The buyer principle when buying and selling residential property – An economic analysis

The introduction of a nationwide buyer principle for the purchase of residential property is currently being discussed (draft law BMJV, 2019). In the future, the clients of the estate agents – mainly the sellers – would pay for the agent’s commission, so that the ancillary acquisition costs for buyers should decrease.

Whether this can be achieved with the buyer principle depends to a large extent on the probability of the sellers passing on the brokerage costs to the purchase prices. This study, commissioned by leading brokerage firms, therefore examines the potential effects of introducing the buyer-principle on a scientific and empirical basis.

DIW Econ concludes that the buyer principle should be applied to buyers in tight housing markets will not relieve the burden – even if it could promote competition among brokers in the medium to long term. The fact that the introduction of the buyer principle does not create additional housing does not address the central obstacle. The intended objectives will, therefore, largely not be achieved with the help of the buyer principle.

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