Are you looking to buy a property? Very often, the first instinct is to focus on the listed price. And you’re absolutely right… It’s the first thing to check. But have you considered additional costs, especially real estate agency fees? Understanding them will help you make better choices and optimize your investment. What are they, how are they calculated, and who pays them—the seller or the buyer?
Understanding Agency Fees in a Real Estate Transaction
When selling a house or an apartment, the real estate agent plays a key role in negotiations and guides you through the entire transaction process.
Agency fees, therefore, represent the compensation you pay for the services provided by the agent.
These fees vary depending on several factors, including the type of property, its location, the local real estate market, and, of course, the agency’s pricing policy.
The Cost of Real Estate Agency Fees
In France, real estate agency fees typically range between 3% and 10% of the sale price. On average, they are around 4% to 6%, which is common for properties such as country houses or suburban apartments.
However, in cities like Paris, fees can go up to 10%. Why? Simply because demand is extremely high, which naturally affects agency fees. You can see this reflected in some of our Paris real estate listings!
Online agencies, on the other hand, are changing the landscape. With their fixed-rate pricing, they offer a more affordable alternative compared to traditional commission-based fees.
How Are Real Estate Agency Fees Calculated: Percentage or Fixed Fee?
The most common method is based on a percentage of the sale price. This percentage is often tiered: the higher the property price, the lower the commission rate. For example, an agency might charge 4% for a property priced between €30,000 and €300,000, 3% for a property between €300,000 and €700,000, and 2% for properties above that range.
On the other hand, some agencies or independent professionals prefer to offer a fixed fee. In this case, the cost is not calculated based on the total price of the real estate transaction. Instead, you pay a predetermined amount regardless of the sale price. This approach simplifies the process and avoids any surprises!
Additionally, some agencies use a hybrid model, combining a base fee with a percentage for high-value properties. A set fee is charged initially to cover the basic services (listing the property, viewings, property valuation). Then, a percentage is applied to the total cost once a certain price threshold is exceeded.
Who Pays the Real Estate Agency Fees: The Seller or the Buyer?
Contrary to popular belief, there are no strict rules. It depends on the sales mandate established between the seller and the real estate agent.
If the seller chooses to cover these fees, the listed sale price includes everything—this is known as a “FAI” price (fees included). However, if the buyer is responsible for these fees, they will need to add them to the purchase price. For example, for a property listed at €300,000 with €15,000 in agency fees, the displayed price remains €300,000, with the commission clearly stated separately.
However, let’s be clear: in every scenario, it’s ultimately the buyer who pays, as the total transaction amount remains the same. The main difference is how this impacts notary fees. If agency fees are the buyer’s responsibility rather than the seller’s, notary fees are calculated solely on the property’s value (€300,000) rather than the total price including agency fees (€315,000).
How to Negotiate Real Estate Agency Fees?
To lower commission costs, compare agencies and leverage competition. Some agencies include premium services like virtual tours or home staging. If not, try negotiating a discount.
Finding it difficult to get a price reduction? Limit non-essential services! Reducing the services included in the package can lower the commission, especially when fees are predetermined.
However, be cautious not to seem overly demanding! This could be perceived negatively and might jeopardize potential savings. A steep fee reduction could also lead to longer delays between the sales agreement and final deed.
It’s important to note that the Hoguet Law (1970) and the ALUR Law (2014) protect buyers and sellers by enforcing transparency and regulating agency fees. Throughout each step of a real estate sale, these regulations ensure a professional, clear, and fair transaction process.