How Real Estate Commission Works?

How Real Estate Commission Works

How Real Estate Commission Works?

Maybe you’re about to rent a house or buy a home like you always wanted. Either way, you’ll face real estate fees to pay!

If you’re going to be a tenant, you’ll need to bear expenses like deposit, one-month or hire rate, and shipping.

If you’re going to be a homeowner, you’ll come across title deed fees or maintenance expenses. And then there are real estate commission or real estate fees, whether you’re renting or buying the property. In this case, you need to adjust your budget accordingly.

So, what is real estate commission, and how much does it cost?

What is Real Estate Commission or Real Estate Fees?

You might need an expert opinion to correctly handle the processes for buying, selling, or renting a home. Real estate agencies allow you to safely make agreements, and they are the ones to take care of documents and create contacts with potential customers.

In cases when a property changes owners or is rented, there is a financial exchange. Making this process easier, real estate agencies get a commission, aka real estate fees, to create their own capital. As you receive intermediary services during the legal process, real estate agents gain the right of a commission, which could be the purchase commission and renting commission.

How Much is the Real Estate Commission?

It’s hard to state there is a certain amount the agents receive. Real estate agents get a commission in a rate calculated over the rental or sales value of the home.

Then what percent commission do real estate agents make? It depends on the renting and selling bargains. This percentage is determined as per the Regulation on the Immovable Property Purchase.

The real estate agent can receive a maximum of 2% + VAT /18%) of the sales value, both from the seller and the buyer.

For the renting bargains, they can get a commission of a maximum one-month rental rate + VAT (18%).

Who Pays the Real Estate Commission?

Because you’re going to set your budget accordingly, you might be wondering who’ll pay the agent’s share. Well, the answer to the question “Do the buyer or the owner pay real estate commission?” is both yes and no as it depends on whether it’s a renting or purchase transaction.

As mentioned above, the purchase commission is paid both by the buyer and the seller individually. If they’ve come to terms, only the buyer can pay it, too.

Unless otherwise agreed, the tenant bears the real estate fees and pays the commission when renting.

How to Calculate Real Estate Commission When Renting a House?

So, you’ve found a house that meets your needs and expectations, and you can’t wait to move in! So, how to calculate the real estate commission, that is real estate fees?

Let’s say the monthly rental rate is ₺3000. In this case, you should calculate the VAT for it and add it to ₺3000, which is equal to ₺3540. This is the maximum amount you can pay.

Real Estate Commission Regulation

Real estate commission rates are determined by the Regulation on Immovable Property Purchase. According to its 20th article:

In real estate purchases, the service charge rate cannot exceed 4% of the sales value on the intermediacy contract, excluding VAT.

In renting transactions, the service charge rate cannot exceed the monthly rental value stated on the contract, excluding VAT.

Unless otherwise agreed in a written document, the service charge is shared between the business owner and the buyer or the tenant equally.

What Happens If You Don’t Pay the Commission?

Some real estate fees are obligatory pay. Let’s say you have rented or bought the house that the agent showed you, but cut out the agent. In this case, would you have to pay the commission to the agent? What would you face if you don’t pay the commission for the house you have rented, sold, or bought?

Real estate fees are obligatory to pay. You must pay the commission. If the name of the real estate agent is on the brokerage contract, legal action can be taken.

If there is a contract, you need to pay the commission when renting or purchasing the house.

However, you don’t need to pay for real estate that the agent showed you but you didn’t rent or buy. If you’re touring a property outside of town, the agent might ask you to cover the travel fees.

Can Real Estate Agents Increase the Commission Rate?

As per the regulation, agents can’t ask for a commission or real estate fees higher than determined.

If this rule is violated, the Ministry of Customs and Trade imposes a penalty of $3000 to the agent. If the agent violates the rule once again within a year, the penalty doubles for every incident. Additionally, if a chain company commits this violation, quintuple penalties are imposed.

Serving as a bridge between the homeowner and the buyer, real estate agents receive a service charge of 4% of the property value (2% from the buyer, 2% from the seller) the most, excluding the VAT. For the renting transactions, they receive the one-month worth of rental rate the most. The relevant articles on Article 20 of the Regulation are as follows:

In real estate purchases, the service charge cannot exceed 4% of the sales value stated on the contract, excluding the VAT.

In renting transactions, the service charge cannot exceed the one-month worth of the rental price, excluding the VAT.

Unless otherwise agreed in a written document, the service charge is shared between the business owner and the buyer or the tenant equally.

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