Abu Dhabi resident Alex Nicholl thought he had taken all of the necessary precautions when selling his 2016 Volkswagen Touareg. He insisted the buyer pay in cash and refused to give him the keys after the transfer of ownership was done when the new owner said he would pay by cheque instead.
To sell a car, the buyer and seller must transfer ownership at a car registration centre in the emirate the car was registered. It was here Mr Nicholl was caught out. After removing the plates, the buyer and seller went to Mr Nicholl’s bank nearby in Abu Dhabi to cash a cheque but the bank said it would take three days for the cheque to clear. The buyer said he’d give him the cash later that afternoon, and insisted he had to get back to work.
But when Mr Nicholls returned to the Mushrif car registration centre where his car was parked, the vehicle was gone.
He says CCTV footage shows the car was placed on a transporter and whisked away. He has filed a case with the Abu Dhabi police, but the culprit is yet to be found and Mr Nicholl is left without the Dh82,000 that was supposed to be paid to him.
Abu Dhabi police declined to discuss details of the case when contacted by The National.
“It’s a lot of money to be writing off,” says Mr Nicholl, who has lived in Abu Dhabi for eight years. “For most expatriates, the most valuable possession in the UAE will be their car, if they haven’t bought property.”
Selling your car can be a daunting process, from putting it on the market to negotiating a price and the actual transaction. Add to that the prospect of settling for a low price or dealing with a bounced cheque or falling victim to fraud, the process can also cause significant financial strain.
“Eighty per cent of [problem] cases are fake cheques, personal cheques and seller agreement/loan clearing-related issues,” says Imad Hammad, founder of car classifieds platform CarSwitch.com. “This is the bulk of where the mess happens.”
The coronavirus pandemic has made selling a car even more challenging, as people worldwide face job losses and income reductions.
However, there are steps that sellers – and buyers – in the UAE can take to protect themselves. Here, we outline how to avoid the potential financial pitfalls.
Get the best price
Sellers have three options to put their car on the market: go to a dealer, sell it through a managed service such as CarSwitch, or sell it on your own through an online platform such as dubizzle or YallaMotor.
“If you go to a dealer, there is little you need to worry about, except for the fact that you will lose a lot of money,” Mr Hammad says.
He estimates dealers are looking to make at least 10 per cent on the transaction, but the benefit with certified dealers is sellers don’t need to worry about fraud.
Portals such as sellanycar.com or cashanycar.com are “the exact same thing as selling your car to a dealer”, says Mr Hammad. “In fact, what these guys do is sell the car to a dealer.”
CarSwitch acts like a real estate broker and charges between Dh1,000 to Dh3,000 as a service fee to take care of the process, charged only after the car is sold. However, CarSwitch does not take cars that are older than 2009 or have more than 200,000 kilometres.
If you decide to sell your car through a “self-serve portal”, Mr Hammad says it is important to do your research and find out how much similar cars are going for in the market.
“You want to get the most money for your car, particularly during these times of Covid when frankly, it’s incredibly difficult to sell a car because there’s excess supply and suppressed demand,” he says.
One strategy is to find out the bottom price that dealers would offer and price it just above that. “You don’t need to lose 20 per cent of the value – lose 10 per cent and you’ll sell it really quickly,” Mr Hammad says.
Invest in an inspection report
Potential buyers want to know if your car is in good condition, making an inspection report from a reputable service shop a valuable investment, says Jorge Bialade, the general manager of YallaMotor, a subsidiary of the Middle East jobs site Bayt.com.
“Usually in a car-buying transaction, the power is with the buyer … but the inspection report is what actually gives more power to the seller on that negotiation,” Mr Bialade says.
Ideally only accept payment in cash
When it comes to accepting payment, there are three possible formats: cash, cheque or wire transfer.
Both Mr Hammad and Mr Bialade recommend cash as the best choice. “That is the most preferred option in this market, because there is very little counterfeit cash,” says Mr Hammad. “And people are also comfortable because it is a safe country.”
“Do not accept by any means deferred cheques or any sort of instalments,” Mr Bialade says.
If cheque is the only option, then insist on a manager’s or banker’s cheque, whereby the bank takes the funds out of the account in advance.
“This way the money is reserved and the bank is guaranteeing that the money is available,” Mr Hammad says. “Never, under any circumstances whatsoever, take a personal cheque, because personal cheques can bounce. And if they bounce, there’s very little you can do.”
If a seller has been given a dishonoured cheque, a criminal complaint can be filed with police, says Omar Khodeir, a senior associate in the litigation department of Al Tamimi law firm in Dubai.
However, bounced cheques up to Dh200,000 usually result in fines instead of jail sentences and the fines are not payable to the cheque beneficiary.
The third option, wire transfer, is difficult to time to coincide with the transfer of ownership. Sellers are safe if they wait until the money is received, but “buyers need to beware”, says Mr Hammad.
Verify payment before making the transfer
To transfer the ownership, the buyer and seller meet at the car registration centre, so the transfer of ownership and exchange of payment need to be near simultaneous.
“There’s a period of time when you had exchanged the car electronically at the car registration centre and then the cash is expected to be handed over,” says Mr Nicholl. “It’s during that period, where you basically have two minutes, five minutes, 10 minutes … you are trusting that person to hand over the cash for the car.”
To avoid any problems or surprises, Mr Hammad suggests the buyer and seller count the money together while waiting for their turn at the car registration centre. CarSwitch does this, even if it is Dh100,000 or more.
“Yes, it might feel awkward, but it’s a large transaction that you don’t do often,” Mr Hammad says. “Get over it, don’t be awkward. You’re not friends, you’re strangers.”
Don’t neglect transferring ownership
Sellers may feel safe if they have the cash in hand, but have not yet transferred ownership of the car at the registration centre.
However, the liability of the car rests with the registered owner, which means any traffic or Salik fines, and even illegal activity could end up being the responsibility of the owner on record.
“To sell a car is not simply to collect money for it. It is also to transfer ownership, so you are no longer liable,” Mr Hammad says.
Buyers beware too
There are also pitfalls to watch out for on the buyer’s side. “The sword cuts both ways,” Mr Hammad says. “Buyers get ripped off just as often. Both need to be vigilant.”
For example, if a seller has a car loan from the bank, the car cannot be sold until that loan is paid off. The seller must get a "mortgage release" from the bank that shows the loan is cleared for the car registration centre.
Therefore, if the buyer agrees to pay off the loan, it is important to get a seller’s agreement from an official provider, such as CarSwitch, which guarantees they receive the car once the debt is cleared. This protects the buyer, because they could pay off the loan and the seller could disappear.
Seller’s agreements are only available in Dubai, not Abu Dhabi or Sharjah. In those emirates, a power of attorney can be used instead, but buyers should be aware that a power of attorney can be cancelled, Mr Hammad says.