As in any field of trade, entering the international market in real estate opens up new prospects and opportunities to earn money. However, many brokers don't understand where to start when it comes to selling real estate abroad, especially in a place like Dubai. In this article, we will look at a few key aspects that will help one decide to take the first step.
The main fears of brokers
Many brokers from other countries are wary of entering the Dubai market and selling real estate by the sea despite the fact that they can earn significant commissions for such deals. The main obstacles for brokers are:
- Legal aspects of working in the UAE.
Dubai has strict legal laws, so many novice brokers are afraid of running into trouble because of ignorance of the peculiarities of local legislation.
- Difficulties in establishing direct contact with real estate developers.
Usually newcomers do not inspire confidence in reliable developers. Often developers either work with already proven brokers or trust their marketing department.
- Ignorance of the market, the peculiarities of different neighborhoods, the transaction process, and the payment process.
Brokers often have to answer client questions regarding paperwork, tax obligations, administrative fees, etc. Without the right knowledge, this is not easy to do.
3 ways to solve these problems
1) Going the long way on your own
The most obvious and direct path that brokers choose is to start a private practice in Dubai. At first glance, there is nothing complicated about it: you can move, get a license, and start operating. However, such work provides certain features and hides many pitfalls. Newcomer to the real estate market in the UAE is difficult to independently build up a client base from scratch, to select suitable options in an unfamiliar market and take into account the nuances of local legislation.
In today's world the most expensive resource is time. Of course, you can try to figure out all the nuances on your own and, in the end, come to a positive result. However, wasted time, nerves and money, most often not worth such a deal.
Pros of independent work:
you do not share the commission with the agency and take all the profit to yourself;
you do not risk running into an unscrupulous agency and losing several months of work for nothing;
you build your own work schedule without looking at the management.
Minuses of independent work:
The absence of an experienced mentor to whom you can turn to for questions that arise;
the need to learn a new market where you are not an expert and compete with brokers who have been working here much longer;
a high probability of failing to take into account some of the important legal aspects of working in the UAE and "losing face" in front of the client;
all responsibility and advertising costs fall on the shoulders of a private broker, i.e. yours.
2) Use the services of a real estate agency
With the help of an agency, you can maximize the ease of selling real estate in Dubai, especially in the first stages. You can find a real estate agency that is already operating in Dubai and hand over the client to them. They will take the deal to the final stages and you will get your commission. Sounds tempting, but it is not that simple.
Advantages of working through an agency:
- You will have people with you who you can always turn to for professional advice;
- in general, agencies have all the templates of the necessary documents, so you will not need to spend a lot of time filling them out.
- no need to spend time and money on registration and legalization;
- maximum reduction of risks and liability.
Minuses of working through an agency:
as with any employment you will have to comply with all the regulations and standards that exist in the agency;
it will take time for the agency to trust you to close large deals;
you share the profits with the agency.
How and how much you can earn working through an agency:
It is important to understand that a broker's income is made up only of the commission for selling real estate. No salary is expected in the UAE, in most cases. However, there is good news: in Dubai, the commission that the broker will receive as a result of a successful transaction is many times higher than in Russia.
If we are talking about a large agency that has a saport department, marketing, legal department, etc., then the approximate range of commission that the broker will receive will be approximately 20-30%.
If it is a medium sized company, then most likely the commission the broker will receive will range in the neighborhood of 50%.
If it's a small, private agency, the commission on your personal completed transactions could be as high as 70%.
3) Take advantage of various services for brokers
If you have a large base of clients in your own city, in which you are working, you should not burn bridges and immediately move to the UAE. To start with, you can use special platforms for realtors and start working remotely. It is with the help of such services that you will be able to hand over the client to a professional broker, while keeping most of the profits.
What is the most profitable way for a broker?
Each broker chooses their own way of entering the real estate market in Dubai. Some need stability and support, so the choice falls on working with a real estate agency. Others are looking for freedom and decide to work independently. The third think about minimizing risks and keeping most of the profit and use special platforms.
Let's compare how much a broker can earn by working with a local real estate agency and working independently on a platform.
Case of buying an apartment through a local agency
A Russian-speaking client approached a Russian broker in January 2023 with a request to find an option for a profitable investment in Dubai at one of the most popular new building launches. In turn, the Russian agency approached one of the promoted agencies in Dubai with a Russian funder. Usually this agency pays 30% of commission for bringing a "live" client and concludes deals very quickly. Thanks to the efforts of this agency, at the start of sales managed to "pick up" a good apartment with 1 bedroom, costing 1642 000 AED.
The commission from the developer on this deal amounted to 4% of the value, i.e. 1642000*4% = 65,680 AED.
Accordingly, the Russian broker received 30% of this amount, i.e. 65,680*30% = 19,704 AED, which amounted to about 5,400 USD.
How much the broker would have earned through the platform
When selling to his client a similar apartment in a new complex of developer Meraas by Housebook (e.g. Central Park Plaza) under scheme number 2 - "Full Client Management", this Russian broker would have received 65% of the commission.
Thus his income would be 65,680*65% = 42,692 AED or 11,700 USD, which is 2 times more than the classic affiliate scheme.
We have told you about the three main ways to enter the real estate market in Dubai. Orient on your experience, personal preferences, knowledge and choose any convenient way for you.