Estate Agent Commission

By Ynze Kliphuis, LL.M.
Russell Advocaten, B.V.
Amsterdam, Netherlands

What is commission? When do you have to pay your estate agent commission? And when is it not due?

What is Estate Agent Commission?

An estate agent is called in to negotiate the sale of a home. The estate agent makes advertisements and accompanies clients during viewings. As payment for his services he receives estate agent commission (Dutch: courtage). This commission often consists in a percentage of the sales price but other arrangements can be made. The question is however whether the latter is advisable. The estate agent will surely make a greater effort if the amount of remuneration depends on the sales price of your home.

When is Commission Due?

Under the law, the estate agent is entitled to commission as soon as the sale/purchase is achieved. However, exceptions are possible and a different time for the payment of the commission can be agreed upon.

Estate Agent Commission If No Sale Has Been Achieved?

In principle, estate agent commission is due as soon as the sale is concluded but it is possible to agree that the payment does not have to be made until the agreement has been executed and the home has been transferred to the buyer. In this case, the question remains what will happen when the buyer invokes his financing reservation and the purchase will be annulled. Is the estate agent still entitled to commission? The Supreme Court rendered a decision on this topic earlier this year.

A buyer had annulled the purchase via e-mail and enclosed an e-mail from a lender as proof that his request for funding had not been granted plus an e-mail from his mortgage broker that a refusal by another lender was to follow suit. The seller agreed to the annulment. But even though the purchase did not take place, the estate agent demanded payment of commission and costs.

The Supreme Court decided that the estate agent could claim commission if seller and buyer had agreed on the annulment of the purchase and the purchase did not come about. However, this only applies if the seller has agreed to the annulment when there was no good reason to do so.

More Information

Would you like to gain legal advice regarding commission arrangements with your real estate agent? Do you need help drafting or checking a contract for services or a purchase agreement? Please contact us.