Real Estate is less transparent in Germany

As many of those who know me know, I was away for three weeks visiting my native Germany. While there I couldn't resist to probe my friends and family for information on German real estate. What I found made me appreciate the US system, which is much more transparent than I previously thought.

In the United States real estate brokers cooperate by placing their listings on the Multiple Listing Service (mls) of their area, thus making their listings accessible to all other brokers who might have suitable buyers for these properties. In exchange the listing brokers shares their commission with the broker who finds the buyer.

In Germany no such system exists. Brokers do not cooperate with each other. Therefore, if you are trying to buy a house in Germany, you will have to visit many different brokers because each of them will only show you their own listings, thus limiting the number of homes you can see. In effect you'll never be able to see a true picture of all the properties for sale in your desired area.

It took my cousin and her husband over two years to find a house in a suburb of Munich because each broker would first show them their stale listings and pretend their was nothing else on the market. Absent a comprehensive listing of properties for sale, it took them two years and many trips to many different brokers to finally see some decent properties and then their dream home.

While a Multiple Listing Service might not guarantee you ever finding your dream home, it makes the likelihood much stronger since the service is accessible to the public and a broker can't hide any properties from you.

The next shocker in German real estate was the commission: 7%. In California the commission in now generally 5% and paid entirely by the seller. In Germany, the buyer pays half of the commission, as does the seller. The broker always represents both sides of the deal. I'm not sure how comfortable I'd feel about being represented by the broker who also represents the seller. Whose side will he be on? Will he have my best interests in mind?

But the final straw was what my little sister told me: a listing broker arranged for her and her husband to see a house. The problem was, he had trouble finding it. My sister found out quickly why: he had never even seen the property! The seller had visited him in his office and asked him to sell his house. The seller had also told him how much he wanted for the property, and the broker promptly advertised the property without ever viewing it. Well, this wouldn't fly in California, where a broker has to have viewed the property and prepared the disclosure documents for it. Disclosures are also unknown in Germany and it is still truly CAVEAT EMPTOR - Buyer beware.