What is Real Estate Brokerage? Commission Rates for Brokerage Entities

Real Estate Brokerage is an activity governed by the Law on Real Estate Business 2023, requiring strict adherence to practice conditions and remuneration regulations. Clarifying the legal nature and financial obligations helps parties minimize risks. Long Phan Consulting Company analyzes the current regulations below.

What is a real estate broker?

Based on Clause 11, Article 3 of the Law on Real Estate Business 2023, real estate brokerage is the act of acting as an intermediary for parties in the sale, transfer, lease, sublease, or lease-purchase of real estate.

This definition affirms the broker’s role as a bridge, separating property ownership from service provision. Brokers do not hold title to the property but facilitate trade. The law clearly distinguishes brokerage from speculation or fraud. Acts of collecting deposits illegally under the guise of brokerage are strictly prohibited.

Content of real estate brokerage activities

Based on Article 62 of the Law on Real Estate Business 2023, main activities include:

1. Finding partners meeting the customer’s conditions to negotiate and sign contracts.
2. Authorized representation to perform tasks related to procedures for purchase, sale, transfer, lease, sublease, and lease-purchase.
3. Providing information and supporting parties in negotiating and signing contracts.

>>> See more at: Scope of Real Estate Brokerage Activities under Current Regulations

The commission is payable to the brokerage firm.

According to Clause 2, Article 63 of the Law on Real Estate Business 2023:

• The level of remuneration and commission is agreed upon by the individual broker and the real estate exchange/brokerage service enterprise.
• The remuneration level does not depend on the price of the brokered transaction.

Currently, the law does not set a fixed commission rate; it is primarily agreed upon based on market customs and transaction value.

• Sales: Typically 1% to 3% of the contract value.
• Leases: Typically 0.5 to 1 month’s rent. These common market rates serve as a basis for negotiation and must be recorded in the brokerage contract.

Legal consulting services for real estate brokerage in Long Phan

Long Phan Consulting Company provides comprehensive legal solutions for investors, individuals, and brokerage enterprises, ensuring transaction safety under the Law on Real Estate Business 2023:

• Contract Drafting & Review: Drafting strict brokerage contracts compliant with the Civil Code; clarifying fee/commission clauses; reviewing model contracts to protect client interests.
• Dispute Resolution: Representing clients in negotiating or litigating fee/commission disputes; analyzing evidence of brokerage contributions or violations of obligations.
• Licensing & Compliance: Assisting in obtaining Practice Certificates for personnel and establishing Real Estate Trading Floors; advising on AML compliance.

>>> See more at: Is It Possible to Practice Real Estate Brokerage as an Individual?

Frequently Asked Questions

Below are some frequently asked questions in the real estate brokerage field; please refer to them:

Can individuals practice independent (freelance) brokerage?

No. Individuals must hold a practice certificate and practice within a real estate service enterprise or trading floor. Independent practice without an organization is illegal. (Legal Basis: Clause 2, Article 61, Law on Real Estate Business 2023).

What is the difference between “Remuneration” and “Commission”?

• Remuneration: Paid for the effort (marketing, finding clients) regardless of the transaction result.
• Commission: Paid only when the transaction is successful (contract signed). (Legal Basis: Article 63, Law on Real Estate Business 2023).

Must brokerage contracts be in writing?

Yes. Real estate service contracts, including brokerage, must be made in writing. Verbal agreements have no legal validity. (Legal Basis: Clause 9, Article 3, Law on Real Estate Business 2023).

Is there a maximum cap on brokerage commissions?

No. There is no statutory cap. The rate is entirely agreed upon between the parties but must be clearly stated in the service contract. (Legal Basis: Clause 2, Article 63, Law on Real Estate Business 2023).

Can a broker be a party to the sales contract in the same transaction?

No. A broker is a third-party intermediary. If they directly buy or sell the asset, they lose their objective role. This prevents conflicts of interest. (Legal Basis: Clause 11 Article 3 and Article 62, Law on Real Estate Business 2023).

Conclusion

Understanding regulations on Real Estate Brokerage protects legal rights in high-value transactions. Long Phan Consulting Company commits to providing specialized support. Please contact Hotline 1900636389 for direct expert advice.