Existing property commission: everything you need to know
Existing property commission is a key concept in the property sector, especially in Dubai, where demand for residential and commercial property is constantly growing. But what exactly does this commission mean and why is it important for buyers and sellers? In this article, we explain the key aspects of commission associated with existing property and give you valuable tips for dealing with property sales and purchases.
What is a commission?
A commission is a fee paid to an estate agent or property agency when a property is sold or let. This fee is usually calculated as a percentage of the sale price or rent. In Dubai, the commission on existing property can typically range from 2% to 5% of the sale value, depending on various factors such as the location and type of property.
Different types of commission
- Sales commission: This is payable when a property is sold and varies depending on the agreement between the buyer and seller.
- Letting commission: This commission is charged when a property is let. It is often lower than the sales commission and varies depending on market conditions.
- Exclusive commission: Sometimes an exclusive agreement is made between the seller and the estate agent, which means that only this agent has the exclusive right to sell the property and therefore receives the commission.
How is the commission calculated?
The commission on existing properties is normally calculated on the basis of the sales price. For example, if you sell a property for AED 500,000 and the commission is 3%, the commission would be AED 15,000. It is important to clarify this in advance to avoid any misunderstandings.
Who pays the commission?
As a rule, the commission is paid by both the buyer and the seller, with the exact split being specified in the purchase agreement. It is important that both parties agree to the agreement before a transaction is finalised.
Tips for buyers and sellers
Here are some tips that can help you better understand and manage the existing property commission:
- Educate yourself: familiarise yourself with common commission rates in your area to get a realistic idea of costs.
- Negotiate: Don’t be afraid to negotiate commissions, especially if you’re talking to multiple agents.
- Understand the service: Make sure the service you receive for the commission meets your needs, be it a comprehensive market analysis or additional marketing services.
Illustrative example on the topic: Commission on existing property
Imagine you have sold a flat in Dubai Marina. The property has a price of AED 1,200,000. Your estate agent has offered you a commission of 3%. After the sale, a commission of AED 36,000 is due. When preparing the sale, you asked the estate agent to advertise the property extensively and to carry out a market analysis. With this support, you not only found a buyer, but also realised a price that was 5% above your original expectations. Despite the commission, you feel satisfied as both you and the buyer have benefited from the successful completion.
Conclusion
The existing property commission plays a crucial role in the property sales process. It is important to be aware of the different types of commission, how they are calculated and how they are paid. Thanks to thorough preparation and transparent communication, both parties can benefit from a successful property sale and avoid mistrust. If you would like to find out more about the property market or property valuation, please explore our other articles.
