By Shehzad H Abbasi
Will new rules improve property agents’ popularity, asks Shehzad H Abbasi
The real estate news this week appears to be good. RERA have announced they will enforce a common set of contracts, which have been available for some time, as mandatory for all transactions and agents.
These contracts crystallise the relationships between buyers, sellers, and brokers, and limit the number of agents listing a property. Does this mean you will receive less calls from agents wanting you to list your property with them? Not really. Does it mean there will be a more professional approach of individuals to one of the most discussed professions in Dubai? Not necessarily. So what can we expect to see as a result of this news?
In many conversations around Dubai, real estate brokers are too often berated as being greedy, incompetent, or lacking in market awareness or knowledge. This is harsh. There are some fantastically well-respected, knowledgeable and professional people in the market. Sometimes it is sellers and buyers themselves who cause consternation. Ever changing price demands, shifting definitions of what constitutes sellable area – although this is an entire article in and of itself – and time constraints placed on deals, can all be cases where the messenger is shot. Equally, most people can tell you a story of a case where – in their opinion - a broker acted in bad faith.
At any rate, I’m sure we can all agree that there are good, bad, and occasionally ugly practitioners within any industry, and property brokerage is no exception.
My initial argument should be clarified. Sellers can list their property with a maximum of three agencies. This has been the case for some time now, but only the contracts lodged officially are really going to be enforceable here. It remains very hard to police the actual number of agents listing a particular property. It is almost impossible to prevent agents from cold calling the various lists circulating around Dubai of potential sellers, aka property owners. For prospective buyers, be aware there may still be more than three companies selling the same property.Do your homework and you may find one is giving a better price than the others. Do not be fooled, however, by false promises of obviously low prices utilised by some agents. These are usually just ploys to have you contact a particular broker.
Legally speaking, I am sure many property lawyers will assert that you cannot standardise a contract which has so many potential variables. There will always be points wherein non-standard clauses will be required or requested. How RERA deals with this will be interesting. The most obvious route to dealing with this would be to allow some sort of addendum to the agreement. In truth, the most likely result of any standardisation will be an increasing number of side agreements will appear alongside the official contract.
So, what about the positives?
In theory, this legislation should lead to more professionalism in the way agents approach every deal. Not only can they speak with more confidence about holding a listing with only two other agencies maximum, but also that additional agents are discouraged from gazumping sales. Uniformity of contracts implies that a uniformity of sales information available should follow suit. Hopefully now you won’t see as much disparity between agents selling the same property. The difference will be down to presentation, so with a bit of luck agencies will be more careful in presenting a property well, and being able to answer any questions raised.
A quicker sale process and documentation phase should be another positive impact of these laws. If all documentation is now standardised, there should be no hidden unpleasantness in agreements. The document for the actual sale & purchase agreement (form F) is apparently being revised. But forms relating to the agent & seller (form A), and buyer & agent (form B), should remain unchanged. Given the lack of buyers and sellers who use conveyancing professionals in Dubai, this could at least provide some measure of protection. Of course, in sizeable transactions like property purchases, it is wise to take legal advice whenever possible.
Despite the size of many deals, every penny still counts. One of the biggest transaction costs is transfer fees, and related items such as agency fees and developer NOC’s. Standard contracts should ensure greater transparency at earlier stages of negotiation on exactly who will pay which charges. This would be a very welcome and extremely positive result of the rulings.
Just as banks have adapted to the new mortgage caps imposed, agencies now have to focus even more on points of differentiation. Unlike the mortgage caps though, I assume, these rules have been issued on the basis of complaints about the lack of standardised structure to sales. This implies the rules were based upon market demand, which is a good thing. Agents should be encouraged by this legislation.
Professionalism and excellent customer service, and the goodwill they bring with them, are prime factors in winning new business. So perhaps the best agencies will be the ones who don’t bombard property owners with phone calls to sell their property. For brokers, at times you’re only as good as your listings, and who are the companies who get the most exclusive listings? The ones who win the hearts and minds of their customers.
Shehzad H Abbasi
Shehzad was the Chief Operating Officer of Galadari Investment Office from 2005-2012, and now serves the boardsof several major entities in the UAE as a strategy &reputation management consultant.
ravenous vultures, springs to mind..