As Dubai’s real estate industry has seen an upward trend, so have the scammers operating in this industry. News is filled with foreign and local investors falling for innocent-looking property scams in Dubai.
While some scams use fake listings, others include people posing as real estate agents and running off with your money. But the different types of property scams in Dubai cannot be summarized in one paragraph.
Therefore, today we are diving deep into different tips to avoid real estate scams in Dubai. We’ll go over what these scams are, how they work, and how to protect yourself from them.
Here are the top nine effective ways to avoid property scams in Dubai.
1. Only Hire Registered Agents
The first line of defense for protecting yourself from Dubai property scams is to always work with a registered real estate agent. Any real estate agent not registered with the Dubai Land Department may scam you out of your hard-earned money.
You should always begin by asking the agent to show you their broker ID. This government-issued ID will tell you whether they are legit or not. You can also use their details for cross-verification from the land department.
2. Never Pay in Advance
One key feature of property scams in Dubai is when you’re asked to make payments in advance through dubious or untraceable channels.
For example, if you’re asked to pay some money upfront in cash or through a wire transfer before seeing the property, walk away from the deal and don’t look back.
Sometimes, you may have to pay some money upfront, such as consultation fees or online services. Other than that, a real agent will never ask you for any payment for the property before the contract is signed or you have reached an agreement with the seller.
3. Unbelievable Valuation
If the offer makes you feel like you’re getting an unbelievable deal, think again! Scammers often use attractively low (when selling) or high (when purchasing) valuations to lure innocent investors.
It usually happens when you’re unaware of the price trends in the Dubai real estate industry or haven’t done enough research. In such cases, it becomes essential to hire the services of a reputable agency that understands the local market and holds itself to high-quality standards.
4. Don’t Rely on a Verbal Agreement
One of the key tips to avoid real estate scams in Dubai is to put your agreements in writing.
Also known as form “F” or Memorandum of Understanding (MoU), this pre-sale contract legalizes the agreement you can present in court if anything goes wrong. Sometimes, a formal contract may also be required between the buyer and the developer.
5. Watch Out for Fake Listings
Agents looking to scam investors often put little effort into their listings. They simply copy other agents’ listings available online and paste them on their website/portal. The only thing that they change is the contact information.
Their goal is to simply get a call from an interested party, which they can then redirect to something scammy.
To find whether a listing is real or fake, compare it with those available on other portals. If the listings are new but read exactly the same as the older ones, they are probably fake.
To avoid this, always use reputable listing platforms and real estate portals. These agencies regularly inspect their listings to ensure nothing bogus makes it online.
DLD’s Madmoun Service
To address the fake listing issue, the Dubai Land Department has introduced the Madmoun Service. This service allows customers to check the authentication of real estate advertisements. It uses QR codes that are issued for real estate advertisement permits.
It will help you find out unreliable sellers and advertisements and help people learn whether a specific ad has been approved by Real Estate Regulatory Authority(RERA)
6. Visit the Property Before Signing any Contract
Some scams use fake owners to sign contracts while the real owner doesn’t have the slightest clue. To avoid this, visit the property before signing any contract.
Not only will this let you verify the existence of the property and the legitimacy of the owner, but it will also let you observe the property’s condition. It also works well when you’re interested in purchasing apartments and want to see how the previous tenants used them.
You can then report any issues and damages to the seller before getting into an agreement with them or even incorporate a condition to fix the damages in the contract.
7. Always Use Cheques for Payments
When making payments, it is always safer to deal in cheques instead of cash or wire transfer. If the other party insists on making payments other than cheques, they are most likely scamming you.
Cheques make it easier to trace fraud and catch scammers. Moreover, Dubai Land Department requires that the money paid to the seller be in the form of a manager’s cheque in the trustee’s office.
8. Use Escrow for Off-Plan Properties
Off-plan property is a property yet to be constructed. It is also known as a “pre-construction” property. Investors usually purchase off-plan properties because of their attractive payment plans and promising future returns.
If an off-plan property in Dubai has caught your eye, never make the mistake of depositing the money in a non-escrow account.
According to the instructions of RERA, a developer who intends to sell an off-plan project should have a designated escrow account to receive payments in.
Off-plan properties come with inherent risks. For example, things may go wrong at any time during the construction. The developers might go bankrupt, or the contractor might not meet the quality standards promised earlier.
Depositing your money in an escrow account will keep it safe until you’re fully satisfied with the completion of the project.
9. Verify the Ownership
Verifying the ownership will keep you safe from getting scammed by a fake owner. There are a few ways to verify the ownership.
- You can review the property deed and NOC to confirm the owner and check for outstanding debts.
- Another way is to check the ownership using the Dubai Land Department’s validation page.
You can choose “Validate Property” or “Validate Owner and Property,” depending on what you want to validate.
You’ll be asked to enter the title deed number, title deed year, and property type. You’ll also be asked to enter the owner’s name if you want to validate the owner. Once you hit enter, you’ll be given the verification of the desired property.
Why do Investors Fall for Property Scams in Dubai?
When looking at it closely, it becomes clear that most investors fall for property scams in Dubai because of a lack of knowledge, negligible understanding of ground realities, and insufficient research.
Even though these tips to avoid property scams in Dubai will help you, they’re not enough on their own.
The most practical and reliable way of protecting yourself from real estate scams is hiring the services of a company that knows and understands the city.
Moreover, such a company should hold itself to high standards and feature registered brokers who meet all the legal requirements.
