The party that signs the brokerage contract with the real estate broker is responsible for paying the commission in Saudi Arabia. Depending on who requested and contracted for the service, that party may be the seller, buyer, landlord or tenant. The law does not automatically assign every commission to the buyer or every rental commission to the tenant.
Under Article 14 of Saudi Arabia’s Real Estate Brokerage Law, the standard commission is 2.5% of the transaction amount for a sale and 2.5% of the first year’s rent for a lease, unless the parties to the brokerage contract agree otherwise in writing.
Quick answer: Check the brokerage contract, not market assumptions. It should identify the contracting party, the commission rate or amount, the basis of calculation and the payment terms.
Who Is Responsible for the Real Estate Brokerage Fee?
Responsibility follows the brokerage contract. A property owner may appoint a broker to market a property, a buyer may retain a broker to locate a suitable asset, or a tenant may request assistance in finding premises. In each case, the contracting relationship determines who bears the fee.
This distinction matters because the parties to the property transaction and the parties to the brokerage contract are not always identical. A person should therefore review the actual brokerage arrangement before agreeing to pay a commission.
Does the Seller Pay the Broker Commission?
The seller pays when the seller has contracted with the broker and the brokerage contract makes the seller responsible for the fee. Ownership alone does not make the seller liable in every transaction; the written agreement remains the starting point.
Can the Buyer Be Required to Pay the Commission?
Yes. A buyer may be responsible when the buyer appoints a broker to search for, assess or help complete the purchase of a suitable property. The applicable amount and payment conditions should be stated in the brokerage contract.
Buyers preparing for a transaction can also review the step-by-step guide to buying property in Saudi Arabia without treating purchase procedures and brokerage commission as the same subject.
Does the Landlord or Tenant Pay a Rental Broker Fee?
Either may be responsible. The relevant question is whether the landlord, tenant or both entered into the brokerage arrangement. A rental listing by itself should not be used to assume that one side always pays; the brokerage contract and any written allocation of the commission should be checked.
How Much Is the Real Estate Broker Commission in Saudi Arabia?
The statutory calculation under Article 14 is:
| Transaction | Standard calculation | Written alternative |
|---|---|---|
| Property sale | 2.5% of the transaction amount | The parties may agree otherwise in writing |
| Property lease | 2.5% of the first year’s rent only | The parties may agree otherwise in writing |
The 2.5% should not be described as an inflexible figure in every case because the law expressly recognises a different written agreement. Brokerage commission should also be kept separate from property price, rent, down payment, security deposit, tax and government or administrative charges.
Sale Commission Example
Assume a residential property is sold for SAR 1,200,000 and the brokerage contract applies a 2.5% commission:
SAR 1,200,000 × 2.5% = SAR 30,000
The contract should then identify which party pays that SAR 30,000 and when payment becomes due.
Lease Commission Example
Assume a commercial unit has first-year rent of SAR 120,000 and the brokerage contract applies a 2.5% commission:
SAR 120,000 × 2.5% = SAR 3,000
For the statutory calculation, the base is the first year’s rent—not the total rent across every year of a multi-year lease. Parties should nevertheless check whether their written brokerage contract contains different agreed terms.
These examples illustrate brokerage commission only. They do not calculate tax, property-transfer costs or other amounts that may apply to a particular transaction.
What Should the Brokerage Contract Say About Commission?
The written contract is essential because it turns a general expectation into a defined obligation. The Real Estate Brokerage Law requires a brokerage contract to be in writing and deposited with the Real Estate General Authority (REGA). It must also have a definite term; if no term is stated, the law provides a 90-day term from the date of conclusion.
Before signing, the parties should be able to identify:
- The broker and relevant licence information
- The contracting party or parties
- The property or requested service
- The commission percentage or fixed amount
- The value used to calculate the commission
- Who is responsible for payment
- When the commission becomes payable
- The duration of the brokerage contract
- Any written term that differs from the standard calculation
The Implementing Regulations also require the percentage or amount of the commission to be included in brokerage contracts made with owners, buyers, landlords or tenants, as applicable.
When Does a Real Estate Broker Earn the Commission?
Under Article 15, a broker is entitled to commission when the brokered transaction is completed in accordance with the brokerage contract during its validity. Entitlement may also arise when the transaction is completed within two months after the contract expires, provided the broker proves that the transaction resulted from the broker’s work.
This prevents the due date from being assessed solely by looking at the date of the final sale or lease. The contract term, the broker’s role and the connection between the brokerage work and the completed transaction may all be relevant.
What If the Transaction Is Not Completed?
An incomplete transaction does not always produce the same result. The Implementing Regulations state that if the seller or landlord becomes entitled to the down payment without completion of the transaction, the broker is entitled to 25% of that down payment, unless the parties agreed otherwise in the brokerage contract.
This is not a 25% commission on the property price. It is a separate rule tied to the down payment retained by the seller or landlord when the transaction is not completed.
How Is Commission Shared When the Broker Contracts With More Than One Party?
The rules distinguish between one brokerage contract involving multiple parties and multiple brokerage contracts connected to the same transaction.
One Contract With Multiple Parties
When one brokerage contract is concluded with more than one party to the same transaction, the prescribed commission is divided equally between those parties unless they agree otherwise in that contract.
Separate Contracts for the Same Transaction
When the broker has separate brokerage contracts with different parties, the amounts stated in those contracts and the allocation method in the Implementing Regulations apply. If no commission percentage is specified, the prescribed commission is divided equally among the relevant parties. The total commission remains subject to Article 14 and any valid written terms.
This is why buyers and sellers should ask whether the broker is acting for more than one party and review the written commission arrangement before completion.
Broker Commission, Down Payment and Security Deposit: What Is the Difference?
| Payment | Purpose | Key point |
|---|---|---|
| Brokerage commission | Payment for real estate brokerage | Borne by the party contracting with the broker |
| Down payment | Amount connected to confirming a transaction and its completion terms | It is not the broker’s commission, and the broker may not retain it as security for commission |
| Security deposit | Amount connected to potential damage to leased property | Separate from rent and brokerage commission |
| Sale price or rent | Consideration paid for the property or its use | Paid under the sale or lease arrangement, not as brokerage compensation |
| Taxes and other charges | Separate statutory or transaction costs | Should not be silently combined with the broker’s fee |
If a sale proceeds to registration, the parties can separately review the property transfer process in Saudi Arabia . That process has a different purpose from determining who pays the broker.
Three Practical Commission Scenarios
Scenario 1: An Owner Appoints a Broker to Sell
An owner signs a brokerage contract authorising a licensed broker to market a property. The property sells for SAR 800,000 while the contract is valid. If the contract applies the standard 2.5% and assigns payment to the owner, the commission is SAR 20,000 and is borne by the owner.
Scenario 2: A Buyer Hires a Broker to Find an Office
A company asks a broker to locate an office that meets its budget, access and space requirements. The company signs the brokerage contract. If the broker completes the agreed service and the transaction is concluded under the contract, the company may be responsible for the stated commission even though it does not own the property.
Where a purchase depends on property financing, readers can separately review the real estate financing guide in Saudi Arabia . Financing arrangements are separate from the brokerage commission payable under the brokerage contract.
Scenario 3: A Broker Contracts With Both Sides
A broker has an arrangement involving both parties to one transaction. The parties should not rely on an informal assumption that each side will pay a full separate fee. They should review whether there is one contract or multiple contracts and how the commission is allocated under the applicable written terms and regulations.
Common Mistakes to Avoid
- Assuming the buyer always pays the broker
- Assuming the property owner always pays
- Describing 2.5% as an unchangeable amount despite a different written agreement
- Calculating a rental commission on the whole multi-year lease instead of the first year’s rent under the standard rule
- Confusing commission with a down payment or security deposit
- Failing to check the broker’s licence information
- Paying without reviewing the written contract and calculation base
- Treating tax and other transaction costs as part of the commission without verification
Checklist Before Paying a Property Broker
- Verify the broker’s identity and licence information.
- Confirm that a written brokerage contract exists.
- Identify every party to that contract.
- Check who is required to pay the commission.
- Review the percentage or fixed amount.
- Confirm whether the calculation is based on sale value or first-year rent.
- Check when the commission becomes due.
- Keep the contract and proof of payment.
For a broader understanding of development, management, leasing and related property functions, visit Real Estate Company in Riyadh . This guide remains limited to brokerage commission and does not present every real estate service as brokerage.
Frequently Asked Questions
Who Normally Pays the Real Estate Broker Commission in Saudi Arabia?
The party that contracted with the broker under the brokerage contract bears the commission. Depending on the arrangement, this may be the seller, buyer, landlord or tenant.
What Percentage Do Real Estate Brokers Charge in Saudi Arabia?
The standard commission is 2.5% of the transaction amount for a sale and 2.5% of the first year’s rent for a lease, unless the parties agree otherwise in writing.
Is the Buyer Always Responsible for the Broker Fee?
No. The buyer is responsible when the buyer is the contracting party or the written arrangement assigns a share of the commission to the buyer. The law does not automatically place every commission on buyers.
Is Rental Commission Calculated on the Entire Lease Term?
Under the standard statutory calculation, it is based on the first year’s rent only. A different arrangement must be assessed from the written brokerage contract.
Can the Seller and Buyer Share the Commission?
Yes, the written brokerage arrangement may allocate the commission between parties. Where one contract involves multiple parties and does not provide another allocation, the Implementing Regulations provide for equal division.
Can a Broker Keep the Down Payment as Security for Commission?
No. The Real Estate Brokerage Law states that a broker may not retain the transaction down payment as security for the broker’s commission.
Can Commission Be Due After the Brokerage Contract Expires?
It may be due if the transaction is completed within two months after expiry and the broker proves that the transaction resulted from the broker’s work.
Conclusion
The correct answer to “who pays the real estate broker commission in Saudi Arabia?” is found in the brokerage contract. The payer is the party that contracted with the broker, rather than a party selected automatically because they are the buyer, seller, landlord or tenant.
The standard calculation is 2.5% of the sale amount or 2.5% of the first year’s rent, unless the parties agree otherwise in writing. Before paying, verify the broker’s licence, read the contract, confirm the calculation base and distinguish the commission from the down payment, security deposit, tax and other transaction costs.
Official references: Saudi Real Estate Brokerage Law and Implementing Regulations of the Real Estate Brokerage Law , published by the Real Estate General Authority.
Editorial note: This article provides general educational information and is not legal, tax or financial advice. A particular transaction should be assessed using its contracts, documents and applicable official requirements.
Last reviewed: September 2026