As individuals navigate the intricate process of buying property in this cosmopolitan hub, a common question arises: who bears the responsibility of paying the realtor commission?
Importance of Understanding Commission Structure
Clarity on commission structures is essential to avoid potential misunderstandings and ensure a smooth real estate transaction. Let’s explore the dynamics of realtor commissions in the context of buying property in Dubai.
Role of Realtors in Dubai
Realtors play a crucial role in navigating the complexities of Dubai’s real estate market. From identifying suitable properties to negotiating deals, their expertise is invaluable for both buyers and sellers.
Who Typically Pays the Realtor Commission?
Seller-Paid Commissions
Traditionally, realtor commissions are borne by the seller. This model is prevalent in many real estate markets, including Dubai. Sellers factor in the commission when determining the listing price, and upon a successful sale, the agreed-upon commission is deducted from the proceeds.
Buyer-Paid Commissions
In some cases, buyers may be responsible for paying the realtor commission. This arrangement is less common but not unheard of, especially in unique situations or negotiations where buyers explicitly agree to cover the commission.
Builder-Paid Commissions
Here in Dubai, Property builders may assume the responsibility of paying the realtor commission, particularly in new developments. This arrangement can impact the dynamics of the transaction.
Law No. 85 of 2006 and its Impact
The real estate service in Dubai is controlled by Law No. 85 of 2006. This document regulates all aspects of the services provided by these specialists.
For instance, it indicates the responsibilities of a real estate agent in Dubai as well as the most important nuances of their cooperation with the client.
So, according to this law:
The client must sign a contract with the broker, and the contract must be registered with the Dubai Land Department (DLD) – this is a precondition for the specialist to be paid.
If several brokers have been chosen to work under one contract, they are jointly responsible for the service delegated to them.
The brokerage agreement must contain the names of the parties, the characteristics of the property, and the conditions for the provision of real estate services.
The law also clearly stipulates the financial obligations between the agent and their client.
For example:
The broker is entitled to receive their remuneration after signing the contract of sale and registering it with the Department unless otherwise specified in the papers. If the contract is pending, the realtor is not entitled to payment until this condition is met.
The broker can only receive payment for their work from the party that authorized them to mediate the transaction. If such permission is granted by both parties, each of them shall be solely responsible to the broker for the payment of the remuneration due even if they decide that only one of them will pay the full remuneration.
The document also states in which cases you may not pay the agent:
The broker loses the right to receive remuneration or to claim reimbursement of expenses if they act in favour of another party, thereby violating their obligations to the person they represent.
The agent is also not entitled to remuneration for their service if the latter did not lead to an agreement between the two parties.
In this case, the broker also cannot claim compensation for expenses. The contract is considered concluded when the parties to the negotiations agree with all the conditions stipulated in it.
Potential Benefits of Paying Buyer’s Commission
Enhanced Buyer Representation
Buyers opting to pay the realtor commission may experience heightened dedication and personalized services, as the realtor is directly accountable to them.
Incentivizing Realtors to Work with Buyers
Offering a buyer’s commission can attract top-tier realtors, incentivizing them to prioritize and advocate for the buyer’s interests throughout the process.
Conclusion
In navigating the intricacies of realtor commissions when buying property in Dubai, understanding the roles and responsibilities of all parties involved is paramount.
Clear communication, awareness of legal aspects, and a willingness to negotiate can contribute to a successful and mutually beneficial transaction.
FAQs (Frequently Asked Questions)
Q: Can buyers negotiate the realtor commission in Dubai?
A: Yes, buyers can negotiate the commission rates with realtors based on various factors.
Q: Are there legal regulations governing realtor commissions in Dubai?
A: Yes, Dubai has regulations outlining the legal aspects of real estate transactions, including realtor commissions.
Q: Is it common for buyers to pay the realtor commission in Dubai?
A: While less common, some buyers may choose to pay the realtor commission, depending on the negotiation and agreement.
Q: How do market conditions impact commission payment in Dubai?
A: In a competitive market, sellers may be more willing to cover the commission to attract potential buyers.
Q: What are the advantages of a buyer paying the realtor commission?
A: Buyers paying the commission may experience enhanced representation and dedication from the realtor throughout the transaction.
Rabee Khan is the founder of Serps Growth. He has led 100s of successful SEO campaigns in the most competitive verticals like SAAS, health, finance, law and now in Real Estate. He’s also helped 100s of agency owners scale by systemizing their SEO. Rabee is a Search Executive skilled in Business Planning, Interpersonal Skills, Analytical Skills, Advertising, and Marketing Strategy with a demonstrated history in the marketing and advertising industry.
