Introduction
When you decide to sell a property with a real estate agent, one of the things you want to know is how much the real estate commission will be and if it is set by law. Buyers also wonder if they have to pay a real estate commission.
A real estate commission is not any fee. It is governed by the law. Must be agreed upon by the parties before they start working together. In this guide we will explain what the law says, the common real estate commission rates and when a real estate agent gets paid.
1. What Does Greek Law Say About Real Estate Commission?
In Greece real estate agents are regulated by Law 1921/1991. This law is the framework for real estate brokerage activities.
The law does not say that there is a fixed real estate commission percentage. Instead it says that the real estate commission must be agreed upon by the parties and written in the brokerage agreement.
So different real estate agencies can charge real estate commission rates or have different terms.
If there is no written agreement the real estate agent can still ask for a real estate commission.. A clear written contract protects both the property owner and the real estate agent.
2. How Much Is the Real Estate Commission for Selling a Property?
In Greece the common real estate commission rate for selling a property is about 2% of the final sale price plus 24% VAT.
This percentage is not set in stone. Can vary depending on:
- The value of the property
- The location of the property
- How hard the sale is
- The type of listing agreement
- The agreement between the owner and the real estate agent
For expensive properties or special cases the real estate commission rate can be negotiated.
Lets look at an example. If a property is sold for €200,000.
The real estate commission at 2% is €4,000.
VAT at 24% is €960.
The total real estate commission is €4,000 + €960 = €4,960.
This amount is for the party that agreed to pay the real estate commission.
3. Who Pays the Real Estate Commission: The Seller, the Buyer or Both?
In Greece it is common for the real estate agent to get a real estate commission from both the seller and the buyer.
There is no law that says this has to happen every time.
Who pays the real estate commission depends on the agreement made with each party.
For example lets say the sale price is €150,000.
The real estate commission at 2% is €3,000.
VAT at 24% is €720.
The total real estate commission is €3,720.
The seller and the buyer can both pay a real estate commission.
The seller pays €3,720.
The buyer pays €3,720.
The total real estate commission earned is €7,440.
To avoid confusion the real estate commission arrangement should always be clearly stated in the brokerage agreement.
4. Exclusive Listing vs Open Listing: What Changes in the Real Estate Commission?
The type of listing agreement can affect how the property owner and the real estate agent work together.
Exclusive Listing means the property owner works with one real estate agency for a certain time.
The agency will do more to market the property like taking photos running ads and promoting it through their network.
Open Listing means the property owner can work with agents at the same time.
This gives the owner flexibility but the marketing might not be as coordinated.
One option is not always better than the other. The right choice depends on the property owners goals.
5. When Is a Real Estate Agent Entitled to a Real Estate Commission Even If the Sale Is Not Completed?
This is one of the confusing parts of real estate brokerage.
In general a real estate agent gets a real estate commission when their work leads to an agreement, between the parties.
In some cases a real estate commission might still be owed even if the sale is not completed.
For example if the real estate agent finds a buyer who agrees to the sale terms. The sale is cancelled for reasons that have nothing to do with the real estate agent.
If the property owner sells the property directly to a buyer that the real estate agent found.
The brokerage agreement might also say that the real estate agent gets a real estate commission in these situations.
Whether a real estate commission is owed always depends on the agreement and the specific situation.
6. What Should a Brokerage Agreement Include?
A good brokerage agreement protects both the property owner and the real estate agency.
It should include:
- Full property details
- The agreed asking price
- The agreed real estate commission percentage
- Who pays the real estate commission
- How long the agreement lasts
- If the agreement is exclusive or not
- When the real estate commission is paid
- How to end the agreement
It is very important to read the agreement before signing.
FAQs
Can I negotiate the real estate commission?
Yes. Real estate commission rates are not set by law. The real estate commission amount is agreed upon by the client and the real estate agency. Can vary depending on the property and services.
Do I owe a real estate commission if I do not sell my property?
Not always. Whether a real estate commission is owed depends on the brokerage agreement. If the real estate agent did their job. In some cases a real estate commission might still be owed even if the sale is not completed.
Does the real estate commission include VAT?
Usually not. Most real estate commission rates do not include VAT. The VAT rate is added to the agreed real estate commission amount.