The ordering principle makes buying a house more expensive instead of cheaper

Justice Department Barley wants to make buying a home cheaper through the buyer’s brokerage commission. The opposite will happen, says an expert opinion.

Controversial question: does the ordering principle make the home more expensive or cheaper?

SSharply rising rents and real estate prices in metropolitan areas pose major challenges for the federal government. Measures taken so far, such as building child benefits, appear rather half-hearted.

Justice Minister Katarina Barley (SPD) is betting that real estate will be cheaper if the client pays the broker when selling. An expert opinion commissioned by the Ring Deutscher Makler, however, comes to the opposite conclusion.

Problem of real estate transfer tax

It is to be expected that the seller will include the brokerage costs in the purchase price. If the purchase price then rises, more real estate transfer tax will be due, which has been increased significantly in most federal states in recent years. Ultimately, the buyer would then pay extra, because no tax has to be paid on the brokerage fee.

Barley, on the other hand, expects the buyer to be relieved, as the seller usually instructs the broker. Realtor fees are out of proportion to the service rendered, especially in areas with a tight housing market.

However, in many federal states the brokerage fee is usually divided between buyer and seller. This not only reduces the effect of the customer principle. Rather, buyers who hire a broker would have to pay the entire brokerage fee in the future. State Secretary Gerd Billen wants to meet representatives of the real estate industry on Wednesday.

When renting apartments, however, the customer principle works, according to the expert opinion, since the amount of the rent is not subject to market economy rules, but to social tenancy law. In areas with high demand, the landlord cannot charge as much as they want because of the rental price limit and therefore cannot simply pass on the brokerage costs.