Agent Fees When Buying a Home in Bangalore: Payer, GST and Written Terms
An agent's fee is one of the least discussed costs of buying a home in Bangalore, and also one of the easiest to get wrong. This guide explains who normally pays it, whether any law caps it, what GST does to the bill and which terms deserve a written record before you start viewing homes.
Who Pays, by Type of Purchase
In a resale, each party commonly pays the broker acting for it, usually as a share of what the home sells for. The figure follows local custom and negotiation. If the seller's broker is showing you the flat, ask frankly whether you are also expected to pay, because one broker may be working for both sides.
With a new project the pattern flips. Commission to the channel partner usually comes from the developer, with the buyer paying the developer's price alone. At the first meeting, ask the agent whether any amount is due from the buyer. Buyers owe no brokerage on projects booked through this site, as the About page states, and the price and cost sheet are the developer's.
What the Law Says, and Leaves Open
RERA, passed in 2016, describes an agent as someone who negotiates for another person, or represents that person, in the transfer of plots, flats or buildings in return for a fee or commission. Registration is required under Section 9 before an agent helps with a sale in a registered project. Section 10 sets conduct rules, including record-keeping, honest statements and help with documents at booking, and Section 62 prescribes Rs. 10,000 for each day of default.
What the Act omits is any rate. It contains neither a fixed percentage nor a ceiling, so the fee is purely a contract between agent and client. Claims about a "legal rate" have no basis, and the figure can be negotiated.
Understanding the GST Layer
Broking counts as a service, and GST on real estate services supplied for a fee or commission is 18%, made up of 9% central and 9% state tax. It is levied on the fee and never on the price of the property. GST registration is compulsory once an agent's service turnover over a year goes above Rs. 20 Lakhs.
Registered brokers add GST to their fee and issue a tax invoice that carries the GSTIN. Because an unregistered agent cannot collect tax, a GST demand with no GSTIN on the invoice needs questioning, and fee and tax must appear as separate lines.
Take a Rs. 1.2 Crore home as an example, with three illustrative rates. At 1% the fee is Rs. 1,20,000, GST is Rs. 21,600 and the payment totals Rs. 1,41,600. At 1.5% it is Rs. 1,80,000 plus Rs. 32,400, or Rs. 2,12,400, and at 2% it is Rs. 2,40,000 plus Rs. 43,200, or Rs. 2,83,200. Whether a quote includes GST or adds it on top can mean a difference of Rs. 43,200 at the highest rate, so ask which it is.
A Short Written Agreement
A single page, or an email that both parties acknowledge, is enough. Sign it when the broker first starts showing properties and well before any deal looks close. Cover these items.
- The percentage, or a flat amount in rupees
- The base it applies to, ideally the price written in the deed
- Whether the quote includes GST or adds it
- The person paying, and whether the opposite party also pays this broker
- The stage when payment falls due
- The work included: visits, papers, price negotiation and presence at registration
- What happens to the fee if the sale does not go through
A flat amount removes the broker's incentive to talk the price up, which helps a buyer hoping to bring it down. With a percentage, define the base so that duty, registration charges and furniture stay out of it. Both parties should keep a signed or emailed copy, because a verbal understanding is hard to prove if the amount is later disputed.
When to Pay
Completion is the logical moment, and for a sale that means registration of the deed. Before that the sale may still collapse over title, finance or the seller. Handing over the full fee at introduction or after a verbal price agreement is premature.
Paying a part when the sale agreement is signed is a workable middle path, as long as the rest is held back until registration and the paperwork says what is refunded if the sale fails. Use bank transfers against a receipt or invoice rather than cash that leaves no record. A receipt that names the property, the amount and the purpose of the payment protects both sides.
Conflicts of Interest
If both seller and buyer pay the broker, the fee depends on the sale closing. That ties the broker to completion, whereas the buyer needs a fair price at the lowest level and a clean title. The two goals overlap without being the same.
Verify the key points yourself. Set the asking price against registered transactions and official guidance values, and let a lawyer of your own choosing review the title documents. The broker's view is useful, but only as one of several inputs.
Fee in the Bigger Picture
Above Rs. 45 Lakhs, Karnataka charges 5.6% stamp duty after cess and surcharge, plus 2% registration, and legal fees, loan processing and society transfer charges follow. On Rs. 1.2 Crore, duty and registration together at 7.6% add up to Rs. 9.12 Lakhs. A 1% brokerage with GST would add another Rs. 1,41,600, and because home loans are sized on property value, these extra costs usually come out of the buyer's own savings.
Is the Agent Registered?
Agents who sell RERA-registered projects need a K-RERA registration and should state its number. Ask for it, and search the state's RERA portal before handing over any papers. The entry shows the registered name and validity dates.
Resale homes in older buildings mostly fall outside RERA, and the agent concerned may hold no registration. The safeguards then are a written fee agreement, bank payment and a title check done independently. For project queries, the contact page is the place to start.
