Who Pays For Real Estate Agent Fees In Ghana?

In buying and selling homes in Ghana, most people do so with the help of a licensed real estate agent in Accra. These real estate agents in Ghana understand the local market and possess superior negotiation skills compared to the homebuyers themselves. Moreover, these professionals can generally make the entire home buying and selling process much easier. In exchange for their services, real estate agents receive a commission. 

The commission real estate agents in Ghana receive is only a fraction of the total expenses involved in real estate transactions. Various fees contribute to the closing costs of every home sale, including legal fees, stamp duty, and agent commission, with the overall amount depending on the size of the transaction. But the question is, ‘Who bears which cost in a real estate transaction in Ghana?’

Knowing the ins and outs of real estate fees can give you a better idea of the work of real estate agents in Ghana. Let's get into the nitty-gritty of just how much real estate agents get paid and who pays them in Ghana.

How Real Estate Agents in Ghana Are Paid

When it comes to the question of who pays a real estate agent's commission in Ghana, things get a little dicey. In Ghana, real estate agents and brokers typically earn their fees through a commission, which is a percentage of the property's sale price. This means they generally do not charge direct fees to either home buyers or sellers.

What we know and practice in Ghana is that the home seller pays the fee. However, the seller usually incorporates the fee into the price of the home. So, in this case, you will not be wrong if you say the buyer ultimately bears the cost indirectly. Though the buyer pays the entire purchase price to the seller, a percentage will be taken off the sold price and given to the agent.

Numerically, let's say a real estate agent in Ghana successfully completes a home sale of GHC1,000,000. Assuming the agent commission negotiated was 5%, the fee would be GHC50,000. The fee comes out of the sold price. In this case, it is the seller who bears the cost since it wasn't added to the sale price. The buyer pays the GHC1,000,000 and not GHC1,050,000, and hence the seller would receive GHC950,000 from the sale.

How Much is an Agent Commission in Ghana?

The real estate agent commission in Ghana is not fixed by law, and it can always be negotiated and agreed upon by the parties involved. Generally, between 3% to 5% of the sale price for residential property sales. The higher the selling price, the lower the agent commission can be negotiated. So, this means that the commission can even be as low as 2% of the final sale price.

Commercial property transactions in Ghana attract a commission of not more than 5%, and this is calculated on the sale price. For rentals, the agent usually receives one month’s rent, paid by the tenant. What you need to keep in mind is that the commission is a percentage of the home's selling price. So, the exact fee remains unknown until an offer is accepted and the house is sold.

How much real estate agents make in Ghana is becoming one of the biggest contentions in the real estate market. The perception that the fees are too high for little work done has gotten the attention of real estate developers in the country. Because of this, major real estate developers in Ghana have hired sales managers to take care of marketing and home sales.

What many home sellers in Ghana don’t realise is that the real estate agent will have to bear the long-term cost of keeping the house on the market, including signage and advertising fees. Look at it from this perspective, and trust me, many home sellers would understand that what agents receive as their commission is worth it.

Buyer Vs Seller: Who Pays More At Closing?

Now, let's compare the home buyer and home seller who pays more during the closing stages of a home sale. How high can real estate agents' and lawyers' fees be in Ghana? What about other property purchase costs in Ghana? What you should know is that both home buyers and sellers pay for the closing costs, but they incur different types. 

The following distinguishes what fees a home buyer and seller pay during the closing stage of a real estate transaction in Ghana.

Home Buyer

The financial responsibilities of a home buyer in Ghana extend beyond the agreed-upon purchase price, encompassing several statutory and professional fees. Every home buyer in Ghana is responsible for legal and stamp duty fees. The legal fees that lawyers charge are regulated by the Ghana Bar Association. Depending on the sale price, legal fees range from 3-10%. 

A stamp duty of 1% payable by the homebuyer is levied on the value of the property. This is another mandatory payment that the homebuyer must make. The stamp duty is a tax on assignments (the transfer of property ownership). Without the payment of stamp duty, the property transfer may not be legally binding or recognised by the Lands Commission.

But remember that the costs paid by home buyers at closing are related to the process of obtaining a mortgage. In a case of a mortgage, costs such as loan origination fees, appraisal, title costs, homeowners insurance, or home inspection will be paid by the home buyer. 

Overall, the home buyer pays a minimum of 4% of the property's value at closing in the form of legal fees and stamp duty without a mortgage.

Home Seller

Primarily, the only cost a home seller incurs at closing is the real estate agent's fees of 5% on the sale price. Sometimes, home sellers request to know the true value of their properties, and in this case, the seller will have to pay an additional 1% of the value of the property.

Have in mind that who pays for what can vary depending on the agreements signed before any deal could take place, and they are always room for open negotiation at any stage of the buying process.

The Role of Real Estate Agents in Ghana

Real estate agents in Ghana play a pivotal role in the property market. They act as intermediaries between home buyers, sellers, landlords, and tenants. Their role goes beyond finding prospective buyers – they also provide a wide array of services that facilitate smooth and legally sound property transactions.

Real estate agents in Accra, Ghana, act as the primary point of contact for clients looking to sell or buy property. They possess the skills to negotiate on behalf of buyers to secure the best possible purchase price and terms, and for sellers to maximise their returns. The same goes for tenancy arrangements – they negotiate lease terms for tenants and landlords.

In essence, real estate agents in Ghana serve as indispensable guides, facilitators, and negotiators, streamlining the often-complex process of buying, selling, or renting property in the country. Their expertise and services are crucial for both local and foreign clients looking to invest in the Ghanaian real estate market.

Final Thoughts

While the real estate agent’s commission is only a portion of the total transaction cost, both buyers and sellers in Ghana need to understand who is responsible for what. Most home buyers and sellers work hand-in-hand with real estate agents. In exchange for their service, agents receive a percentage of the sales price known as the commission.