% (15,000 euros) of this in addition to the regular commission. Such clauses are intended to motivate the broker to achieve the highest possible price. They must be clearly agreed upon in the contract.

It is critical to be wary if the minimum price in the brokerage contract is deliberately set low in order to maximize the share of the additional proceeds. A minimum price of €380,000 for a property worth €450,000 generates a surplus of €70,000, from which the agent receives significantly more than from the regular commission. Therefore, have the minimum price verified by an independent market valuation.

In addition to the surplus proceeds clause, there is also the model of the performance-based commission: Here, the commission is directly linked to the outcome of the bidding process-the higher the sale price, the higher the commission. This model offers an even more direct incentive structure, but is less common in Germany than in Anglo-Saxon markets.

Surplus Proceeds in Foreclosure Auctions

In a foreclosure auction, the hammer price may exceed the established market value-the surplus proceeds then benefit the creditors and, if applicable, the debtor. The distribution is based on the ranking of creditors in the distribution proceedings (Sections 105 et seq. ZVG). Only after all creditors have been satisfied does the debtor receive the remaining surplus proceeds.

In practice, however, a surplus is rare in foreclosure auctions-more often than not, the hammer price is below the market value. The reasons for this include the limited pool of bidders, uncertainties regarding the property’s condition and tenant situation, as well as the emotional barrier to bidding in a foreclosure auction. A surplus arises only when there are several committed bidders and the property is particularly sought-after.

Strategies for Achieving a Premium in a Regular Sale

The premium in a traditional real estate sale-that is, a price above the original asking price-is usually achieved through targeted bidding processes. This involves setting a market-driven but not inflated asking price that attracts as many interested parties as possible. Several serious prospective buyers then bid on the property, driving the price up.

Prerequisites for a successful bidding process: a well-attended viewing (high number of interested parties), clearly communicated bidding rules (minimum bid, bidding deadline, binding nature), a realistic initial valuation, and a well-presented property (photography, property brochure, staging). In prime locations in Nuremberg, a well-organized bidding process can drive the price 5-15% above the asking price.

The key factor here is the right market phase: In times of declining demand or high interest rates, a bidding process fizzles out because there are simply too few prospective buyers. The decision for or against a bidding process should be based on a sober assessment of the current market situation-not on the hope that enough bidders will turn up.

Additional Proceeds and Home Staging

Professional home staging-the targeted furnishing and visual enhancement of a property before viewings-increases the likelihood of achieving additional proceeds. Studies from the Anglo-Saxon world show that well-staged properties sell faster and command higher prices. Awareness of this has grown in Germany, but home staging is not yet standard practice everywhere.

Staging is particularly effective for vacant properties: empty rooms appear smaller, colder, and harder to visualize. Subtle, professional furnishing helps prospective buyers imagine themselves as residents-and increases their emotional willingness to buy, which ultimately also raises their willingness to pay.

Practical Tip for Sellers in Nuremberg

We recommend that sellers in the Nuremberg metropolitan area critically review surplus profit clauses in real estate agent contracts. A moderate share of surplus profits (e.g., 20-30% of the surplus profit above a realistically set minimum price) can motivate the agent to market the property with particular dedication. Problems arise when the minimum price is deliberately set low-in that case, the seller is effectively paying a hidden additional commission. Have the minimum price verified by an independent market valuation.

Frequently Asked Questions

Is an excess proceeds clause in a brokerage contract permissible?

Yes, such clauses are generally permissible, provided they are clearly worded and not contrary to public policy. Case law requires transparency: The minimum price, the percentage, and the calculation method must be clearly stated in the contract. Unclear or unreasonably high excess proceeds clauses may be invalid.

Do I have to pay taxes on the excess proceeds?

The surplus proceeds as such do not constitute a separate taxable event-they are part of the capital gain. The total profit from the real estate sale is taxable if it is realized within the 10-year speculation period (§ 23 EStG) or if the property is part of business assets.

How do I generate surplus proceeds when selling?

The most important levers for generating additional proceeds are: professional marketing (high-quality photos, property description, reach), targeted buyer outreach (target group marketing), bidding process (in cases of high demand), and home staging (visual enhancement before the viewing). In sought-after Nuremberg neighborhoods, a well-organized bidding process can drive the price 5-15% above the asking price.

What are the risks of a bidding process?

The risk lies with the seller: If there are fewer interested parties than expected or if buyers do not outbid each other, the bidding process can create the impression that the property is difficult to sell. A bidding process is particularly suitable in markets with active demand and for properties that appeal to multiple target groups simultaneously.

When does a bidding process make sense?

As a rule of thumb: If more than five to seven serious prospective buyers show up for an initial viewing, this indicates sufficient demand. We assess the situation after the first viewing appointments and recommend a bidding process only if market conditions make it seem realistic-not as a standard tool.

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