MASTERKEY BLOG

RERA: Fines to agents who flout brokerage rules

By Gokhan Polat, Community Manager


I recently read an article on The National about how Real Estate Regulatory Agency (RERA) is planning to fine individual agents who are passing on confidential information or handling transactions without the approval of their company. According to Sultan Al Suwaidi (RERA), the breaches range from ‘cooperating with unlicensed brokers’, ‘failing to keep brokerage and client information private’ and to ‘closing contracts without the brokerage’s knowledge’.


I can definitely see how these breaches are problematic for brokerages, but I’m still stuck with a question is my mind: Why do we have these issues in the first place? I thought I’d ask Daniel who has been working in the Dubai real estate sector for more than 9 years.


“There are a number of reasons for why an agent would feel compelled to do a deal outside the brokerage. Some agents feel that if their brokerage was not involved in the deal, why should they share the commission? The agent’s argument is often based on the fact that you can meet potential buyers/sellers who haven’t had any interaction with your head office, especially if it’s a close friend or a relative the agent has known for many years prior to joining the brokerage.


Another factor is that many agents in their home country would have been able to do the transaction as a freelancer without the brokerage. In the UAE it’s near impossible to legally operate as a freelancer so many resort doing these deals well-knowing that it’s outside the rules.” - Daniel Hart, CEO @ Masterkey


So would the threat of fines force agents to comply with the rules? It’s an attempt to solve the problem, but a very tough one to implement. The main issue is that non-registered freelancers are allowed to get away and close deals. Before RERA can start giving out penalties to individual agents, it needs to have all property listings registered with Simsari and make sure that only the agents who have been registered can sell the property. This assures that RERA know who’s allowed to do the transaction.


In order for that to work, every advertising portal needs to have a Simsari number for each listing in the system and ensure that the Simsari number is verified. This will be difficult to enforce, because it requires getting the brokerages and advertising portals to collaborate with RERA much closer than they are today.


RERA could start giving out penalties based on accusations of outside brokerage deals, however this will not stop these deals from happening and may even force agents to use more illicit methods.


source: www.thenational.ae/business/property/brokers-to-take-heat-for-rules-breaches


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