Is real estate business allowed in Islam?

Question

Is real estate business allowed in Islam? I live in the US and most buyers within the US buy a property with a mortgage loan, and I know anything to do with interest is not allowed. The only reason why I am concerned and I am questioning this is because of the agent's involvement with the buyer. As an agent, if I represent the buyer I am technically taking a part in how the buyer will buy the house; all-cash, or mortgage.

I really like real estate and I was wondering if it is allowed according to the teachings of the Qur'an.

Answer 1

In Islam buying and selling is mubah. See this hadith:

Messenger of Allah (pbuh) said: "Both parties in a business transaction have a right to annul it so long as they have not separated; and if they tell the truth and make everything clear to each other (i.e., the seller and the buyer speak the truth, the seller with regard to what is purchased, and the buyer with regard to the money) they will be blessed in their transaction, but if they conceal anything and lie, the blessing on their transaction will be eliminated."

[Al-Bukhari and Muslim].

So as long as both buyer and seller are in agreement, and the contract doesn't contradict any other Shari'ah law, then selling anything is mubah. There are certain items that are explicitly haraam to sell (like intoxicants), but real estate is not among them.

Answer 2

Islamqa.com:

In Saheeh Muslim and elsewhere it is narrated that Jaabir (may Allaah be pleased with him) said: The Messenger of Allaah (peace and blessings of Allaah be upon him) cursed the one who consumes riba, the one who pays it, the one who writes it down and the two who witness it, and he said, “They are all the same.”

As a real estate agent, I don't think you normally get involved with helping the buyer setup a mortgage, and I don't think you witness the buyers mortgage agreement signature either.

Answer 3

as long as you're dealing in cash, ie; the sale involves no interest on your part.

then it is halaal, there is no reason why we should buy, or sell houses without using interest as muslims, but as soon as interest comes into the equation, you should stay out of it, I'm sure based on what you're allowed to do in your belief, you shouldn't be forced to deal with interest if you're muslim.

Answer 4

It seems quite evident that since the real estate agent is fully involved in the sale and purchase of real estate and also helps in arranging mortgage which is always interest based (riba)---so the real estate agent is directly or indirectly facilitating riba--in fact he she is helping encouraging and inviting people to engage in riba for his personal gains

Answer 5

As a real estate agent, I don't think you normally get involved with helping the buyer setup a mortgage, and I don't think you witness the buyers mortgage agreement signature either.

This is incorrect. In the USA, once a house or property has been sold, both the LISTING and SELLING agents (be they the same or different people) MUST be at the closing. At the closing there are many documents that need to be signed by the seller and buyer of the property. For this discussion the critical document(s) pertain to the mortgage, which expressly contains the terms of payment and RIBA. Although the agents may not facilitate obtaining the mortgage, they are clear witnesses to the signing. As such, I humbly disagree that selling real estate, aside from 100% cash, is halal.

Answer 6

They did not have fiat currencies in our prophet's time. In fact, fiat currencies are a recent invention of the last 150 years. Fiat currencies used to be backed by gold. For example, prior to 1971, the US Dollar was backed by gold. Then president Richard Nixon took the dollar off of the gold standard after he made agreements with Saudi Arabia, Iran, and Persian gulf countries to sell their petroleum only in US Dollars. So, in effect the dollar has been backed by petroleum reserves instead of gold since that time.

Despite being backed by international petroleum reserves, the dollar continuously loses value compared to real assets like gold, silver, land, fuel, food, etc. This is known as inflation and is a form of riba. Inflation is particularly acute for fiat currencies that are not pegged to the dollar or euro and not backed by any real assets; such as the currencies of many third world countries.

Therefore, when trying to determine the real amount of riba involved in a loan or mortgage we have to compensate for inflation of the currency compared to the value of hard assets like gold or silver. If the inflation of the currency compounded on a monthly basis underlying a 30 year mortgage equals the the compounding interest rate of the note, then there is no real riba since the effect on one cancels the other.

In conclusion, while interest charged on a note based on hard currency is definitely riba, this is not always the case for loans based on fiat currency.