Home Broker Story

This got brought up over the weekend by a SPD political figure, and openly discussed this morning via a number of news media sites in Germany.  I'll reference it back to N-TV (commercial news network).

If you own a condo or home, and you sell it in Germany....you typically went to a home agent/broker, and they did all of the advertising and paperwork involved.  The broker fee can range from the 3-percent level on up to 7.14-percent.  The better operations with higher success rates can demand the higher percentage. 

TYPICALLY, the fee here is handed to the buyer, and they are going to pay it.  There might be some instances where it's advertised to be a 50-50 deal, but the majority of the time....it shifts over to the buyer.

So you can do the math on a 200,000 Euro home, and figure a rough 5-percent broker fee....which you the buyer would have to figure 10,000 extra Euro that you need to find in your budget.  For the more expensive homes (300,000 Euro), and the higher fee (say 7-percent), that's 21,000 extra Euro that you need to find.

Over the weekend, the Justice Minister (Barley-SPD Party) came out and said that the SPD wants to change the practice and force the seller to be the only one who pays the commission fee. 

Logic?  Barley puts this back to young people/families, and suggests that they have an enormous burden already, and the broker fee is basically unfair. 

You can do the math with what the German Federal Statistical Office say.....roughly half-a-million homes and condos flip on a yearly basis.

What would generally happen?  Barley didn't explain that detail, but lets lay out an example.  You own a 2-bedroom condo in Frankfurt in a prime area, with the current value of 250,000 Euro.  A smart broker who has a record of selling such properties in 90 days or less will take over the project to sell it.  His normal take is 6-percent.  It comes out to 15,000 Euro for this project.  So the seller looks at the property and ups his sell-price to 265,000.  Same deal with a guy owning a house in Wiesbaden worth 700,000....he'd up his house price to 742,000 (probably 749,000 in round numbers). 

Yes, everyone would hike their property to make the cost factor suggested by the Justice Minister from the SPD Party. 

Will the CDU-CSU team agree within the coalition?  I seriously doubt it. 

They might lean over and agree to a 50-50 split, but even in that case....you'd still have the seller inflate their home-price, to meet the cost of the broker. 

Getting Germans to advance onto the idea of no broker?  Prior to the internet era, I would have said it was physically impossible.  Today, with the on-line marketing tools, it is possible to push the broker teams aside, and do this all yourself (meaning you need to get pretty smart at advertising).  In this SPD circle, I suspect that they'd like to push the brokers out of the picture as much as possible.  In big cities like Frankfurt or Bonn.....it's possible.  But in these smaller towns of 10,000 or less.....more ruralized....then no, the brokers probably aren't going away.