Real Estate Broker
Synonyms: Property Broker، Real Estate Agent، Realtor
Last updated: 2026-08-03
Short Definition
An individual or company holding a Fal License from the Real Estate General Authority to mediate property transactions for a commission, legally required to display the license number on contracts and advertisements.
Overview
Legal Basis
Brokers are governed by the Real Estate Brokerage Law issued by Royal Decree M/130 dated 30/11/1443H, which prohibits practising brokerage or providing real estate services without a license from the Real Estate General Authority and granted practitioners 180 days to regularize on entry into force. The individual brokerage and marketing license costs SAR 300 per year. Violations include unlicensed practice, submitting false information to obtain a license, and providing misleading information or concealing material facts about a property. Penalties are a warning, suspension for up to one year, revocation, and a fine of up to SAR 200,000, doubled for repeat violations within three years. Commission is subject to 15% VAT under the VAT Law.
Practical Example
A broker in Riyadh holding a Fal License at SAR 300 a year mediated a villa sale worth SAR 2,400,000 at an agreed 2.5% commission of SAR 60,000, plus 15% VAT of SAR 9,000, bringing the invoice to SAR 69,000. Before signing the brokerage agreement he obtained a copy of the electronic title deed to verify ownership as the law requires, and displayed his license number on both the brokerage contract and the property advertisement. In the same transaction the seller paid 5% real estate transaction tax of SAR 120,000 before title transfer, a levy entirely separate from the broker commission.
Common Mistakes
- ✗Dealing with a broker without verifying the Fal License, when the law obliges brokers to display the license number on contracts, advertisements and all dealings.
- ✗Agreeing commission verbally with no written brokerage contract specifying the rate, when it becomes due and who bears it.
- ✗Overlooking that commission attracts 15% VAT as a service fee, producing a surprise on the final invoice.
- ✗Confusing broker commission with the 5% real estate transaction tax, which are entirely separate obligations owed to different parties.
- ✗Accepting a property offer without asking the broker for proof of ownership, when the law requires the broker to obtain a copy before signing the brokerage agreement.
International Differences
In the UAE, brokers must obtain a broker card from RERA after a course and examination, with 2% the customary commission in Dubai. In Turkey, an authorisation certificate from the Ministry of Trade is required, with 2% customary and both parties sometimes paying for a 4% total under local practice. Egypt applies looser regulation with customary commission between 1% and 2.5%. The Saudi model differs in tying licensing to a central database and requiring the license number on every dealing, with penalties reaching SAR 200,000.