Being a real estate sales agent in Dubai is more than just showing clients properties or sharing listings with them. You should have a comprehensive understanding of the sales journey, and the laws that govern the industry.
In this session at Bayut Academy, we discuss everything you need to know to kick-start your career in Dubai real estate sales, as we share the key highlights of Dubai real estate sales that every new realtor should know.
THE SALES PROCESS
The typical Dubai sales process from an agent’s point of view is as follows:
- Source your inventory
- Advertise your inventory
- Qualify potential buyers
- The buyer makes an offer
- The seller accepts the offer
- Buyer and seller sign the contract
- The property is scheduled for transfer of ownership
Let’s look at the key sales terminology that you should be familiar with:
- Listing: A contract between the owner and broker, authorising the broker to advertise his/her property
- Exclusive listing: An agreement in which a property seller appoints and authorises a single broker to act as a seller’s agent
- Open listing: An agreement in which a property seller appoints more than one seller’s agent
- Distress Sale: A type of sale that occurs when a property, stock or asset must be sold quickly
- Commission: A fee earned on a real estate transaction, usually a percentage of the selling price
- Valuation: A professional estimate of the value of an asset in this case a property
- Service charge: A fee collected to pay for the services related to the primary product or service being purchased
- Liability: A debt or obligation that one owes
- Lender pre-approval: An authorisation by the lender to the borrower of a loan amount
- Comparative Market Analysis: A tool used to estimate the value of a specific property by evaluating similar ones sold recently
- Down Payment: An amount of money the buyer pays at the start of a real estate transaction
- Equity: The amount of your home that you own
- Escrow account: A legal holding account, where funds cannot be released until the predetermined conditions are met
- Mortgage: A type of loan used to purchase or maintain a home, land or other types of real estate
- Foreclosure: The action of taking possession of a mortgaged property when the mortgagor fails to keep up with payments
- Title Deed: A legal deed or document that reflects ownership of a property
- Oqood: A registration document for contracts between property developers and buyers
- Principal: The original sum of money borrowed in a loan or put into an investment
- Asset: A resource with economic value that an individual, corporation or country owns or controls, with the expectation that it will provide a future benefit.
The Dubai Land Department governs all the real estate operations in the emirates. RERA (Real Estate Regulatory Agency) is the DLD’s regulatory arm, and offers a legal framework for the sector.
Here are some important real estate laws in Dubai:
- Law number 7 of 2006: Regulates the registration of completed real estate transactions
- Law number 85 of 2006: Regulates the real estate profession and sets out the criteria to hold a license and practice as a real estate broker in Dubai
- Law number 27 of 2007: Regulates the ownership of jointly owned properties (owner’s association)
- Law number 14 of 2008: Applies to property mortgage and property units as a security for debt
- Law number 13 of 2008: Regulates the sales and marketing of off-plan properties
- Law number 21 of 2013: Formation of a special judicial committee for the liquidation of cancelled properties in Dubai
RERA uses forms for real estate transactions in Dubai, to streamline the process for all stakeholders involved. These forms are as follows:
- Form A: An electronic copy, an agreement between the buyer and seller
- Form B: An Agreement between the buyer and the broker
- Form F: An Agreement between seller and buyer
- Form I: The Agreement between two brokers
- Form U: The termination of the contract between seller/buyer and broker
Check out our in-depth guide to the RERA forms here: https://www.bayut.com/mybayut/guide-rera-forms-dubai/
Types Of Ownership In Dubai
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Lease-Hold
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Free Hold
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Non-Freehold
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|---|---|---|
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Lease-Hold
An individual owns a property for a limited period
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Free Hold
An individual owns the property in full
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Non-Freehold
A GCC National owns a property or land in full
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Lease-Hold
Ownership: up to 99 years
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Free Hold
Ownership: unlimited (for life)
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Non-Freehold
Ownership: unlimited (for life)
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Lease-Hold
Example: Dubai Silicon Oasis, Green Community (DIP)
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Free Hold
Example: Dubai Marina, Dubai Hills Estate, Emirates Living, JBR
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Non-Freehold
Example: Bur Dubai, Sheikh Zayed Road, Barsha, and more
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Types of Sales In Dubai
Direct developer sales (off-plan)
- It involves sales of property under construction
- Property is sourced directly from the developer
- Commission is paid by the developer
- It cannot be mortgaged if its under construction
- Registered in the DLD as Oqood (under construction)
Secondary market sales (resale)
- Ready properties
- Sourced from individual owners
- Commission paid by the buyer or seller
- These properties can be mortgaged
- Registered by the DLD as Title Deed
Direct Sales
- Ready properties
- Sourced by developers directly
- The commission is paid by the developer
- Registered in the DLD as title deed
Developer’s Obligations
- The developer must have proof of possession of the plot and an escrow account for each project
- 5% of the funds in the trust account is used for marketing purposes
- A developer must complete 20% of the construction before selling a project or provide a bank guarantee for 20% of the construction value to RERA
- The developer is allowed to charge an administration fee and fee for NOC. The minimum charge is AED 5K
- Developers may charge an additional service fee, such as a fee for an urgent issuance of NOC
- A developer must have a contract with the brokerage before giving permission to the broker to market their project
If there is a variation in the property size at the handover:
| If the unit area is | The developer must |
| Greater than the area mentioned in the SPA | Not increase the price of the unit |
| Smaller by more than 5% than the area mentioned in the SPA | Compensate the buyer for the shortfall in proportion to the reduction |
If there are any defects after the handover, the developer remains liable for:
- Ten years to repair any structural defects
- One year to repair or replace defective installations, such as mechanical, electrical, sanitary or plumbing installations.
Developers’ rights to terminate for buyers’ default
- The developer shall give the buyer a written notice
- If the buyer fails to comply, the developer should notify the DLD
- The DLD will issue a default notice to the buyer, allowing the buyer 30 days to rectify the default
- If the default persists beyond 30 day notice period, the DLD may deregister the unit, and the developer has the right to cancel the contract with the buyer
| If the Developer has… | The Developer can retain |
| Completed 80% of the construction | Full amount paid by the buyer |
| Completed 60% of the construction | 40% of the purchase price |
| Completed Less than 60% of the construction | 25% of the purchase price |
| Not commenced construction for reasons beyond their control | 30% of the amount paid |
Cancelled Projects
If the developer’s project is cancelled by order of RERA, the developer must refund the full amount paid by the buyer.
The Special judicial committee for cancelled projects was set up to oversee cancelled developments in Dubai.
- It handles all matters regarding the liquidation of assets of cancelled projects
- Relates to ‘cancelled’ projects and not ‘on hold’ or ‘delayed’
- Responsible for liquidating real estate projects and settling debts after the deduction of liquidation costs
- All decisions of this committee are final and cannot be appealed
Read more about the legislation regarding cancelled projects
Mortgages
- A mortgage is an agreement between a borrower and a lender to buy a home without having all the cash upfront.
- A mortgagee (lender) is a creditor who lends money to someone against the security of property that exists. It must be a bank or a financial institution licensed by the Central Bank
- A Mortgagor (borrower) is the holder of personal rights under the contract of sale registered in the real estate register
- Mortgages must be registered at the Dubai Land Department
- The mortgagor (borrower) is responsible for paying registration fees
- The fee to register a mortgage is 0.25% of the loan amount, payable to the DLD
- The mortgage terminates on registration upon the repayment of the secured debt
Mortgages in Dubai:
- UAE nationals and expats (both UAE residents and non-residents) are eligible to take a home mortgage in Dubai
- The maximum age limit to avail of a home mortgage is 65 for salaried individuals and 70 for self-employed
- Maximum mortgage tenure is 25 years
- Banks have four main criteria to calculate eligibility: time spent in the UAE (a minimum of 6 months to one year), duration of employment in the UAE (minimum of six months), annual income and credit history.
Further reading: Check out our guide to mortgages in Dubai: https://www.bayut.com/mybayut/mortage-types-dubai/
Power of Attorney
Power of Attorney is a legal document that gives one party the authority to represent another, in specified legal or financial matters.
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In real estate, power of attorney is used for the following purposes:
- Withdrawing funds from an account
- Collecting rental income
- Entering a mortgage
- Entering a lease transaction, either as a landlord or tenant
- Entering a sale or purchase contract
- Paying bills
- Investing money
Provisions of a Power of Attorney (POA):
- If the grantor is in the UAE, POA must be notarised by the Dubai Notary Public
- If the grantor is outside the UAE, the POA must be legalised by the UAE Embassy in their country of residence and further legalised by the UAE Ministry of Foreign Affairs
- POA must be in both English and Arabic. If there are inconsistencies in the two language versions, the Arabic interpretation prevails
- POA is valid for a maximum of two years and must have an expiry date
- POA must be granted for a specific property for a specific purpose (such collection of rent, signature on a SPA, or paying DEWA bills)
- POA will lapse with the death of a grantor
- If a real estate broker holds the POA, it must be verified by the Grantor before every use.
The Four Real Estate Sales Models
- Cash buyer and cash seller
- Mortgage buyer and cash seller
- Cash buyer and mortgage seller
- Mortgage buyer and mortgage seller
Let’s look at the journey with each sales model:
Cash buyer and cash seller
- Buyer and seller sign Form F
- Buyer submits a booking deposit
- Seller issues a security cheque against the booking deposit
- Seller applies for NOC from Master Developer
- Buyer arranges for all payments; payable to the seller, DLD and broker
- Buyer and seller go to the Registration Trustee to transfer the property Title Deed
Mortgage Buyer and Cash Seller
- Buyer applies for pre-approval
- Buyer and seller sign Form F
- Buyer submits a booking deposit
- Seller issues a security cheque against the booking deposit
- Buyer’s bank conducts valuation of the property
- Buyer’s bank issues Final Offer Letter
- Sellers applies for NOC from the Master Developer
- The buyer, seller and bank representative go to the registration trustee to transfer the property ownership
Cash Seller and Mortgage Seller
When there is an existing loan on a property, the outstanding loan must be settled prior to the transfer of the Title Deed.
- Blocking of the property with a liability letter from the bank to the DLD
- Buyer and seller sign the Form A
- Seller to obtain a No Objection Certificate from the Developer
- Buyer to issue Managers Cheque payable to the bank to settle the outstanding loan amount
- Buyer to issue Managers Cheque payable seller for the remaining balance
- Buyer to issue Managers Cheque to the DLD for the transfer fee
- The seller takes the cheque payable to the bank to release the mortgage and obtain the clearance/release letter
- Unblock the property at the Dubai land Department and arrange for the transfer of property
Check out our in-depth guide to selling a mortgaged property
Mortgage Buyer And Mortgage Property
- Buyer and seller sign Form F
- Buyer submits a Booking Deposit
- Seller issues a Security Cheque against booking deposit
- Buyer’s bank conducts valuation of the property
- Buyer’s bank issues Final Offer Letter to the buyers
- The seller applies for the Liability Letter from the bank
- A liability letter is sent to the buyer’s bank
- The buyer’s bank will start settling the existing mortgage
- Original Title Deed is released to the Buyer’s bank
- Seller requests No Objection Certificate (NOC)
- Seller submits the NOC to the buyer’s bank
- Buyer, seller and buyer’s bank representative
Fees
| Type of Fee | Percentage of Sales Price |
| Registration fee at DLD | 4% |
| Registration Trustee Fees* | AED 2K – AED 5K |
| Brokerage Fees | 2% |
| NOC Fees | AED 500 – AED 5K |
Registration Trustee Fees* are charged based on the property value and completion.
Payments at the time of transfer are to be made in the manager’s cheque only
All parties involved in the transaction must be present at the time of transfer.
| Property Price | Off Plan Property | Ready Property |
| More than AED 500k | AED 5k | AED 4k |
| Less than AED 500k | AED 3.5k | AED 2k |
Owner’s Association
- The Owner’s Association is a non-profit organisation that manages common areas in jointly owned properties, i.e. buildings or communities, where there are multiple title-deed holders.
- It is a business in its own right and can be sued own name
- It has the right to own and dispose of movable assets
- It can enter service agreements.
Read more about the Mollak System
Service Charges
Service charges are recurring fees for maintaining and upkeep common areas in Dubai’s residential buildings or communities.
The fees usually cover costs for security, cleaning and maintenance services, landscaping and other aspects of property management.
Unpaid Service Charges
If a unit owner fails to pay the service charges and fails to remedy the following notice from the Owners Association (OA), OA may impose a penalty at the rate of 12% per annum, calculated daily.
Transferable Service Charges
Services charges can be transferred to the new property owner, calculated daily on a pro-rata basis.
Code of Ethics
As a Dubai real estate agent, it is expected to adhere to a code of ethics, detailed as follows:
- Duties to your clients: To protect and promote what’s in the client’s best interest.
- Duties to the public: To avoid misinterpretation or conceal factual or essential information related to the property and the transaction.
- Duties to other realtors: To not make false or misleading statements about other real estate professionals, their businesses or their business practices.
We recommend you thoroughly understand Dubai’s sales laws and processes, study the market’s trends, and price your inventory correctly.
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