Jordan's Real Estate Brokers Manipulate Dreams of Flat Seekers

Amman – (Al-Ghad)- Arjan, 2 bedrooms, 1 living room, 1 dining room, equipped kitchen, stone masonry, great location with full amenities, JD 170 per month

This is an example of the kind of ad found in the weekly classified newspapers – accompanied by a phone number. The number leads to an agency. These agencies lure customers to their offices to sign an agreement, of which the most important clause involves an advance fee of 10 Jordanian Dinars ($14) and agreeing to pay a 5 percent cut of the annual rent for an apartment.

Customers call these numbers and visit these agencies in order to save time finding a suitable residence. But they often get financially abused.

The story of citizen Islam Mohammed (33 years old) reveals the depth of legal infractions committed by some unlicensed agencies, due to the absence of a law regulating their work. But the problem is on the rise. Only 200 of the 5,000 agencies active on the market are registered, according to estimates by the union of real estate brokers.

Mohammed’s story begins after he read a classified advertisement for a house close to the sports city whose specifications he found attractive. He called the number on the ad; the broker maintained that the information is accurate, but that he would have to pay JD15 ($21) to take a look at the apartment regardless of whether he finds it to his liking or not.

Mohammed went to the agency’s office, located in the Gardens. He paid the JD15 to look at the aforementioned house and then was accompanied by one of the staff to the place. But the apartment had none of the specifications promised in the ad: neither two bedrooms, nor the promised living and dining rooms, or an equipped kitchen as claimed by the broker when he called. Instead he found one big room, a kitchen without sanitary fixtures, in addition to a living room and a bathroom.

Moreover, Mohammed was surprised to discover that the apartment was two kilometers away from the Madina roundabout. It was completely different from the description in the ad. But when he tried to object to what he believed was fraud, the employee answered with derision: “What are you going to do? This is what you got,” he told him. So Mohammed left quietly, fearing that the quarrel would lead to a fight.

“Most of the owners of such offices hire people to scare the customers who discover they have been swindled after seeing the advertised house,” Mohammed explains.

To probe the experience of apartment seekers with these agencies, these two investigative journalists decided to enter the world of real-estate brokers, under the guise of looking for an apartment.

Evidence from nine field visits to such offices in Amman and its suburbs – using a hidden camera — uncovered systematic fraud by brokers and real estate agencies affecting thousands of customers. The agencies make money with promises of a suitable home, which remains ink on paper. This occurs in the absence of clear legislation regulating these agencies in the rental market.

The authors of the investigation found that eight of the nine agencies they visited were not registered with the Department of Lands And Survey.

Scouting for an apartment in the free classified listings often leads apartment seekers into a trap where they are bound to waste their money and time. The fantastic specifications entice customers and encourage them to seek out the apartments. However, after viewing the place, they are shocked to find out that it is very different from what is advertised.

After looking at the weekly classifieds, the authors of the investigations began their trips looking for an apartment. Most of them were a dead end.

At the agency, brokers spoke calmly and gave full assurances about the veracity of the ad (Arjan, 2 bedrooms, 1 living room, 1 dining room, equipped kitchen, stone masonry, great location with services, JD170 per month).

Before heading out with one of the staff members to look at the apartment, the following conversation took place with the office director:

– Please, you need to pay JD10.

– No problem, but we will look at the apartment first.

– No. We take JD10 before the visit.

– But what if the house is not according to the features in the newspaper?

– This is how things work, I swear. In any case, if you don’t like it, we will look for another one.

– Why wouldn’t we like it? If it is like it says in the paper, there is no problem. Unless it is different. Right?

– I meant just in case. You know, some customers waste our time for nothing.

– No problem. Here you go.

The first surprise was that the apartment was not in the Arjan area, as the ad claimed, but in the al-Amir Hassan suburb, separated from Arjan by the Jordan Street.

Geographically, the suburb and Arjan are adjacent. But the prices of apartments vary sharply between these two areas. It is difficult to find an apartment in Arjan as large as120 square meters (like the one advertised) for less than JD230 ($325). The same area in the adjacent suburb, however, goes for only JD150 ($212), according to estimates by renters.

The second surprise was the dilapidated condition of the apartment, unlike what was stated in the newspaper. The walls had been affected by the humidity, the paint was peeling, the ceramic tiles and sanitary fixtures in the bathroom were in a deplorable state, and mold covered the cabinets in the dilapidated kitchen. In short, the apartment required hundreds of dinars for renovation.

There was also a discrepancy in the price. The advertisement said the rent was JD170 ($240), but the authors of the investigation heard the son of the landlord, who is 16, say that a new price had been agreed upon with the office, which was JD180 ($255). The agent, after seeing the state of the apartment, told him, “We shouldn’t be arguing about JD10.”

The authors argued with the agent about the discrepancy between the classified and reality. The agent ended up promising to find another apartment, with better specifications, in a few days. It has been two months, but neither of the authors received a call about another apartment.

On a similar visit to another office, an ad for an apartment read: “Near Safeway Shmeissani, 3 bedrooms and one master bedroom, hall, equipped kitchen, 2 bathrooms, marble floors and calm location for JD210 per month.”

The price for the stated location in an upscale Amman neighborhood and the claimed amenities would appear tempting to anyone looking for an apartment. But one trip to the apartment revealed the deception in the ad.

The large apartment was unfinished. It lacked marble and gypsum. The “master” bedroom was also missing; rather we found a bathroom next to a room with no sunlight. It was in terrible condition. The pipes were rusted and the faucets damaged and not working.

During a visit to another agency, the authors met one of the victims – an old man with a white beard using a walking cane. His search for a house had led him to the same office.

We sat together in the waiting room discussing the costs of apartments, while six young men were eating lunch. “Welcome,” said one of the staff members, staring at the old man in a manner preventing him from voicing advice to the authors of the report, despite the disparities between the ads he had witnessed before meeting us.

We visited the advertised apartment in the Gardens area, after going through the motions, paying the fee and listening to the young men spell out the specifications. However, the apartment’s condition was no better than the ones we had seen before.

By coincidence, we saw the old man whom we had met at the office before visiting the apartment. He was furious. “They ripped you off. Huh?” he said angrily. “They took me there and showed me the apartment first.” When we asked him why he did not warn us about its real condition before we paid the JD10, he simply stated, “But they were sitting there.”

We noted the old man’s story and went to visit another agency only to discover how big rooms disappear. The classified promised: “2 bedrooms, living room, dining room, modern equipped kitchen, large bathroom, modern stone masonry, quiet location close to amenities, JD150 ($212).

But it turned out to be a one-bedroom studio apartment with one hall, a tiny kitchen, and a bathroom without a sink.

The strangest case was an apartment in al-Rashid suburb. The ad promised “two bedrooms, one hall, one living room, one equipped kitchen, one bathroom, first floor of a villa, modern stone masonry, and quiet location.”

To our surprise, the apartment was in a residential building, not part of a “villa,” as the ad claimed. But the agency director kept finding excuses.

By law and according to Article 3/9 of the Lands and Survey Regulation No.80 of 1999, the Department of Lands and Survey is in charge of regulating the real estate agencies sector.

When asked about such agencies, the department maintained that one had been referred to the courts and another had received a warning in the past year.

In a written reply, the department indicated it had “regular communications with responsible authorities, represented by the Ministry of Municipalities and the Greater Amman Municipality (GAM), concerning complaints received from the licensing regulators and the General Union of Owners of Real Estate Agencies against offices, which purchase, sell, or broker property without a license, in order to pursue necessary legal action against them.”

Under the provisions of the regulatory system of real estate agencies and its amendments (No.53 of 2001), the Department of Lands and Survey considers all complaints received against any licensed agencies, through the Committee for Licensing and Monitoring Real Estate Agencies, and then takes the necessary action. It is also the authority for regulating and granting professional licenses to practice real estate brokerage, according to the same law.

The department indicates that the number of licenses granted in 2012 stood at about 125, compared to 23 at the time of writing this year.

Problem of Control

Despite the letter of the law, lawyer Saed Karaja believes that there is a problem with how these agencies work. He considers the legal basis for the fees collected by the agencies to be permissible, whereby two parties agree on a service and the office receives a payment as agreed. However, in many cases, the advertised specifications of the property do not conform with reality.

Karaja blamed DLS and GAM, in addition to consumer protection commissions and organizations, in light of the absence of regulations for the real estate brokerage market.

Legal expert Dr. Hamdi Suleiman explains: “There is no specific law in Jordan regulating the work of unlicensed real estate agencies. Moreover, current laws related to the Department of Lands and Survey do not allow it or any other authority to monitor the work of such agencies, except after the harm has been done and someone complains.”

Suleiman indicates that regulations No.53 of 2001 and their amendments are limited to licensing agencies and following up on complaints. But they do not grant the authority to look at its data and records or investigate their work procedures. He stresses the importance of creating a law to regulate real estate services. The law should indicate licensing provisions and the authorities responsible for permits, in addition to regularly following up on the work of these agencies and sanctioning those who practice real estate brokerage services outside of the legal framework, he suggested.

Furthermore, a large number of real estate brokerage agencies are not part of the union. This leads to chaos in their services, in the absence of any legal protection for their customers, according to Suleiman. He believes the low sum of money charged by the agencies, which do not exceed JD20 for the most part, discourages victims from resorting to the courts, as the expenses for legal action will certainly exceed the amount paid to the agency.

Jamal Wishah, the head of the General Union of Owners of Real Estate Agencies, maintains that a great number of these agencies are working without permits or with a general services license, which they use to work in real estate. He calls on the public not to deal with such agencies.

According to Wishah, around 5,000 agencies work in real estate brokerage throughout the Kingdom. However, only 200 are registered in the Land and Survey department and a mere 40 registered in the union. He believes the gap is due to the department’s inaction concerning the monitoring of the agencies. He insists on compulsory licensing.

The union leader says the damage done by such offices, who lure citizens for a mere JD10, does not only impact citizens. It is detrimental to the economy as a whole, since it damages the reputation of the real estate market, whose total contribution to the GDP stands at around 2 percent.

Subsidiary sectors to the real estate market contribute around 17 percent of all economic sectors in the GDP, according to official statistics by the Department of Statistics.

After several attempts to contact its officials, GAM sent a short email to the authors of the investigation, maintaining that it takes the necessary legal action through the Department of Health and Professions Control against owners of real estate and/or survey agencies that are in violation or unlicensed by the municipality. This is according to the law of licensing professions in the city of Amman, where Article 13/a stipulates that “the governor has the authority to search the locations at any time.” But it did not provide any further details.

After checking the records of the lands department, only one agency was found to be licensed out of the nine that were visited by us. All  the other agencies were unregistered and two of them did not even have a known name.

However, violations are not limited to fraud. Some of them raise the amount collected by the agency, in case of a deal. They ask for 5 percent of the total contract value upon signing, while Law 53 of 2001 states that the amount should not exceed 2 percent.

The issues posed by real estate agencies should be of great concern to citizens, unless a specific law is enacted to ensure monitoring and accountability and prevent the bullying of citizens by these agencies.

 This investigation was conducted with support from Arab Reporters for Investigative Journalism (ARIJ), under the supervision of coaches Saad Hattar and Imad Rawashdeh.