Although most of us part
of the Dubai real estate brokerage sector have been skeptical and none
accepting to the current changes feeling the heat of the challenge and the
frustration of the possibilities, we need to admit that change is most needed
and when accepted becomes most beneficial. This is the case with the newly
publicized permit system and MLS implementation, although it is part of a
legislation that has been there for some time.
The legislation not only
changes the dynamics of our market which is definitely needed however also
changes the CULTURE. The culture of buyer trying to abuse the seller and the
agent, the seller trying the same with the buyer and the agent, the agent going
ahead with his own game to abuse the buyer and the seller. As a result agents
are seen as none professionals, none transparent and our business becomes less
sustainable. Such market activity pushes professionals away from the market and
the industry.
Are brokers the problem.
Not really, brokers are victims as much as guilty.
When a buyer runs all
through the market to get the cheapest listing, and negotiates the cheapest
commission this is the result.
When a seller lists the
property with all agents in the market and negotiates the cheapest fee this is
the result.
The result is an agent who
would either need to play the market game or sit on the side and ethically
watch. Malpractice only encourages more malpractice.
An agent will need to drop
the fee (thus offer a less quality service) charge the other party under the
table, live a conflict of interest and get his fee asif he is steeling, drop
the price to the least without negotiation as he is afraid that another broker
down the road will start at a lower asking price and get the deal (sometimes
start at an asking price which is below what the seller would accept). The
seller still gets a fake sense of the market as 50 offers are sent to him while
it is the same buyer circling the agents the property is listed with. The buyer
thinks that there are 50 similar properties on the market while it is the same
property listed with 50 agents 50 times.
Bottom line, transparent
brokers would be called naïve.
Seller’s and buyers
believe that such practices are the norm and feel that they should be part of
the common practice. New buyers and sellers who are used to more regulated
markets feel none comfort in entering the market.
Let’s look calmly at the
pros and cons of the permit and MLS system’s implementation.
To start with permits:
There has been a flood of
brokers, and developers who would falsely market a property online, through
social media or any other digital forms. Over promising on a property that you
are trying to offer as well. If you are a descent strait forward agent and you
market the same property for what it is, it won’t appeal to the market. Your
money is badly spent, your add has no value. This will all be organized with
time. Nothing is born perfect however it all sits in its place with time.
To market on any other
form of media you needed a permit at all time prior to the new publicity drive,
it is now only simpler as you can do it online.
Here we get to the MLS
system analysis and at the same time we will discuss all fees.
Don’t we all prefer to
only take exclusive listings, or at least listings not distributed to more than
a handful of agents. Many agents feel currently that such a privilege is not
possible, to a limit that they rarely ask for a mandate to market or any kind
of exclusivity. How many times have a broker called a seller and the seller
mentioned that he is not ready to sign any documents (come back to me when you
have an offer). Is it acceptable that you market your neighbors car without
legal authorization, surely not, so how will you be able to sell someone’s
house which is worth millions without an authorization.
When sellers know that
hundreds of agents accept to market their property without any authorization
where is the urgency to sign any documentation. Such practices create a bad
culture. And currently it is a cycle of that.
When seller’s know that
they can list only with one agent or a max of 3, and that the property cannot
be marketed except if proper documentation is signed, the seller will sign the
documentation, as a result what agents currently feel is a privilege will
become the norm.
The same goes for a buyer.
We will reach a culture
and an atmosphere of transparency with less efforts. All agents need to thank
Dubai Land department and the real estate regulatory authority for such an
approach. And yes many are skeptical as this has been tried and there has been
challenges. Gents our market has done in 10 years what took other markets a
hundred to do. Are we perfect, definitely not, are we taking a giant step
towards better practices; we surely are.
Our current business
models are not sustainable as they are. Real estate brokering should be a
career not a money making few years in someone’s life. Real estate brokerages
should be companies for life not silos which generate profit in good days and
lose money in bad ones with revolving doors.
Our market should move to
a sustainable model sooner or later.
Commissions should be paid
by the party the broker represents. Commissions rates for sales should be at 5
to 7% similar to many other markets. An agent should be a buyer’s agent or a
seller’s agent thus that partys’ window to real estate. Solicitors should be
part of our everyday life. Escrow accounts should be opened for each
transaction.
Each ethical broker should
be able to be proud of what he does, rather than live with a feeling that he is
at all times doing something illegal. Every ethical professional broker should
live a decent life rather than struggle for the coming deal. Brokerage firms
should be able to afford to build careers, retirement plans, investment
initiatives for employees, growing businesses which make it through the good
times and bad times.
Fees; it is surely evident
that if every firm looks at the current number of listings they have and the
fee structure in place panic will fill the market. Any agency with 2000
listings would do a simple calculation and notice that they need 2 million AED
to be able to get permits for their listings. Ladies and Gents no average size agency
should have or be able to maintain more than 100 to 200 listings. 200 listings
only per agency with only 1000 agencies in the market means that 20% of all the
properties in the market are on offer.
Other questions to be
asked: Why should a listing stay on the market for 1 year. Why should a listing
which is 30% higher than the going rate of similar properties be on the market.
Wouldn’t we rather pay
104AED more per listing per month and make sure that there is a government body
overlooking our and the investors interest.
Wouldn’t we prefer to have
customers think about professionals in our industry similar to how they view
architects, doctors, plumbers, teachers, painters, tailors and all other pros.
Hand in hand towards a
better culture. It’s a business not for everyone. Professionals shall thrive.
