Real estate agency commission rates in different countries

Each country has its own approach to calculating commissions for real estate agents. This figure depends not only on the type and value of the property but also on the specific rules of the company. One must also add VAT, which is levied on the commission. The VAT rate varies from country to country.

Austria

In Austria, in most cases, the buyer pays a real estate commission of 3% (3.6% incl. 20% VAT). The fee is established by Austrian real estate broker regulations (Rechtsvorschrift für Standes- und Ausübungsregeln für Immobilienmakler), which prohibit real estate agents from charging more than permitted by law.

According to MKR Real-Consulting, the maximum commission is 4% (4.8% incl. VAT). However, such transactions are rare, with a property value of up to €40,000, but these prices are not common in Austria, Konstantin Isakov, head of Austria-Invest, explains.

According to Isakov, sellers sometimes pay the real estate agency 1% to 2%, but this is rare and only happens in certain instances, such as when the seller is a developer that needs to sell newly built flats quickly.

"For commercial and prime residential real estate, the rules are the same, the commission is 3.6%, including 20% VAT. But in practice, the buyer can negotiate the fee with the agency, especially in multi-million-dollar transactions", Isakov says.

Croatia

Commission in Croatia is 6%, split equally between buyer and seller. VAT on commissions is 25%. Commissions charged on major transactions can be reduced by prior arrangement with agencies.

According to Ekaterina Kalender, real estate consultant at Adria PRO, the minimum commission, charged on property cheaper than €40,000, is €1,500. The commission for new or resale properties does not differ.

Activities carried out by real estate agencies are governed by the Real Estate Brokerage Act (Zakon o posredovanju u prometu nekretninama). However, the act does not limit the commission amount, which is set by an agency agreement.

“Discounts on commissions are granted only in major transactions and are rarely given in other cases,” Kalender says.

Cyprus

In Cyprus, the agent's commission is always paid by the seller, while the agent pays VAT on the commission.

“An agent's commission depends on the region, type and price of a property in Cyprus, varying from 3% to 8%, but most often 5%. The commission on more expensive properties is sometimes 1% to 2% lower. Still, everything depends on the arrangements agreed by an agent and a seller,” George Dokuchaev, sales director at Prime Property Group, explains.

Property agents in Cyprus use discounts to attract clients. “This occurs occasionally, mostly in the existing property market, as the proceeds from sales and resales are usually much larger than the earnings of an agent. What is more, a 1% to 2% discount makes no difference for the seller”, Dokuchaev says.

Czech Republic

The average commission charged by real estate agencies in the Czech Republic is 2.5% to 5%, plus VAT for VAT-paying agencies. However, many charge a fixed sum for an inexpensive property. Commission on an expensive property is sometimes lower, at 1%. Either the seller or the buyer may have to pay the commission – this largely depends on the property company or the terms negotiated between the buyer and seller.

When purchasing a new-build property, the buyer does not pay a commission to the realtors. In such cases, the developer pays the fee (from 1% to 3%, depending on the developer).

According to Getberg, the VAT on realtor fees is 15% for residential properties and 21% for commercial spaces and land plots.

Finland

In Finland, commissions range from 3% to 5% and vary from agency to agency, though it rarely reaches the upper limit, according to Elena Lednitskaya, account manager at Bulevardin Kotimeklarit. “Our company charges a commission of 2.5% for flats and 3% for detached houses, inclusive of VAT in both cases”, she says.

The realtor's fee is often paid by the seller only. However, sometimes the buyer makes a surety agreement with an agency to search for a particular property. The buyer then pays a commission to the agency, but the agency may not charge a commission to the seller.

Generally, there are no discounts on commissions.

France

In France, the seller usually pays the realtor's fee. If a new-build real estate in France is being sold, the development company pays the agency a commission.

According to Elena Generalova, head of French Riviera Realty, the rate varies based on the property price: 8% for properties up to €50,000, 7% from €50,000 to €120,000, 6.5% from €120,000 to €200,000, 6% from €200,000 to €500,000, 5% from €500,000 to €1 million, and 4.5% for properties above €1 million. The commission is often contractually agreed and negotiated when a sales mandate is signed. Developers fix the commission they will pay when apartments are sold to an agency in a specific property, she explains.

Real estate agent commissions in France are governed by Law No. 70-9 of 2 January 1970 (Loi Hoguet). However, in some cases, buyers may negotiate a discount.

Germany

In Germany, the commission on properties with a contract value of up to €15 million is from 3.57% to 7.14%, incl. 19% VAT. A property of over €15 million entails a fee of at least 2.38%, inclusive of VAT.

Sofia Bulanova, real estate sales manager at Tranio, says: “Even if the property is expensive, the commission is rarely lower than 3%. It is almost impossible to find a listing with a fee lower than 3%, but if you negotiate with an agent, you may agree on 2%.”

The local realtor’s association in each state determines the recommended commission. The final figure is then determined by competitive pricing. Usually, either the buyer pays the commission or it is split into even shares between the buyer and the seller.

The rule about dividing the commission between the buyer and the seller applies only to purchases that concern individual flats and private houses, and to buyers who live in the flat or house themselves rather than renting it out. 

The splitting of the commission does not apply to undeveloped land and apartment buildings, as well as to all purchases of real estate by entrepreneurs, including commercial real estate or apartment buildings. Buyers purchasing land to build their own house are also not subjected to the commission split.

“Foreign clients are practically always charged a commission fee in Germany, but it is not a given that the seller would pay, especially if the real estate object is liquid”, Marina Filichkina, head of sales at Tranio, says.

Greece

Greece has special legislative regulation of commissions establishing a standard fee at 2% for each party.

VAT on the commission is 24%. Both buyer and seller pay it.

Hungary

In Hungary, real estate agent fees range from 3% to 5% of the property's market value (plus 27% VAT). According to real estate broker Duna House, most large agencies fix the fees at 5%, which is to be paid by the seller.

Italy

Sellers and buyers split the commission in Italy. According to Natalia Grankina, client relations manager at LiguriaHomes Casamare, in Liguria, each party usually pays 3%, no matter the value of the deal, plus 10% or 22% VAT (for luxury housing). Olga Skovron, real estate agent at Engel & Völkers, says her company applies a 4% rate to both buyer and seller.

The commission amount is not governed by any law in Italy but is set by the city’s chamber of commerce (Camera di Commercio) acting under the regulations usi e consuetudini. “This means that agents set a commission in a segment or a district at their own discretion, but taking into consideration the ordinary course of business and standard practices which would be considered by the judge in potential litigation. For instance, if an agent charges 5%, and the client refuses to pay, the parties can go to court and expect the judge to award an average commission of 3%, based on the type of service in that particular region, to be paid by the client to the agent”, Skovron says.

Commissions can be discounted in Italy. “A client bound by an exclusivity agreement with only one agency is given a discount on a commission. If a client buys a costly property for millions of euros, the agency can also give a discount. We also set special beneficial commission rates for our regular clients. For instance, one of our clients acquired three properties over a year, so we made a special cooperation agreement with a customised tariff schedule for future acquisitions and sale”, Grankina says.

Latvia

In Latvia, the seller almost always pays the commission. However, according to Mercury Group Estate rental and sales expert Julia Barsukova, in rare cases when a property is unique or sold at a low price, the buyer and the seller may split the commission equally.

No laws are governing the commission, so a sales contract or competitive pricing sets the fee, which usually amounts to 2% to 5% of the property value. “A commission of less than 3% – usually 2% – can be charged on expensive properties, yet the same can reach 5% for cheaper properties”, Barsukova explains.

Montenegro

Buyers do not pay for realtor services in Montenegro. The fee, usually 3% to 5% of the property price, is paid by the seller.

“There is no difference in fees in new-build and existing property markets. A lower commission is usually charged on expensive (€1 million and above) and high-profile property as compared to cheaper or new property entering the market,” says Anton Shamarin, managing partner at Value.One.

Developers sometimes give discounts to buyers, and agents can increase this discount by reducing their commission. According to Shamarin, VAT is not added to commissions on new-build properties whose prices already include VAT.

Portugal

“5% is the standard commission in the Algarve, Southern Portugal,” says Olga Leberskaya, commercial director at Aurora d’Estrelas LDA. “The commission charged on a property of less than €100,000 is €5,000, excluding 23% VAT. So sellers must pay the real estate agency €6,150 when selling a property of €100,000 or less”, she adds.

Only the seller pays the commission. “If the buyers are delighted with the property found and acquired, they may sometimes pay an additional fee to a good real estate agent on their own initiative,” Olga comments.

According to the expert, lower commissions of 3% to 4%, or higher fees of 6% to 7% are rare, and realtors rarely give discounts on their fees.

Slovenia

Real estate agent fees in Slovenia are governed by law, so agents cannot arbitrarily charge their clients more than prescribed.

“In Slovenia, the total commission charged to buyer and seller cannot exceed 4% by law. But it is not always split equally. Buyers most often pay 3%", Vladimir Uvarov, head of the Future Real Estate representative office in Russia, says.

According to the Uvarov, the standard VAT rate is currently set at 22%, but a lower rate of 9.5% is applied to residential property transactions.

Spain

In Spain, sellers almost always pay the commission, which ranges from 3% to 5% of the transaction value. However, if the property value is low, the commission is usually fixed at €6,000. In the new-build property market, commissions are generally lower than in the existing property one (in percentage terms) — the more expensive the property, the lower the commission.

The VAT rate varies among different regions from 6% to 10%. For instance, in Catalonia, it is 10%. For commercial properties, buyers usually pay the commission, which ranges from 2% to 6%, depending on the value of the property. The VAT on the purchase of commercial real estate is 21%.

Switzerland

Real estate agent commissions in Switzerland range from 3% to 5% plus 7.6% VAT, which the seller typically pays. Real estate agents can make up for a low sale price by agreeing to a fixed cash fee in the contract. For instance, if the asking price for a house is Fr.533,000, the minimum commission will be Fr.16,000 (3% of the property price), even if the house sells for less.

Thailand

Sellers usually pay the commission, which ranges from 3% to 5%. If the buyer purchases secondary real estate, then the seller pays the commission. Whereas if the purchased property is a new-build object, the developer must pay the commission. Buyers never pay the commission. 

It is possible to get a discount while paying the commission. There are also agencies of real estate in Pattaya that explicitly offer cashback arrangements (i.e. they return a part of their commission to the buyer).

Turkey

In Turkey, on the secondary property market, commissions run at about 4%, which is split equally between the seller and the buyer. VAT on the commission is paid by the agency. In the market of new buildings, the developer pays a commission, while the buyer is not charged.

However, in some Turkish locations, such as Istanbul, İzmir, Kuşadası, Bodrum and Marmaris, both the buyer and the seller pay a commission – usually, 3% each, explains Maria Zharaya, Tranio director for Turkey.

Maria Zharaya Head of Tranio Turkey

The commission varies significantly between projects and cities. In the new-build market, it is often established by the developer and included in the asking price. In the resale market, agents typically add their fees to the price set by the seller. The commission amount is not governed by law or disclosed by sellers or agents.

Commissions are sometimes discounted by up to 2%, Zharaya explains. “In some regions such as Alanya, for example, the situation varies greatly – developers sometimes grant discounts to clients contacting them directly, but agents also often do so. Smaller agencies have fewer overhead expenses, which makes it easier for them to share part of its commission with the buyer”, she says.

UAE

Laws in the UAE establish the brokerage fee at 2% for the buyer and 2% for the seller, Elena Kudryavtseva, real estate consultant at Select Property Group, says. However, in practice, the buyer usually pays a commission of 4%.

At the same time, when buying a new build, the developer pays the realtor's fee. Unlike other countries, there is neither VAT nor any other additional markup on commissions for residential property in the UAE.

“The country introduced VAT in 2018, but it will not be charged on residential real estate, at least for the moment", Kudryavtseva says. The VAT rate on the purchase of commercial real estate is 5%.

UK

In the UK, commissions are lower than in other countries. According to LonGrad representative Dmitry Zakirov, in more saturated markets (properties under £500,000), independent real estate agencies reduce commissions to 0.5% of the property value. In comparison, the most common rate is about 1.5% to 2%, though some aggressive agencies, such as Foxtons, have higher fees of 2.5% to 3%. In more expensive markets (£5 million to £15 million), commissions do not exceed 2%, while fees for properties from £20 million rarely exceed 1%. Sales of investment offers such as hotel rooms, student residences, and other small-scale investments, ranging up to £500,000 are an exception. In these cases, developers are willing to pay 5% to 7% to encourage potential investors.

Both buyer and seller might have an agent. “The seller pays a commission to an agent, who represents the seller in 96% of housing market transactions”, Zakirov says.

“There are also professionals who act for buyers. This is a common practice in London, which is full of foreign investors, who would rather pay agents to search for exclusive and most profitable options, expert evaluation, transaction support, etc. In commercial real estate, both parties often have their own agents”, Zakirov adds.

There is no statutory regulation for commissions. The fee is agreed upon between the client and the agent or determined by competitive pricing. As for discounts, according to Zakirov, everything depends on negotiations. Agents can reduce their fees for sellers or developers under exclusive agreements or during the simultaneous sale of several properties. Consultants can cut their fees for repeat buyers.

United States

In the United States, sellers almost always pay the commission.

According to Ilya Bitkov, realtor at Coldwell Banker, the commission on transactions below $1 million is typically 5% to 6% and 4% to 4.5% for properties above $1 million. Commissions for multimillion-dollar transactions are 2% to 3% or fixed under a prior agreement.

“An agent can make a service agreement on the condition that service will be paid based on a certain percentage. For example, at least 2.5% commission should be paid to the buyer's agent no matter what the total amount of the commission is. Thus, if the total commission is 4% and each side is paid 2% under a 50/50 split, the buyer will pay an additional commission of 0.5% to their agent. The commission is paid to the real estate company, but not to the agent, who is not entitled to receive any personal remuneration from clients”, Bitkov explains.

According to the expert, real estate commissions are negotiable in the United States – both parties agree on the commission, which is not prescribed in any regulations. “Even if the commission is preliminarily agreed upon as a percentage, both the buyer and the seller are fully entitled to agree to a lower price during the final negotiations. The real estate company might disagree or make concessions to come to a mutual agreement”, Bitkov says.

Author: Yulia Kozhevnikova