Real Estate Brokerage Contract and Ad License 2025: Complete Guide for Owners and Brokers
Complete guide to real estate brokerage contract and ad licensing in Saudi Arabia. Learn contract creation steps, approval, and protecting your rights as an owner or broker.
Introduction: Why Everything Changed in Real Estate Advertising
Do you own a property and want to sell or rent it? Has a real estate broker asked you to "sign a brokerage contract" and you didn't understand why? If you're a property owner—especially if you're elderly or don't follow technological updates—this guide was written specifically for you.
In the past, anyone could advertise a property anywhere: WhatsApp groups, Twitter, or even a sign on the property. But today, everything has changed! Advertising any property in Saudi Arabia now requires an official license, and this license can only be obtained after creating a documented brokerage contract between the owner and the licensed real estate broker.
The Golden Rule: No real estate advertisement without a license, no license without a brokerage contract, and no brokerage contract without the owner's approval.
What is a Real Estate Brokerage Contract?
A real estate brokerage contract is an official electronically documented agreement between the property owner and the licensed real estate broker. Under this contract, the owner authorizes the broker to market their property and find a suitable buyer or tenant, in exchange for a commission agreed upon when the deal is completed.
This contract is not a traditional paper document—it's created electronically through the Fal Platform operated by the Real Estate General Authority (REGA), and requires the owner's approval via an SMS message sent to their phone.
Why Has the Brokerage Contract Become Mandatory?
REGA implemented this system for several important reasons:
- Owner Protection: No one can advertise your property without your explicit consent. Previously, some people would advertise properties they didn't own!
- Buyer Protection: Every advertisement now has a license number that can be verified—no more fake listings.
- Broker Protection: The contract preserves the broker's right to commission if the deal is completed, even if the owner or buyer tries to bypass them.
- Market Regulation: Every advertisement can now be tracked with the responsible party identified, raising trust in the real estate market.
How Does the Broker Create a Brokerage Contract? (Step-by-Step)
These steps are performed by the real estate broker, not the owner. However, it's important for owners to understand what happens:
Step One: Login to Fal Platform
The broker accesses REGA's website (rega.gov.sa) and selects "Electronic Services for Real Estate Brokerage," then logs in via National Access (Nafath).
Step Two: Select Contract Type
The broker chooses "Brokerage Contracts" then "Create New Contract," and specifies the type: brokerage contract with property owner.
Step Three: Enter Deed and Owner Information
The broker enters:
- Property deed number (must be an electronic deed).
- Owner's national ID number.
- Owner's mobile number registered in Absher.
Step Four: Specify Contract Details
The broker specifies:
- Service type: sale or rental.
- Contract start and end dates (90 days maximum if not specified).
- Agreed commission percentage (system specifies 2.5% maximum).
- Marketing scope: Does it include electronic advertising? Signs? Real estate platforms?
Step Five: Send Contract to Owner
After saving the contract, the system automatically sends an SMS message to the owner's phone requesting approval of the contract.
How Does the Owner Approve the Contract? (Simple Explanation)
This section is very important for property owners, especially those who aren't tech-savvy:
What Happens After the Contract is Created?
First: You'll receive an SMS on your phone (the number registered in Absher) from REGA.
Second: The message contains a link to access REGA's platform and review the contract details.
Third: After reviewing the contract, you have two options: Accept or Reject.
Important Tip: If you don't receive the message, make sure your mobile number is updated in Absher, and ask the broker to verify they entered the correct number.
What If the Owner Doesn't Use the Phone Well?
If you're elderly or don't handle messages and links well, you can:
- Ask one of your children or relatives to help access and read the contract before approving.
- Contact the broker to explain the details by phone before sending the contract.
- Visit the broker's office to see the contract on their screen before it's sent to you.
After Approval: How Does the Broker Get an Advertising License?
After the owner approves the brokerage contract, the broker can now obtain a real estate advertising license for each advertisement they want to publish.
What is a Real Estate Advertising License?
It's a unique number issued by the system for each real estate advertisement. This number must appear in the advertisement whether it's on a real estate platform, social media, or even on a billboard on the property.
Steps to Obtain an Advertising License:
- Access Fal platform and select "Real Estate Advertisements."
- Choose "Create Real Estate Advertising License."
- Select the active brokerage contract linked to the property.
- Enter advertisement details (description, location, price, photos, channels).
- Pay license fees (50 SAR per advertisement).
- Receive the license number and use it in the advertisement.
Advertising License Packages for Brokers:
For brokers who publish many advertisements, REGA offers discounted packages:
- 50-ad package: For moderately active brokers.
- 150-ad package: For active brokers.
- 250-ad package: For large offices and companies.
What is the Brokerage Commission? And Who Pays It?
The Real Estate Brokerage Law specifies the commission as follows:
For sales: 2.5% of the transaction value (unless otherwise agreed in writing).
For rentals: 2.5% of the first year's rent only.
Who pays the commission? The party who contracted with the broker. If the brokerage contract is with the owner, the owner pays. If with the buyer, the buyer pays.
Important Note: The broker deserves their commission even if the owner completes the deal directly with a buyer brought by the broker, during the contract period or within two months of its expiration.
What If You Advertise Without a License? Strict Penalties
REGA doesn't tolerate violators. Penalties include:
For individuals and brokers:
- Warning and license suspension for up to one year.
- Permanent license cancellation.
- Fine up to 200,000 SAR.
- Double the fine for repeat offenses within 3 years.
For real estate platforms:
- Fine up to 1 million SAR.
- Platform license suspension or revocation.
- Referral to authorities in fraud cases.
Benefits of the New System for All Parties
For Owners:
- Protection from fake advertisements in their name.
- Official documentation of the relationship with the broker.
- Assurance of dealing only with licensed brokers.
- Easy tracking of property advertisements.
For Brokers:
- Protection of commission rights with documented contract.
- Higher credibility with clients.
- Distinction from unlicensed practitioners.
- Ability to contract with sub-brokers legally.
For Buyers/Tenants:
- Guarantee of advertisement authenticity by verifying license number.
- Knowledge of the responsible broker.
- Protection from fake advertisements and fraud.
Frequently Asked Questions
Q: Does the owner need a Fal license to sell their property themselves?
A: No, owners don't need a Fal license. However, they need an advertising license if they advertise through a licensed broker or licensed real estate platform.
Q: Can I cancel the brokerage contract after signing?
A: Yes, both parties can agree to cancel the contract. The contract also automatically expires at the end of its term (90 days maximum if not specified).
Q: What if I find a buyer myself during the brokerage contract?
A: If the buyer learned about the property through the broker, the broker deserves their commission. But if it's someone you know, you can complete the deal directly.
Q: Can the broker contract with other brokers to market my property?
A: Yes, unless the brokerage contract states otherwise. This is called a "sub-brokerage contract."
Q: How much are the fees for creating a brokerage contract?
A: Creating a brokerage contract is free. Fees only apply to advertising licenses (50 SAR per advertisement).
Q: What's the difference between a Fal license and an advertising license?
A: A Fal license is an annual license for brokers to practice the profession (300 SAR for individuals, 1000 SAR for companies). An advertising license is for each individual advertisement.
Q: How long is the advertising license valid?
A: One full year from issue date, or until the brokerage contract expires, whichever comes first.
Q: Can I advertise on WhatsApp or Twitter?
A: Yes, provided you mention the advertising license number in the text, and the advertisement is issued by a licensed broker.
Golden Tips for Owners
- Don't approve any brokerage contract before verifying the broker's name and license number.
- Confirm the contract duration and commission percentage before approving.
- Keep a copy of the contract (you can request it from the broker or print it from the platform).
- If you don't understand something, ask the broker to explain it by phone or in person.
- You can verify any broker through REGA's website.
Golden Tips for Brokers
- Explain to owners—especially elderly ones—the importance of the brokerage contract and that it's for their benefit.
- Help owners understand the SMS and how to approve.
- Never start marketing before the contract is approved and the advertising license is obtained.
- Keep records of all your contracts and licenses.
- Renew your Fal license before it expires to avoid business interruption.
Conclusion
The brokerage contract and real estate advertising license system is not bureaucratic complication—it's protection for all parties: the owner, the broker, and the buyer. Yes, it requires additional steps, but it ensures a more transparent and reliable real estate market.
If you're an owner and a broker asks you to sign a brokerage contract, know that they're working the right way. Help them by approving the contract, and you'll find your property marketed professionally and legally.
And if you're a broker, be sure to explain these procedures patiently to your clients, especially elderly ones who may not understand why things have changed. Your patience with them is an investment in your reputation and credibility.