Brokers in Real Estate Transactions

Brokers in Real Estate Transactions

1. Real Estate brokers’ involvement in property transactions in the UAE is not required by law.
2. This is unlike what some may insist on.
3. In other words, there is no law, which requires parties to operate only through real estate brokers.
4. This means that parties can transact directly and draft their own agreements.
5. Furthermore, in Dubai, if parties deal without a broker, they do not need to use a template Dubai Land Department (DLD) forms.
6. As such, they have more freedom and flexibility, not to mention saving on the broker’s commission.
7. Importantly, this applies not only for buying and selling properties, but also for renting.

Broker's Commissions

1. Commissions for real estate brokers in the U.A.E. are not regulated by law.
2. This means, among other things, that there is no law requiring a payment of a broker’s commission.
3. Nor is there a law setting a minimum percentage for the commission.
4. Therefore, it is entirely for the parties to decide 1) what the commission should be and 2) how it should be calculated.
5. For example, it could either be 1) a percentage or 2) a lump sum.
6. Similarly, the commission could be paid either:
   1. only when the transaction is complete, or
   2. in the event the transactions is not complete, a proportionate compensation for the work conducted by the broker, as of that time.
7. In practice, in Dubai, brokers tend to charge 2% as their commission, and usually payable by the buyer.
8. However, as there is no law regulating commissions, there are no specific guidelines as to what brokers can and cannot do, in connection with representing parties and charging their commissions.