Is It Time to End Commission Only Contracts for Real Estate Brokers? Many brokers work on commission only – meaning zero salary. Given the competitive nature of the industry, many go several months without earning anything.
By Anil Bhoyrul
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Nobody can doubt the sheer scale and size of the real estate brokers industry in Dubai. At the last count, there are 5,933 active real estate brokers and 2,285 registered brokerage offices, according to the Dubai Land Department. These numbers reflect the dynamic nature of Dubai's real estate market, which attracts both brokers and investors.
It's hardly surprising: In the last week of June, the Dubai real estate sector recorded AED17.73bn ($4.8bn) of transactions last week, according to data from the Land Department. In total there were 4,109 sales transactions recorded between June 23 and June 27.
Among the most expensive sales transactions listed on the Land Department website were: an apartment in Balqais Residences in Palm Jumeirah sold for AED29m ($7.9m); an apartment in The Royal Atlantis Resort and Residences in Palm Jumeirah sold for AED11.3m ($3.1m); an apartment in Bayview Apartment in Dubai Harbour sold for AED11m ($3m).
So it's obvious why literally thousands of people – many from abroad – are flocking to Dubai for a slice of the action. Real estate brokers have never been more active.
But are they getting a fair deal? Many brokers work on commission only – meaning zero salary. Given the competitive nature of the industry, many go several months without earning anything. That only makes them more desperate to close deals, not always acting in the best interests of their client.
Worse still, many brokerages now charge their employees (who don't get a salary) a joining fee of over $1000. Others charge for the use of a desk and phone and other basic essentials. Never mind zero salary. I know many brokers who end up on negative income each month.
That is, we are told, part of the game. It's the risk you take in the pursuit of earning big bucks. But should it be this way? Isn't it time the conversation is opening on whether new regulation is needed, and brokers are paid a minimum guaranteed salary?
I believe doing so would not only be in the interests of brokers, but ultimately of buyers and sellers.
