Module 4

Sales Process & Agreements

Objectives

Introducing:
 Sales process/cycle.
 Sales models.
 Important general knowledge.

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 Sales Process

How does the real estate sales process proceed?

Typically, a starting point is when a real estate owner decides to sell.

He or she tries to get names of brokers who are experienced and successful
in selling the given type of property.

The real estate owner interviews brokers, discusses the situation, and
offers
a listing to one or sometimes more than one broker.

The owner becomes a principal.

The broker is an agent of the principal.

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 What is a listing?

A listing is a contract between an owner and a broker

authorizing the broker to find a buyer or a tenant who is
willing to buy or lease the property under the terms of the
listing.

Must a listing be in writing?

Must it have a fixed termination or expiration date?

What are the different types of listings?

1. Exclusive Listings (only 1 broker)

2. Open Listings (more than 1 broker)

What are the differences between them?

In each type, who gets the commission?

If the listing is exclusive with one agent,

the system won’t allow another listing
agreement (contract A) to be created for
the duration of the exclusivity period.

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Why would an owner give a broker an exclusive listing?

This type of listing guarantees the broker gets the commission if the property sells
regardless of who sells it.

It gives the broker more incentive to sell, with less risk of wasted time and money.

With non-exclusive listings, a broker may be reluctant to spend time or money to

advertise or show the property because another broker may sell the property and
collect the commission.

THE AGENT WHO HAS VALID AND CURRENT “EXCLUSIVE” AGREEMENTS WITH
SELLERS… WILL ATTRACT MORE SALES AS THE BUYERS AND THEIR AGENTS WILL
KNOW, YOUR SELLERS ARE SERIOUS AND HAVE LISTENED TO YOUR ADVICE.

 When does a listing expire?

 What is the maximum validity for a listing?

 Are there other types of listings?

One of these is called net listing, where the broker’s commission is the amount
by which the selling price exceeds an agreed-upon (net) price to the seller (Top
off commission).

This is illegal because it can create a conflict of interest for the broker, at the
same time it is against the code of ethics.

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 What is the listing price of real estate?

The listing price, as the name implies, is the price put on a property when it
is listed or placed in the market.
This price is chosen by the seller, usually with advice from the broker.

It is the same as the asking price, that is, the price the seller hopes to get,
it is generally considered a starting point for negotiations between the seller
and a prospective buyer and consequently may be set artificially high.

What is the agreement between Seller and Broker? Contract A

LISTING AGENT

. Meet ……

The Seller
. After completing Contract A
on Dubai Broker’s App , a
The Listing Agent link to access Contract A is
does their sent to the Seller. If
homework (CMA) approved by the Seller, the
& research…… contract is considered valid
and electronic signature is
honored.

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 Once Contract A is signed between Seller and Broker, the Broker can then
advertise/market the property after applying for and receiving the advertising
permit from RERA through Trakheesi or Dubai Brokers App.

Cancellation and extension of Contract A can be done through the Dubai

Brokers App.

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 You can then begin marketing the property

FOR SALE
By-Law No. (85) of 2006, Chapter (4) Article (26) states The Brokerage
contract shall be in writing and shall state the names of the contracting
parties, specifications of the Real Property and the Brokerage conditions.
The contract shall be registered in the real estate register.

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 A FEW tips …….

BROKERS SHOULD UPDATE THEIR OWN E-MAILS AND MOBILE NUMBERS IN

TRAKHEESI SO THEY CAN MANAGE THEIR CLIENTS’ REQUESTS ON THE
DUBAI BROKERS APP.

A FEW tips …….

MANAGING THE VOLUME OF LISTINGS IS UP TO YOU, THE LISTING BROKER.

HOWEVER DO NOT MISLEAD SELLERS, DO NOT MISLEAD BUYERS OR OTHER
BROKERS. IF YOU CANNOT MANAGE THE LISTING EFFECTIVELY TO GET THE
JOB DONE, DO NOT LIST THE PROPERTY.
HAVE THE INTEGRITY TO WALK AWAY!

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 Who is a qualified buyer?

He or she is someone,
• Of legal age (21 years or older)
• Mentally capable
who is in the market (that is, who is willing or seeking to buy), who
gives some evidence of being financially able to buy a property
within a specific price range.

What is the agreement between Buyer and Broker? Contract B.

Contract B is accessible through the Dubai Brokers App:

• Buyer sends the request “to buy” to Broker.
• Broker fills out and completes contract B.
• The link to approve contract B is sent to the Buyer by sms or email (
for international buyers).

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 A FEW tips …….

THE QUICKER YOU SECURE YOUR BUYER’S AGREEMENTS ON THE BROKERS

APP…. THE BETTER YOUR BUSINESS WILL BE.
BUYER WILL BE ABLE TO LIST WITH MANY AGENTS.
YOUR SUCCESS DEPENDS ON skills, communication, trust, & their confidence
in YOU.

TAKE GOOD CARE OF YOUR ‘REAL’ BUYERS

Real Estate Sale Cycle

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 7. Contract
settles 1. We
and the list the Contract 1 Contract A
property property
is SOLD Seller & Seller’s Agent

THE REAL ESTATE

Contract 2 Contract B
6. A contract PROPERTY 2. We
attrac
exists on
the property
t Buyer & Buyer’s Agent
Buyers
SALE by
marketi
ng
CYCLE Contract 3 Contract F
Buyer & Seller
5. Offer is 3. We
accepted qualify
by the potenti
Seller al
Buyers
4. Buyer
makes an
Offer
to Buy

The Buyer’s Broker has communicated the request for the Listing (Seller’s) Agent to
prepare FORM F as an “offer”.

• The Listing Broker logs into the Dubai Brokers App, accesses contract B either by:
• Scanning the bar code assigned to contract B.
• Entering the QR number assigned to contract B.
• Selecting contract B from his/her pending contracts.
• If contract B is not available, the listing broker can add a buyer by:
• Inserting buyer’s passport number.
• Scanning buyer’s emirates ID.
• Selecting the buyer’s ID number from the system, if he/she happens to be an
existing owner in the system.

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At NO TIME will the Listing Broker/Seller be able to see the Buyer’s or his
broker’s details
NOR
The Buyer’s Broker/Buyer can see the Seller’s or his Listing broker’s details

UNTIL Contract F is signed and approved by BOTH PARTIES!

TRUST RULE APPLIES

• Valid contracts A and B are mandatory in order for the Seller’s broker to
initiate contract F.
• Upon approval of contract F by Buyer and Seller, “F” shall appear with most
of the information required already inserted:

• Property information will be fetched form Contract A.

• Owners information will be fetched from Contract A.
• Buyers information will be fetched from Contract B. However buyers information will appear in Contract F
only in case both contracts A & B are created by the same broker.
• Brokers information will be fetched from Contract B, in case both contracts are created by different brokers.
• If property is rented, tenancy information will be fetched form contract A.
• Commission of broker A will be fetched from contract A.
• Commission of broker B will be fetched from contract B .
• Documents will be cloned from both contracts A & B with no ability to edit, delete or update. However the
broker who will create contract F should have the ability to attach any additional required documents within
contract F.
Before final approval of contract F by sellers & Buyers, Sellers should not be able to view the buyers
• information & vice versa.

• Broker B should not be able to view sellers information before final approval of contract F by sellers & Buyers.

• Sellers & Buyers final approval of contract F should block the property.

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• Extra terms and conditions can be added to contract F as requested and formulated by
the parties.
• Contract F can be cancelled or extended subject to approval from both parties of the
agreement.
• Once contract F is signed by both parties, the property gets “flagged” in the system for
the “duration of reservation” until the property:

• either gets transferred from seller to buyer and buyer gets his title
deed/Oqood certificate
OR
• the transaction gets cancelled by the parties.

Sales Models

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 A. Cash Buyer – Mortgage Free Property

This is usually the fastest, easiest type of transaction

1. Buyer and Seller sign Form F:

• Buyer submits a Booking Deposit.
• Seller issues a Security Cheque against the booking deposit.

2. Seller applies for the NOC from Master Developer.

3. Buyer and Seller go to Registration Trustee to transfer the property Title
Deed/Oqood.

If a property does not have a Title Deed:

Seller must apply and pay 4% of the original price of the property to issue
the original Title Deed before the Title Deed can be transferred to the Buyer.

If a property is “off plan”; the Seller must register Oqood and pay 4% of
selling price
before he can sell the property.

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 B. Cash Buyer – Mortgaged Property
Cash Buyer- Delayed Sale and/or Off Plan Property

• When there is an existing mortgage/loan on the property, the outstanding loan amount must be
settled prior to transfer of Title Deed to the Buyer.

Step1- Blocking of the Property.

This is done to secure the payments made by the Buyer when settling the mortgage of the Seller on a
mortgaged property or when the Buyer settles the pending payments on delayed sale and/or off plan
properties, to the developer on behalf of the Seller).

Required documents:
• Liability letter from bank/developer (in Arabic) addressed to DLD. It should include the following:
– Details of the property as mentioned on the title deed.
– Outstanding balance of the Seller’s mortgage on a mortgaged property (from the bank) or
outstanding balance of the Seller’s payments on delayed sale or off plan properties ( from the
developer).
– An undertaking statement from the bank to release the mortgage once the
outstanding balance of the mortgage on the property is settled. This should be stated and
included in the liability letter.
Liability Letter has a fixed validity period upon which time, the Buyer should be advised to be ready
to settle the mortgage by the end of this validity period, which could range between 7 – 15 days.
The Bank may charge for early settlement of the loan, Seller pays for this as well, unless
agreed differently between parties.

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• Form F signed by the Seller and Buyer.

• Updated copy of the title deed.

• No objection certificate (NOC) from developer (before submitting the cheques).
• Emirates ID ( if Seller and Buyer are residents of the UAE/Original passport ( if
Seller and Buyer are not residents of the UAE).
• The following Manager cheques issued by the Buyer distributed as follows:
• A manager cheque payable to the bank to settle the outstanding
mortgage.
• A manager cheque payable to the Seller for the remaining balance.
• A manager cheque payable to Dubai Land Department for the transfer and
registration fees split as follows (unless agreed otherwise):
• Transfer fee for Seller = 2% + AED 20
• Transfer Fee for Buyer = 2% + AED 20
• Registration fees for Buyer:
For land: AED 250 (Ownership) + 20 + 100 (Map) + 20 = 390
For unit: AED 250 (Ownership) + 20 + 250 (Map) + 20 = 540
Plus admin fees of AED 1000 to DLD in order to reserve/block the property for
30 days.

RT Fees:

• AED 4,000 for completed property, if the price of the property is AED 500,000 or more. If the
property is off-plan, the fee is AED 5,000.

• AED 2,000 if the price of the property is less than AED 500,000. If the property is off-plan, the
fee is AED 3,500.

The Seller takes the check payable to the bank to release the mortgage and obtain the
clearance/release letters. Both Seller and Buyer may be required to be present at the bank.

Step 2-Unblocking of the Property and Transfer of Ownership from Seller to Buyer.
Both Parties return to registration trustee/DLD to unblock the property to complete the sale
and
issue new title deed in the name of the Buyer.

Required Documents:

• Original title deed.

• Mortgage release Letters from the bank to DLD, Developer and Seller.
DLD Fees:

• AED 1,290 mortgage release fees. (Fees may differ for Islamic banks).

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 C. Mortgaged Buyer – Mortgage Free Property

1. Buyer applies for financing.

– Recommend that Buyers have a pre-approval in place prior to looking at
properties.
2. Buyer and Seller sign form F:
 Buyer submits a Booking Deposit.
 Seller issues a Security Cheque against the Booking Deposit.
3. The Buyer’s bank conducts valuation (appraisal) of property (at Buyer’s
expense).
4. Buyer’s bank issues Final Offer Letter to Buyer.
5. The Seller applies for NOC from Master Developer (both parties attend).
6. After NOC is issued:
– Buyer , Seller & Bank representative attend RT/DLD;
– Title Deed is transferred to the Buyer’s bank;
– Buyer’s bank holds the Title Deed of the property for the duration of the
loan.
7. The mortgage must be registered against the property by the bank (at
Buyer’s
expense) by paying 0.25% of the mortgage value to DLD.
Note: Buyer’s Bank requires valid proof of ownership (Title Deed/Oqood) prior to valuation of the
property.

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 D. Mortgaged Buyer – Mortgaged Property

D. MORTGAGED BUYER-MORTGAGED PROPERTY

1. Buyer and Seller sign Form F.
2. Buyer submits a Booking Deposit.
3. Seller issues a Security Cheque against the Booking Deposit.
4. Buyer’s bank conducts valuation of the property.
5. Buyer’s Bank issues Final Offer Letter to Buyer.
6. Seller applies for a Liability Letter from their bank (depends on each bank).
7. Once the Liability Letter is issued, it is sent to the Buyer’s bank.
8. Buyer’s bank will start the process of settling the existing mortgage.
9. Once existing Mortgage has been settled, original Title Deed held by the Seller’s
bank is released to the Buyer’s bank.
10. Seller requests NOC from Developer (both parties attend).
11. Seller submits a copy of the NOC to the Buyer's bank. The bank will then
prepare the final documentation for the transfer of the property.
12. Buyer, Seller, the Buyer's bank and the agent will meet at RT/DLD to transfer.
13. Buyer’s bank will either issue a cheque for the remaining amount to the Seller
or issue a Guarantee Letter for the same amount.
14. The Mortgage must be registered against the property by bank (paid by Buyer).
15. The Buyer's contribution will be paid to the Seller through a Manager's
Cheque on the day of transfer (for most banks).

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D. MORTGAGED BUYER-MORTGAGED PROPERTY (cont’d)
• No two transactions are the same.
• Broker must perform due diligence in order to protect yourself and your
client. – Make sure you are well informed of all the required documents of
your client, and each step of the process.
• Do not expose your client, yourself and your company to risk.
• Ask if you have any questions, never assume.

Important General Knowledge

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• What is the agreement between buyer and seller?
• What are the terms and conditions contained within this agreement?
• Who design the terms and conditions?
• Can those terms and conditions be changed?
• How long should the transaction take to be completed?
Is that fixed?
• Can it be extended?
• What will be the case if either of the contracting
parties back off?
• What is a role of the broker in all the above?

What is a contract? Is it legally binding?

It is an agreement between legally competent parties in which one party agrees

to do something (or not to do something) in return for consideration (payment)
from the other contracting party.

What is a breach of contract?

What are the consequences?

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Must a contract for the sale of real estate be in writing to be enforceable?

Yes.

Because of the economic importance of real estate, the law requires a contract
to be in writing to be enforceable.

A real estate contract must also include a description sufficient to locate the
property.

What is an addendum to a contract?

An addendum (plural: addenda) is something that is added as an

attachment.

What is an amendment to a contract?

It is a change, correction, or extension of an agreement that does not

change the basic thrust of the agreement.

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Is an amendment to a contract the same as an addendum?

No!

Usually, an addendum is prepared with the original contract, While

an amendment is a later change.

What is meant by a valid contract?

A void contract?

A valid contract has legally binding

force; it is legally sufficient and
authorized by the law.

A void contract cannot be

enforced.

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 What is a power of attorney (POA)?

Power of Attorney (POA) – A legal appointment from one person (Grantor) to another
(Grantee) to act on Grantor’s behalf in his/her absence. The Grantee has authority to make
decisions and sign legal documents on behalf of Grantor.

 How is it legalized?

All POA’s need to be notarised and properly attested:

• If issued in Dubai, it must be notarized by the Notary Public.
• If issued abroad, it must be legalized through the UAE Embassy in that country, then
the Ministry of Foreign Affairs.
• The POA must be in Arabic. If there is an English translation, it must be stamped by a
licensed legal translator.
• For real estate purposes, Dubai Courts and DLD will only accept POA’s that are specific
to the subject property and limited in duration to 2 years.

 Can a broker accept a Power of Attorney?

NO, a Broker may NOT accept a POA in any real estate transaction.

 What is flipping a real estate property?

 Who are speculators?

Flippers and speculators are buyers/investors who purchase real estate for the
sole purpose of making quick return and realizing an immediate gain.

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 What is escrow?
Escrow is an agreement between two or more parties providing that certain
money, instruments or property be placed with a third party (bank) for
safekeeping pending the fulfillment or performance of a specific act or
condition.

Who controls the developer’s escrow account?

DLD controls the developer’s escrow account. Money/funds are released from
the escrow account based on the certified progress of the Project.

What is developer’s escrow account?

The escrow account is required for each project under construction or off-plan
to be opened by the developer after he gets the approval from RERA to
construct the project. Monies received from investors/buyers are deposited into
the escrow account.

In whose name should the escrow account be?

Escrow account is opened under the project name for each and every project.

 What is a down payment or a deposit cheque?

A down payment or deposit is the cheque that the buyer issues in order to reserve a
property. According to the "market norm", it is usually 10% of the selling price, but it will
always depend on price of the real estate property to be reserved.
 Can it be in cash? No, it should be payable in the form of a cheque.
 If in cheque, in whose name? The cheque should be in the name of the Seller.
 When does the seller receive the down payment?
The deposit (down payment) cheque is held by the brokerage company until the
transfer date. At transfer, and based on the agreement between the buyer and
seller, the deposit cheque is either returned to the buyer whereby the seller would
expect the total amount due to him in the form of a manager's cheque or the seller
would accept the deposit cheque and as such would only expect the balance to be
paid in the form of a manager's cheque.
 What is a security cheque, in whose name is it issued?
A security cheque is the cheque issued by the seller in the name of the buyer as a
security for the buyer in case the seller defaults on the agreement. This is also
held by the brokerage company.
.

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 Who gets the cheque if the deal go through, and it the deal does not materialize?
If the deal goes through, the brokerage company returns the security cheque to the seller.
However, if he defaults on the agreement and both parties had agreed on these terms, then
the security cheque is handed over to the buyer due to the seller's default. It is crucial that
defaulting clauses are drafted clearly under contract F so each party knows its rights and
obligations.

Tip: Make sure to get DLD involved prior to handing over any cheques in case of default by
either party.

What is a distress sale?

It is a sale of real estate where the seller is under compulsion, or forced to sell.

Can a broker advertise a distress sale?

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 What is meant by lender preapproval?

It is the practice by a lender of approving a borrower for a certain

loan amount.

This allows prospective homebuyers to shop with the knowledge, likely to

be shared with seller and broker to demonstrate their financial capability,
that the loan will be approved.

What is an asset?

It is something of value that one owns.

Assets can include land, houses, cars, furniture, cash, bank deposits and securities.

What is liability?

It is the opposite of asset; it is a debt or obligation that one owes.

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What is a commission?

It is the fee earned from a real estate transaction, usually a percentage of the
selling price.

Must a person be licensed broker to collect a commission from areal estate

transaction? Or any person who mediates in the deal?

How much should the commission be for a sale’s transaction?

How much is the commission for a lease?

Who pays the commission? Seller, buyer, landlord or tenant?

 When does a broker earn a commission?

 When does the broker collect the commission cheque?
 When does the broker cash the commission earned?
 Can commission be paid in cash?
 In whose name should the commission cheque be?
 Can a broker represent both a buyer and a seller?
 Can a broker represent both landlord and tenant?
 What will be the commission in this case?
 Who will pay the commission?

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What is the difference between real estate (real property) and personal
property?

Real estate or real property is everything more or less permanently affixed

to land.

Personal property is everything else.

Mention the main differences between both real and personal properties:

 Unique (No Similarity)

 Long lived
 Immobile
 Transfer fee to be paid every time a sale of real property takes place

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• How much is the transfer fee?
4% of the Selling Price (as per market price).

• Who pays the transfer fees?

By law – 2% & Buyer 2% Seller unless agreed upon otherwise.

• To whom is it paid?
Transfer fees are paid by manager’s cheque to DLD at RT’s office or DLD.

• Can cash be accepted?

No, only by Manager’s Check, Noqodi or credit card.

• What is needed to prove the ownership of a real estate property?

1. Title deed for finished properties
2. Oqood for off-plan properties.

• Can a broker initiate a contract between seller and buyer without the
existence of a proof of ownership?
Absolutely NOT! A broker must exercise due diligence.

• Can a mortgaged property be transferred at the RT/DLD?

The Seller’s mortgage would need to be settled first BEFORE the
transfer
of the property can be done from the Seller to the Buyer.

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 What is a Valuation?

It has 3 meanings:
 A professional opinion or estimate of the value of property.
 The act or process of estimating value.
The report that describes the process and data used to provide
the value.

When a broker should make sure that an official certified valuation

is
available prior to transaction?

When the property is gifted, in order to determine the value of the

property to calculate the transfer fees.

Valuation is also done by banks to approve mortgages.

NO TRANSACTIONS ARE PERMITTED

UNLESS THE PROEPRTY HAS EITHER

A. THE TITLE DEED ISSUED or

B. THE PROPERTY IS REGISTERED ON THE

INTERIM REGISTER.

ALL REGISTRERED BROKERS AND AGENTS ARE REQUIRED TO KEEP THEMSELVES

UPDATED, RERA WILL NOT CALL OR RING over 7,000 AGENTS IN THE MARKET
TO UPDATE THEM WITH EVERY CHANGE!

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 Who should be present in person at the transfer:
 BUYER or registered POA
 SELLER or registered POA
 BUYER’S AGENT
 SELLER’S AGENT
 BUYER’S BANK
 SELLER’S BANK (May not be applicable)

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