For many, the prospect of buying a property here in Abu Dhabi may seem complicated, nerve wracking, risky and just not worth it. There are many misconceptions however and much misinformation circulates at those dinner party conversations. So, how is one supposed to make an informed decision as to whether to buy or not without looking clearly at the facts, costs and processes, assisted by professionals, rather than relying on hearsay?
The process of buying property here in the capital can be relatively straightforward with the right team and advice.
Finding the right property is the first challenge but a professional agent will consult with you to understand the areas that suit you best, your budget, the type and size of property, the design, aspect and other features, whether it is currently rented or vacant, if it is mortgaged or not, if there are service charges or utility debts, whether the price is fair and also if the seller is going to be reliable!
If you are financing with a mortgage, getting the right financial advice early in the process is crucial as you may waste time looking at unsuitable properties which could be above (or below) your budget. It is important to get a pre-approval which will make any offer on a property much more credible and make the process swifter. The proposed mortgage caps are not yet in force (but likely to be introduced imminently) so if you secure a loan now you will probably be able to borrow a higher proportion than is proposed under the caps. Real estate agents are generally not qualified to offer financial advice but should be able to recommend suitable professionals.
Once the finance is secured and the property found, the final price needs to be agreed between the parties. At this point, a memorandum of understanding (MoU) is usually signed between buyer and seller and a deposit taken from the buyer. This agreement will keep the purchase secure until the final transfer into the buyer’s name.
The agreement is typically for a period of 28 days and the majority of cases are settled within that time frame. A good real estate agent will be able to supply and complete a document that has been professionally worded and tried and tested. The deposit should be held by a registered agent and never released to a seller before the process is completed.
Your mortgage lender will send an independent, professional valuer to inspect and value the property. This is referred to as the ‘valuation’ and is for the protection of both the lender and yourself. Once the mortgage offer is finalised, if there is a mortgage to settle on the seller’s property this will happen at this time and once unencumbered the property can be ‘transferred’ to the new buyer.
Before this transfer meeting, the agent should organise clearance letters from the previous lender and any utility companies to prove there are no outstanding debts. The agent should also prepare calculations for any payments that the buyer will need to pay back to the seller for a proportion of service charges and indeed if there is a lease in place for any rental income due to the buyer from the seller. The agent will book a transfer appointment at the developer’s office and supply all details of buyer, seller and property that the developer requires to prepare the assignment agreements.
The buyer will need to bring ‘Manager’s Cheques’ (otherwise known as bank drafts), for monies due to the seller and for the fees which need to be paid. Typically, fees are paid by the buyer and are normally 2 percent (of the selling price) to the real estate agency and 2 percent (of the original contract price) as a transfer fee to the developer.
At the transfer meeting, money should only change hands as documents are simultaneously executed for the protection of all parties. The developer (or an approved representative) will be responsible for the process and will issue a new Sales and Purchase Agreement (SPA) in the buyer’s name. This completes the process and you will receive keys and can move into your new home or start counting your rental income.
