Estate agent commission: when, how and how much?

Estate agent commission: when, how and how much?

There are a number of different options when it comes to selling real estate in Switzerland. The easiest and most cost-effective option is to place an online listing on a platform visited by potential buyers. Anyone who does not have the time or the requisite knowledge should consider appointing a professional estate agent when selling their property. An estate agent is able to draw on their experience, expertise and network and use targeted advertising, so your apartment or house may well sell more quickly and at a higher price. Read our article ‘Why use an estate agent?’ to find out more about the benefits. This post covers everything you need to know about estate agent fees and who pays what.

An estate agent may charge commission and an agent's fee in the following cases:

  • The estate agent brings buyers and sellers together, so they may charge commission for this referral service.
  • The estate agent assists the seller in contract negotiations with the buyer, and may charge commission for this negotiation service
  • The estate agent checks and verifies a potential buyer’s genuine interest in buying. They may charge commission for this verification service.

What does it cost to use an estate agent in Switzerland?

The amount of the estate agent’s commission, also known as brokerage fees, essentially comes down to negotiation; Swiss law does not stipulate the exact sum, nor the way in which it is calculated. However, Article 417 of the Swiss Code of Obligations (right to remuneration)provides for a certain limit by stating that a judge may reduce a disproportionately large estate agent commission to an appropriate amount at the request of the party liable. This protects the seller – who, unlike a professional real estate agent, often lacks expertise in this area – from excessive commissions.

In practice, it is common to agree on between 2% and 3% of the sale price, depending on the type and location of the property. For an owner-occupied single-family house or apartment, the estate agent’s commission is usually the standard 2–3%, whereas for a property in an apartment building this is set at around 1.5–2%. Basically, the following rule of thumb applies: the higher the sale price, the lower the scaled commission. Besides the brokerage fee, the estate agent may invoice for travel expenses, listing costs, plot plans and other expenses incurred in connection with the sale of the property. These expenses should be set out in the estate agent agreement and, unlike the commission, are due regardless of whether the property is sold. In any event, it is worth setting a fixed price or a cost ceiling for such expenses.

It is definitely advisable to obtain several quotes from different real estate agents and compare their commissions.

When is an estate agent entitled to receive their commission?

The due date for payment of the estate agent’s commission is set out in the estate agency agreement. The entitlement to the commission arises when the purchase contract is publicly authenticated at the notary's office. Hence the estate agent’s commission and additional costs are only due after the purchase contract has been completed successfully. Advance payments or deposits to the estate agent are rather unusual, but it is possible to agree on a different date for payment. As soon as you start dealing with the estate agent, minimal costs can be incurred for drawing up the documentation and the property valuation. Depending on what’s involved, this may be in the range of CHF 1,000–3,000.

Who pays the estate agent’s commission?

From a legal point of view, the estate agent fees must be borne by the seller (contractor principle), as they are in a contractual relationship. The estate agent works on behalf of the seller and is tasked with selling the property to the best of their ability and at the best price.

The agent’s commission, notary fees and so on are tax-deductible and subtracted from the capital gains tax. The exact amount will depend on various factors and differs from canton to canton.

Can you avoid paying an estate agent’s commission?

The estate agent’s fee and commission should always be paid both as a matter of principle and by law. Nevertheless, problems can sometimes arise. It’s essential that the estate agent lists their services accurately. Services that are excessive or not agreed in advance can, in principle, be contested by the seller of the property. In rare cases, the commission does not need to be paid to the estate agent, but in most cases this is due to negligent or fraudulent behaviour

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