When real estate deals stall, your time, investment and confidence take a hit. From the buyers to the sellers, it’s in everyone’s best interest to ensure transactions go smoothly. Part of getting that outcome is understanding the real estate commission in Dubai. How much should property agents or brokers get?
Decoding Dubai’s commission structure is more than knowing about the numbers. It’s about gaining confidence in the process and securing the best possible deal. Understanding commission rates also removes the shock of unexpected costs, allowing buyers or tenants to make informed decisions about their choices.
Whether you’re buying and selling property or considering a career in real estate, this guide will explain how commissions work, the standard rates, and who pays what.
How Do Real Estate Commissions Work in Dubai?
Real estate agents in Dubai receive a commission for facilitating a property sale, purchase or rental. The fee is a percentage of the property’s sale price or the annual rent amount. Once the seller or landlord turns over the keys to the property, the property agent receives their commission.
The Real Estate Regulatory Agency (RERA), which is under the Dubai Land Department (DLD), doesn’t set fixed commission rates. The amount will depend on the agreement between parties, the types of properties and transactions.
Standard Rates
The commission structure in Dubai real estate follows a minimum standard of 2% for the sale of residential properties.
In some cases, Dubai property market conditions influence the commission. Property agents may reduce their commission if it’s a buyer’s market and raise or keep their rates if it’s a seller’s market.
If you’re buying and want to cut your real estate costs, invest in off-plan properties. If you’re a new agent looking to score higher commissions, start with rental properties.
Secondary Market
In the resale market, real estate agents typically get 2% commission, plus a 5% value-added tax (VAT).
Commercial Properties
Agents representing clients selling commercial properties may get 2% up to 4% commission. The commission for a rental is between 5% to 10%, plus a 5% VAT.
Rental Transactions
The commission for a rental property is typically 5% or a flat fee of Dhs 5,000, whichever is higher. VAT provisions exempt renters and their agents from paying the consumption tax on rent and commission.
Off-Plan Properties
Commissions for off-plan sales tend to be higher, reaching 8%. The project’s scale and the developer’s calibre also determine how much commission agents receive.
Commissions add to real estate transaction costs in Dubai, and VAT does, too. Buyers and sellers must confirm that payments include VAT costs.
Who Pays the Commissions?
Who pays the commission depends on the real estate transaction and the agreement.
Here’s a quick guide.
- In secondary market transactions, the buyer typically pays the commission. In some cases, sellers may choose to also pay the agent commission. Since this isn’t a fixed rule, it’s important to explicitly state who pays in the contract.
- In a residential or commercial real estate transaction, the seller may pay the commission to appeal to more qualified buyers.
- In off-plan sales, the developer pays the commission.
- In rental transactions, the tenant pays the property agent’s commission.
- In commercial rentals, the landlord may pay the commission if it’s a long-term, high-value corporate lease.
In Dubai, it’s more common for buyers than sellers to pay the commission. In some transactions, both parties share in the commission payment. For instance, if the real estate broker charges 4% for a commercial property, the seller and buyer might each pay 2%.
Whether the commission is a shared payment or one party takes it on, these details must be specified in the contract and agreed upon. Who pays what must be outlined in the Sales Purchase Agreement or the tenancy contract.
RERA guidelines in Dubai may not set fixed commission rates or assign the responsibility of commission payment, but they ensure that agents follow ethical practices in facilitating the transaction. The agency will ensure transparency in all transactions, setting expectations and protecting all parties.
Do Real Estate Agents in Dubai Get the Full Commission?
Real estate agents don’t get the full commission. Instead, it’s shared with their broker or brokerage firm.
Generally, the agent receives 50% of the commission, and the other 50% goes to the agency. The split depends on the agreement between the agent and their brokerage agency.
High-performing agents, those who’ve sold more than any other agent in their firm, may receive more than 50% of the commission.
Conversely, the agent’s share could also be lower than 50% if they receive a salary with their commission.
Just like the commission rate on a sale or rental, the way a commission is split between parties can also be negotiated. The allocation should be transparent, too; large real estate companies usually keep track of individual commissions through brokerage management software.
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