Let’s make no bones about it. It’s a dodgy business, isn’t it? Real estate agents aren’t exactly loved in this part of the world, and despite being at the heart of the industry, I have to agree with much of the sentiment.
Not long ago, Arabian Business ran a feature headlined ‘Imagine a world without estate agents,’ with this magazine making a case to ditch the lot of us and put us out of business once and for all. While I echo some of the sentiment in that piece, such an idea is purely wishful thinking. Buyers and sellers need an independent third party to act on their behalf — quite often because both sides are extremely busy getting on with their own lives and jobs.
But that doesn’t mean the estate agency business shouldn't get its house in order. Which is why I am launching SKAI Real Estate, as part of my own mission to clean up the industry. Will it work? Only you can decide that. Though to begin with, we need to address the key problems and their solutions.
So here is my own five-point plan to start the cleaning-up process.
Yes, commissions. A very dirty word isn’t it? Largely because it is common practice in Dubai (and the rest of the UAE) for estate agents to bag two percent commission from both parties in a deal. This often gives them a ludicrous four percent fee per deal. That’s AED40,000 for a mere AED1m sale. Plainly too high, and plainly absurd, yet no one in the industry or outside has ever questioned this.
SKAI will fix commissions at 1.99 percent flat — and only from one side. This will be the lowest in the industry, and I challenge the rest of the market to follow.
2. Hidden top ups
Here’s where it gets really messy. We all know it happens — you may think you have bought a flat for AED1m, when the actual price the seller got was AED950,000. You may think you sold a flat for AED1m when the buyer actually paid AED1.05m. Lumping or taking off huge sums to prices is common practice is Dubai. It is wrong, immoral (probably illegal) and yet everyone does it. So my second point is to offer the only guarantee in the market of absolutely no top ups. The price you see is the real price. Again, I challenge the rest of the industry to follow.
3. Represent only one party
It staggers me that most estate agents work for both the buyer and seller. This is a blatant conflict of interest. How can an estate agent possibly give you the best advice when he wants to keep both sides happy? Or to be blunt, doesn’t this mean you are being stiffed?
All the big boys do this in Dubai and it is wrong, and it must stop. So my third point is SKAI will guarantee to only work for one party, buyer or seller. And again, I challenge the rest of the industry to follow.
4. No cold calls
It will come as no surprise to you that most estate agents flog your details to other estate agents and companies as a matter of course. No wonder that you end up with hundreds of cold calls from people you never heard of trying to flog you stuff. Another disgraceful practice, and SKAI guarantees we won’t do this. Come on now, will the rest of the industry follow, or is this how they really make their money?
5. Sticking with you
I have dealt with many estate agents and I know full well that once you hand the cheque over, you will never hear from or see them again. They have your cash — thank you and goodbye. Any problems that then occur, either with the transaction or the property, are your problem. SKAI will guarantee to stick with you – this may sound like a vague promise, but the proof will be in the pudding.
In the last four years, since the property market crashed, estate agents have rightly taken a battering. The old days of simply picking up the phone and picking up a cheque are gone, and they have had to find new ways to stay in business. Unfortunately, in my experience, even the most so-called credible names in the business have been only too keen to get involved in a range of murky practices. Thousands of innocent customers have been fleeced, and the reputation of the industry is on its knees.
But I disagree with Arabian Business when it says we can do without estate agents. A cleaned up, well run and well disciplined industry can be an asset to the property market, especially as it starts to pick up.
I also know that by boldly stating I am going to clean up the industry, I am making life hard for myself. SKAI probably won’t make as much money as its rivals, we will find it hard to break into the industry and no doubt I will be ridiculed by people telling me to mind my own business, or questioning my credentials. But somebody has to make a stand — and I am happy for that somebody to be me.
Kabir Mulchandani is the CEO of SKAI Holdings, a Dubai-based family-owned real estate investment firm.