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In any highly competitive property market around the world real estate agents compete for leads. As some agencies struggle to attract customers, they resort to advertising fake properties that are priced below the market. In Dubai, this behaviour is becoming more commonplace and we need to look at how it can be dealt with.
While the Real Estate Regulatory Agency (Rera) does its best to deal with this issue, more can still be done to minimize this behaviour. I encourage Rera to randomly call agents who have advertised properties in the newspaper or online and review the documentation to confirm that they have been authorised by the rightful owner of the property to advertise it at that price. If wayward agencies are penalised more severely and, in extreme cases, have their Rera licence cancelled, it would be a powerful deterrent, dramatically reducing the number of agents misrepresenting property prices in the emirate.
Clients and legitimate agencies alike are victims of this growing trend. Clients suffer because the property price they ultimately pay has been manipulated, while legitimate property agencies suffer for investing time and money into regulating their property listings, demoralizing honest agents.
Then there are operational costs, which include staff and administration support required to produce quality images and accurate floor plans, develop client relationships and verify listing content and property details. This is in addition to the training of agents and the process of legal documentation to substantiate the listed property.
So what is a fake listing?
It's an underhand tool that will potentially generate business for the agent, whereby the property is either invented or related details are copied or altered, and can include any kind of real estate that will generate interest. Lured primarily by the bargain price, clients call to inquire and the agent convinces the caller the property is no longer available and attempts to sell something else.
While it is not always easy to spot a fake listing, one of the most obvious giveaways is a price that's too good to be true. The most common forms of misrepresentation are:
1) Listing a genuine property from a legitimate seller but at a substantially lower rate than the seller agreed. Once a client calls, the agent notifies the seller and negotiates to bring the price down, while pushing the buyer to pay more.
2) Copying an existing property listing advertised by a legitimate agency but dropping the price by about 10 per cent. When a client calls, the scheming agent gets in touch with the legitimate agent to offer a buyer if the latter is willing to split the commission.
3) Inventing a listing entirely, mainly in a high-demand area at a bargain price to attract interested buyers who are told the property has gone. Callers are then encouraged to consider other properties available with the agent.
How can clients protect themselves?
A good place to start is by conducting due diligence on the agency or agent listing a property and following these key tips:
1) Deal with reputable property agencies that can confirm their listing procedures are backed by legal documentation to support their properties: proof of ownership by the seller, a copy of the owner's passport and Rera's Form A, which regulates the agreed price between the seller and property agency.
2) Be wary of prices that are too good to be true.
3) Report suspicious behaviour or malpractice to Rera if the agency or agent does not respond.
The majority of Dubai's real estate companies do their best to follow the rules set by Rera, however, there are a growing number of agents and agencies that are misrepresenting prices to the detriment of customers and honest agents alike.
This behaviour can be greatly reduced or eliminated entirely if Rera, legitimate agencies and customers work together.
Source: Darko Dumancic, Special to Property Weekly
The writer is a Residential Consultant at Better Homes. He has more than ten years of experience in sales, business development and customer service in several countries. Dumancic specialises in Dubai Marina, Palm Jumeirah and Emirates Living