Who pays agent when buying a property in Dubai?

Based on UAE law, non-UAE residents can buy property, following the same rules as residents. Usually, investors contact an agency to choose the right property and proceed with the purchase. In the Emirates, a real estate agent may also be referred to as a consultant, advisor, or broker, but all these terms refer to the same role. But is it actually necessary to get help of an agent? How exactly and who regulates his work? Who pays commission to the agent and what obstacles you may face, as investor, when exploring real estate market as independent purchaser? All these points we will explain below.

Agent’s work is strictly regulated, in UAE
Those investors, who decided to use a help of a real estate agent might have many questions, throughout the work process. One of the main questions is whether my money secured and what are exact duties of an agent?

Land Department
All emirates in the country also have their own land departments, whose rules and procedures may differ from those in Dubai.
Dubai Land Department has a specific governmental entity that regulates all related to property matters and controls the work of all real estate agencies in Dubai – RERA. When property investment deal takes place, following rules, real estate agent and investor have to register a contract in DLD. It can be done digitally or in writing form. This contract will contain names of agent / agency, investor and the details of the purchased property together with the terms of the transaction. The registration process (if done digitally) can be done with the help of an application, in Dubai there is DubaiRest app. In order to secure information, OTP will be sent to registered email and mobile number of seller and buyer. It helps secure confidential information.

Who is an Agent?
An agent is certified real estate broker who goes through special training, examination and obtains a RERA broker card (we have attached a screenshot showing how the agent’s broker card of Dubai should look). Without this document an agent won’t be able to provide his services to investors. This way Dubai Government protects property investors. An agent, without a RERA card, can’t work independently. He has to be a part of a certain real estate agency.

Who can become a real estate agent?

Anyone with the desire to work in real estate can become an agent, whether it is an Emirati person or an expat. The process of becoming an agent is the same – go through exam and receive a RERA card. There are agents of different nationalities, in Dubai that makes it easy for investors from all over the world to find someone from their country to work with. In majority of cases, it works as a breaking point for investors of the same country or the ones who share the same language to choose Dubai as a place for their investment. You will find many agents from Turkey, France, Italy, Germany, etc.

 Al Hayat Almushreqa agency has a team of multilingual agents, so that all of the information on the website corresponds to the languages, spoken by the brokers.

Who pays to the agent and in what cases it is not necessary?
There are different rules applied, when we are dealing with the off-plan projects and ready units. If it is an off-plan project (under construction), commission is paid to the agent by the developer. No commission will be changed from the buyer’s side. When it comes to the ready unit, seller pays 2% commission (plus VAT), and the buyer pays 2% commission (plus VAT) to the agent. Depending on the agreement between the buyer and the agent, in some cases buyer pays 4% commission of even more if we speak about some specific commercial property. Other variations of the payment are possible, based on the mutual agreement. All financial obligations and charges are discussed in advance to avoid any misunderstanding.

While preparing for the deal, all terms and conditions are mentioned in the brokerage agreement (contract A or B). One of the key points are:

• Broker can’t claim for any reimbursement or remuneration of expenses if he was acting in the favor of other party of the transaction, and not his client;
• If the deal didn’t happen, broker can’t claim any reimbursement of his expenses or commission.

In this case, we can say that commission will be paid only if the deal happened and broker didn’t breach the agreement. Otherwise, any commission claim can lead to the court case.

For instance, some international investors are trying to “save money” on realtor and gain some extra benefit, for themselves. They offer an agent to but a property through him and share the developer’s commission between himself and the agent. Such actions are considered illegal, in UAE. Agent will not risk his position to proceed. Moreover, he can raise a court case, if such incident takes place.

Apart from the commission to the agent, a property investor has other expenses, such as:

• Compulsory fees to Dubai Land Department (DLD) – 4% of the price of the property, plus Admin Fees. The amount of Admin Fees varies from one developer to another;
• Fees for property registration in Trustee office (secondary market);
• Mortgage registration fees (if the unit is mortgaged);
• Payment for issuing a Non-Objection Certificate (NOC).

When an investor sees an online advertisement, it is important to note that the price of the unit is mentioned without these extra charges.

Manager’s Cheque
The process of property investment is strictly regulates, in the same way as the payment for the agent’s services (commission). For instance, manager’s cheque can be used as a security deposit, that confirms that the investor has sufficient amount of money and willing to proceed with the deal. In this particular case manager’s cheque can’t be issued in the name of a particular agent, it’s always should be issued in the name of seller of the property. The cheque is kept at the agency until the successful completion of the deal as a guarantee. If the transaction (on the secondary market) is successfully completed, the agents receive their cheques for the commissions, which were issued by the seller and the buyer in the name of the agency (not in the name of the agent).

Do you actually need an agent when buying a property in Dubai?
As per UAE law, it is not a mandatory to work with the real estate agent, if you want to buy or sell a property. A buyer and seller can do re-sale by themselves. Nevertheless, the real struggle comes to preparing needed documents, following the requirements and contacting the right people. This is where the expertise and knowledge of a real estate agent can come handy. What is more, the agent will be able to find the right property based on the investor’s requirements and budget. An investor will save his time, money and make sure that the property will bring profit in the future. All this can be done with the help of an agent.

Who is a real estate agent?
Real estate agent, in UAE, is a professional with the state registration, official license issued by the agency – employer of the real estate agent. A real estate agent advice on the right investment, takes care of the needed paperwork, takes active part throughout the whole purchase process to avoid any issues that may occur.

Responsibilities of a real estate agent include, but not limited to:

• To find a liquid property, based on the inquiries of an investor, in accordance with the stipulated conditions;
• To be a middle man between a buyer and a seller in order to negotiate a suitable selling price and needed terms and conditions of the deal;
• To prepare all required documentation;
• To secure the deal / transactions for both parties.

As you can see, a real estate agent is not only a person who sells the property and gets the commission. A real estate agent is a perfect negotiator and legally responsible person for compliance of both parties based on the contract.

To use the help of an agent, or proceed with the deal yourself – is a personal choice of everyone. Nevertheless, it is always safer and faster to use a help of a local professional.