If you’re looking to invest in Dubai but dread the transaction part, you’re not alone. Throughout this article, we will walk you through a typical real estate transaction in this vibrant city to help you understand what to expect from this process.
Who is involved in a real estate transaction?
In the successful closing of a real estate transaction, the following parties are involved:
- Real estate agent: Typically, the buyer and seller will each have their own agent to help them through the steps of transferring the property.
- Buyer: the buyer usually works with a real estate agent and can be asked to sign a Buyer-Broker agreement, consenting to work only with that agent. The buyer’s agent helps the buyer negotiate through buying a home and preparing the purchase offer.
- Seller: after listing their home for sale with the help of a real estate agency, the seller authorizes the agent to market their home and negotiate a satisfactory sale. In some cases, the seller is the developer of the property. This is more common with off-plan projects but it can also happen with ready units.
The buyer of a property in the primary market (directly from the developer) must provide only a copy of their passport to begin with the process.
If a company is purchasing the property, the following documents must be provided to the developer:
- Articles of Incorporation
- Registration Certificate
- POA of the person signing on behalf of the company
- Board of Directors Resolution.
In either of these cases, the person or company will sign a property reservation contract with the developer.
Upon handover, the buyer must register their new property at the Govt. of Dubai Land Department to acquire a title deed. The buyer will be responsible for paying the additional fees for this document (it is usually 4% of the property value). Keep in mind, the property must be fully paid to obtain a title deed.
The prospective buyer and seller will usually enter into an MOU (Memorandum of Understanding) where the buyer commits to purchasing the property, and the seller commits to selling it. During a transaction the buyer must pay an initial booking deposit (the amount depends on the property’s value) to the seller. If the buyer retires from the transaction, they forfeit their booking deposit. If the seller withdraws, they refund the deposit amount to the buyer.
There are four payment installment methods, and discounts are applicable for paying more upfront:
- Reservation Fee = 10% plus further installments
- Reservation Fee = 30% plus further installments
- Reservation Fee = 50% plus further installments
- 100% paid on reservation.
A receipt will be sent to the buyer when an installment is received.
Developers may charge for maintenance at rates varying from AED 2 to AED 8 per year per sq. ft. of the built-up area for the unit purchased. Developers may also charge for parking, and rates go from AED 2000 to AED 4000 per parking bay (this is a one-time charge).
Selling the Purchased Property
If you want to sell your property, you will now have to look at the process from the seller’s point of view. These are some aspects to keep in mind when the tables turn:
- The usual charges of real estate agents for a property’s sale start at 2% of the property’s value.
- The property buyer and seller do not need to be in Dubai for the transfer to happen. As long as the power of attorneys are properly notarized and appointed, the transaction can continue with no issues.
- If you obtained your residency visa through your property, your stay will remain valid from 30 to 45 days after the property is sold to a new buyer.
We have based this guide on a typical Dubai real estate transaction. However, the steps may vary depending on your situation and the market you choose to buy in (primary or secondary). We encourage you to speak with one of our agents for a personalized walkthrough and one-on-one real estate advice.
Get in touch with us and begin your journey in Dubai: +971 50 195 2688