Real estate agency fees are the fees paid to the professional involved in the sale or purchase of real estate. Considered as the remuneration of its work as an intermediary between the buyer and the seller, in Benin the agency fees are governed by law N ° 2021-02 of February 01, 2021 modifying and supplementing law N ° 2018-12 of July 2, 2018 on the legal regime of the lease brought two new elements to the use of domestic housing in the Republic of Benin. But then, who is responsible for paying the real estate agency fees?
Who of the buyer and the seller must pay the agency commissions?
This is one of the questions that many buyers ask themselves when they buy real estate. Above all, do not confuse agency fees and notary fees. If the agency fees are remuneration for the work of the professional in a real estate transaction, the notary fees are on the other hand those that are paid to the notary, and which include the emoluments of the notaries and the taxes.
Indeed, when buying real estate, the buyer must also pay the acquisition costs. They include notary fees and taxes. The amount of these costs is calculated on the basis of what the buyer pays to the seller. There is therefore a difference depending on whether the agency fees are the responsibility of the seller or not.
Thus, if the owner decides to use a real estate agent to carry out his sale, it is logical that he is the one who pays the agency fees. In this case, we are talking about agency fees payable by the seller. However, these costs can also be paid by the buyer since the services of the real estate agent also benefit him. The most flexible formula is when these costs are squarely shared between seller and buyer.
Real estate agency fees payable by the seller
In most cases, it is the seller who appoints a professional to sell his house or apartment. As a result, he is logically entitled to pay real estate agency fees. Thus, the property is sold at the price “agency fees included”, (FAI) with the mention specifying fees payable by the seller. It is this price that will serve as the basis for calculating notary fees.
For example, consider an advertisement for a property sold which includes “sale price of 20,000,000 F including 5% fees payable by the seller”. During formalities at the notary, the calculation of notary fees may be spread as follows (if we take 8% as notary fees):
-the buyer will pay 10,000,000 F to the seller and 1,600,000 F for notary fees
-The seller will pay 1,000,000 F to the agency and will receive 19,000,000 F called “net seller price”.
Real estate agency fees payable by the buyer
Nevertheless, since a real estate transaction, the professional is at the service of both the seller and the buyer, it is normal that the buyer also pays the agency fees. Indeed, the latter benefits from the advice and time of the professional (visits, preparation of documents, etc.)
When, for example, an individual contacts a real estate agency in order to acquire a property, agency fees may be borne by the buyer. Because, the individual will benefit from the advice, time and network of the professional to quickly acquire his property.
In addition, the buyer has several other reasons to pay the agency fees. Indeed, the sale price retained which will serve as a basis for the calculation of notary fees is the net selling price, therefore a reduced price because it is without agency commissions.
Let’s take the previous example: The announcement of the property sold includes “sale price of 20,000,000 F including 5% fees payable by the buyer”. During formalities at the notary, the calculation of notary fees may be spread as follows (if we take 8% as notary fees):
-The buyer will pay 19,000,000 F to the seller + 1,000,000 to the real estate agency + 1,520,000 F for notary fees
-The seller will therefore receive 19,000,000 F
As seen in the example above, whether or not the seller pays the agency commission will have no impact on the net selling price. On the other hand, for the buyer, there is a major difference between the two, which in fact lies in the calculation of notary fees.
Agency fees shared between seller and buyer (shared fees).
A formula that is increasingly adopted is the sharing of fees. It makes it possible to bear the amount of the agency fees to the buyer and the seller by sharing. The two actors, according to a predefined percentage, will share the costs to be paid to the agency since they are both beneficiaries of the service. The sharing of fees is a flexible formula which makes it possible to reduce the duration of the sale of a property even if it makes the seller bear part of the costs.