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The Dubai real estate market has seen a number of regulations being implemented from time to time to ensure transparency and professionalism, yet industry experts are complaining about non-compliance of stakeholders.
Marwan Bin Ghalaita, CEO, Real Estate Regula tory Agency (Rera), believes stakeholders in the market should know what they can and can't do. ''We always listen to the industry to enhance our services and try to implement regulations that will help the market,'' he said at a recent press conference. ''We don't regulate for the sake of regulations because nobody likes too much of it.''
But Bin Ghalaita agrees not everyone adheres to regulations. He says it is not so much a question of whether the regulations are working or need enhancement, as of awareness.
''We need to deliver the messages clearly, because after seven years of regulations, thousands of emails, and educational initiatives in the market, I still receive calls from agents who want to sell me a property, even though direct marketing is not allowed,'' he says.
It isn't always brokers who bend rules from time to time. Clients also sometimes get in the way of doing things correctly. A major problem with sellers is that they refuse to sign the Rera-provided form A, which sets out the conditions for a relationship between the agent and the seller. It also ensures the agent adheres to the code of ethics of real estate brokers and that the seller declares vital property information.
Laura Choueri, Founder and CEO, Choueri Real Estate, says: ''A lot of people who do not live here are simply not aware. Others who do just don't want to comply because there are a lot of brokers who don't go by the book, even though there are regulations.''
She calls upon Rera to create more awareness, especially among sellers, and to help promote better synergy among agents.
''This is the only [real estate] industry I know of that is not working together,'' adds Choueri. ''If you go to the US, it's a team effort. Although we're a younger market, there has to be a more ethical collaboration between brokers to push out people who don't comply.''
Bin Ghalaita concedes his communication team in Rera can't reach everyone. ''We need to work more on education and we need more marketing campaigns. So I rely on portals and real estate agents to send messages to the market.''
Making it mandatory
However, Mario Volpi, Managing Director, Ocean View Real Estate, emphasizes on the importance of the form A to safeguard and protect the interest of all parties. ''The fundamentals need to be in place and getting a form signed by the owner adds clarity and provides the basis for how an agent is supposed to work alongside the seller,'' says Volpi.
''Rera states that we have to use form A, but sellers do not always abide by the rules. How can we move forward without the cooperation of all parties?''
He questions the aversion of sellers to signing the form when the same rules apply for renting a car, or buying telecommunications services from du or Etisalat. ''Do we refuse to sign? Of course not, so I do not see what the problem is with some owners to provide correct information and signed paperwork,'' says Volpi.
He believes the authorities need to make the form mandatory. ''Otherwise, we'll continue to have a property market that believes it is in the premier league, but in reality lies in the lower divisions and has too many grey areas.''
''Clarity and transparency is often clouded by differing shades of opaqueness. We do the best we can, but it will never improve without government intervention and accountability.''
But Bin Ghalaita is of the opinion that the adoption of form A should be market driven. ''The industry needs to regulate itself,'' he says. ''If sellers get turned away by everyone, their property won't be listed, so they don't have a choice but to sign.''
Bin Ghalaita proposes that the industry should follow code of conduct, which prescribes that sellers who refuse to sign form A will not receive any help from those concerned. ''Maybe we need to run a campaign, something like 'don't list it if you don't have form A' or 'don't list if you don't sign it','' he says.
Refusing to take on non signing clients, of course, results in a loss of business. However, most of the established firms heed Rera's call for self-regulation.
Adrian Popica, Assistant Manager — Residential Sales and Leasing, Better Homes, says his firm has a strict policy of not advertising without a signed form A. ''It is illegal to advertise a property without having form A signed by the seller and broker,'' he says. ''However, the seller can sign form A with up to three brokers and any party can terminate the agreement with a notice of seven days.
''Form A is relatively new [introduced in May] and it is possible that the legality associated with it is misunderstood. We [brokers] have to take some responsibility and educate the client about the rules and regulations. Statistically, about 20 per cent of owners are cautious about signing the form. However, once it is explained, most of them are happy to provide the information and sign.''
Cecilia Reinaldo, Managing Director, Fine and Country Middle East, adds that only inferior sales agents let sellers get away without signing. ''If agents can motivate sellers to understand your business objectives, they will sign anything,'' she says. ''If sellers are not prepared to sign a listing agreement, then the agent should seriously consider walking away, because a relationship that isn't clear from the beginning will never come to a successful closure. Because of agents who are afraid to say no and who list without documents, portals are filled with wrong information and misleading listings.''
Another bone of contention in the industry is the practice of multiple listings. Many agents believe that exclusivity would lead to a more professional environment. One reason sellers are tempted to list with several brokers is the fact that databases are widely available, explains Reinaldo.
''Owners receive so many calls on a daily basis from different agencies, despite the fact that Rera does not approve unsolicited calls.''
Volpi says there is a need to overhaul the way property is marketed so owners wishing to list exclusively will enter into an agreement with an agent for a fee and a fixed period of time. Moreover, owners who wish to list with more than one agency should be able to do so for an unlimited time frame, but be charged a higher fee and will only pay the agent that actually sold the property.
''These two scenarios are the only way Dubai real estate can move forward with a level of service and professionalism,'' says Volpi, adding that it would take time to educate sellers.
While many agents agree that the solution lies in the emirate adopting a multiple listings system (MLS), others say they will have none of it.
''When we started the MLS two years back, we said we would put all listings under a single agent,'' says Bin Ghalaita. ''But the agents came to me and said 'please don't implement this because owners keep changing their minds and are not giving us exclusivity'. Why? Because it's new.''
Bin Ghalaita is referring to Simsari, Dubai Land Department's (DLD) version of MLS. Today, the initial concept runs under eMart, which is used by only a few real estate professionals.
''I understand eMart is Rera's initiative to create a future MLS, which would then generate a special transaction reference for every listing linked to the government site. This would ensure by default that the listing is only from one agency,'' says Reinaldo. ''But this is a work in progress.''
Bin Ghalaita explains that he was hesitant to apply the MLS fully because he wants the market to adopt it on its own and not through Rera. But several routes are being considered to get it going.
''We have studied the MLS a lot,'' he says. ''If we want to implement it correctly, it should be exclusive, otherwise it won't work. I want to make sure that all properties listed on the portals would be registered with the DLD. Ownership should be known with areas and specifications correct and complete, and only then can we say no transactions can be made without MLS.''
Popica says that having MLS integrated with all the property portals will provide greater transparency and reduce the number of agents and sellers bypassing form A. ''It will help distinguish between the real and fake listings that have, unfortunately, become a reality. We feel tools such as MLS should become an industry standard to ensure the client receives information and advice that is reliable and trusted.''
But Volpi believes Dubai isn't ready for it yet.
''There are too many unscrupulous agents within the sector and their low business standards will prevent the transparency required to go ahead with this,'' says Volpi. ''We already operate a very loose MLS with all the online property portals advertising the available stock. Agents are free to request a collaboration with other agents and split the fee.''
However, Bin Ghalaita reassures the market that MLS will be introduced, adding that investors are already offering exclusivity. ''If we apply it 100 per cent even if the property gets listed elsewhere, no one will be able to sell or rent it without the MLS number,'' he says. ''It will be obligatory to sign form A, or there won't be a number. But this has not been implemented yet.''
Reinaldo welcomes the implementation of MLS because it will protect the interests of clients—both sellers and buyers.
''Currently, they don't fully comprehend what they can do and can't do and it's open to a lot of interpretation,'' says Reinaldo.
''A listing that is not exclusive is open to attract the lowest possible price rather than the best one, since all agents will be working for the buyer, persuading the seller to bring the price down as low as possible.
''Once a listing is controlled, both sides are bound to get the best possible price. And similar to many countries, including the US and Canada, each broker is rewarded by the party being represented. This would also reduce the number of agencies in the market, as only those with a proven track record would be able to secure the exclusive listing mandate.''
On the other hand, buyers will also have to be responsible for their decisions. ''For example, carrying out a survey on a property is always the job of the buyer,'' says Volpi.
The industry's code of ethics demands that agents conduct due diligence on behalf of the client to ensure transparent and lawful transactions, says Popica. ''We feel the broker should adopt an advisory role and guide the client throughout the transaction.''
Source: Nicole Walter, Special to Property Weekly