Real Estate Service Fee Regulations

Every agent providing professional services in the real estate sector must be well-versed in the legal framework concerning service fees (commissions), which form the basis of their earnings. The rules set by the "Regulation on Real Estate Trade" protect the rights of both agents and clients, bringing a standard to the industry.

What are the Service Fee (Commission) Rates?

According to the regulation, the service fee for sales transactions cannot exceed 4% of the sales price, excluding VAT. This rate can be shared equally between the buyer and seller or shaped by the agreement between the parties. However, the total cannot exceed the 4% limit.

For rental transactions, the service fee cannot be more than the one-month rental amount, excluding VAT.

The Importance of a Contract

The regulation mandates a written "service fee agreement" between the real estate agent and the client to be entitled to the service fee. Without this contract, no fee can be legally claimed. The contract must include:

• Information of the parties
• The subject and duration of the service
• The service fee rate and payment terms
• Obligations of the parties

"A contract is a real estate professional's strongest legal safeguard. Verbal agreements are fleeting, but written ones endure."

When is the Service Fee Earned?

The service fee is fully earned upon the conclusion of a sale or rental agreement resulting from the brokerage activity. If the property owner bypasses the agent to complete the transaction with a buyer/tenant found by the agent, the agent is still entitled to claim the full service fee. To protect this right, additional documents like a "property showing form" are also of great importance.