Is this commission excessive?
I inherited a property that I didn't want to keep. A friend recommended an independent broker. The three of us met in a café to discuss selling my property, as I knew nothing about this field. The broker seemed competent and his motivation convinced me to work with him for a commission of 10%. The sale went through, but it was brought to my attention that the agreed commission would be far too high. What can I do about this?
L, Coppet
The profession of real estate broker is not highly regulated in Switzerland, and articles 413 et seq. of the Swiss Code of Obligations (CO) state only that brokers are entitled to their salary as soon as the information they have given or the negotiations they have conducted lead to the conclusion of a contract in their client's favour. The law refers to custom with regard to the amount of this remuneration if it is not clearly defined between the parties.
That said, serious estate agents have clearly established rates that are widely shared between professionals in the sector, who are often grouped together in associations.
Under article 417 of the Swiss Code of Obligations, an excessive commission may be reduced by the court at the request of the debtor, i.e. in principle the seller of the property. Consequently, if you find that the commission charged by your broker is disproportionate to a normal commission and that it is not justified by the complexity of the case or the unusual services provided, you can contest it.
Determining whether or not a commission is excessive is a matter for the judge, who will take into account the usual rate and the circumstances of the case. The nature of the transaction and the broker's activity will be examined. It should be noted, however, that a broker's commission should be assessed primarily on the basis of the success achieved, rather than on the basis of the time or effort expended.
In other words, if you only consider that the broker has not provided a service proportionate to the commission charged, this criterion is not necessarily decisive since the commission is linked to the success of the sale rather than to the amount of work carried out. In general, brokerage commissions in the property sector are between 2% and 3% of the sale price. The usual rate may vary depending on the price used as a reference, and then decreases as the sale price increases. A commission may slightly exceed the usual rate without being disproportionate. However, the Swiss Federal Court has ruled, for example, that a rate set at 11% of the selling price when the usual rate was around 2% was manifestly excessive.
Your broker's claims far exceed what is usually the case, but it remains to be seen whether he has achieved a feat by selling a property that no-one wanted or for a much higher price than the market price, after having, for example, taken on an extraordinary advertising campaign...
