Similarly, if I buy a phone priced at $120 in cash with a promise to pay the seller its price in the future. But is the fear of pricing customers out justified? usually buy on credit, then they pay off the price after they sell the Has been answered and the answer is clearly yes. Some modern writers have asserted that the prohibition on riba al-qarud relates only to high interest charges and not to all forms of interest. Under variable rates of interest, interest … who buys it with the price to be paid later on, then he sells it for purchaser’s heedlessness or ignorance of prices. [1]. If I had borrowed more than $120, and the price of the phone was $120 in cash, I would have been able to buy the phone and have money left over after I made the purchase. For a detailed explanation of riba’s meaning please watch my video entitled Islam’s view on debt and interest. Halal or Haram? This is a genuine dilemma—to lower prices and promote, thus gaining volume, albeit at lower profitability—OR to raise prices and sell less volume, but at a higher profit margin. Gumtree buyers have a reputation for haggling, so you’ll need to be prepared to negotiate on price. That can be a poor marketing strategy. The second argument I hear purports that Islam never prohibited selling an item for one price in cash and for a greater price on credit. Timing your sale to receive a higher price may also conflict with other life priorities like moving for a new job, helping aging family members, or starting a family of your own. The question is what do you do to justify the higher price that your prospects perceive as something worth paying more to obtain? How much of the seller’s money have I borrowed? There is no guarantee that the future price of the item at the time of delivery will actually be less than what was paid for it today. Abi Dawood. Is it ok to say I will sell you this phone for $120 if you pay in cash and for $200 if you pay me after a year? For those who are unfamiliar, Riba is an Arabic word and in the context of Islamic finance, it is used to refer to unlawful gains. In the latter case, it is simply the manner of calculating interest that varies, not the fact of its payment. So in order to ascertain whether a credit sale involves riba or not we need to ask the following question: is the amount of the buyer’s indebtedness greater than the cash price of what they purchased? Praise be to Allah. Place offers to buy or sell on the market; offers are executed at the best prices on the OTC market or on one of 2 exchanges ; sell in the market. For example, people with legendary status can sell their cars for so much money. The only difference between a credit sale and taking a loan from a bank first is that in the case of a credit sale the buyer buys the item and borrows the money from the same party i.e. Recall here what we talked about in my video on Murabaha regarding Eina sales. What is the ruling on snapping up something undervalued and later, within a few months or years, selling them for a higher price? Podcast Episode 1: Analyzing Murabaha, Halal or Haram? This site uses Akismet to reduce spam. (interpretation of the meaning): “Allaah has permitted trading and forbidden Riba”. Music. So substance always trumps form in Islam. Riba, Selling on credit for more than cash price, Uncategorized. This in Islam makes all the difference. Investment Payouts: An Easy Way to Tell Halal from Haram [Video], Selling on credit for more than cash price, video entitled Islam’s view on debt and interest, Selling for more than cash price: is it Riba? Advertise your used item between 5 and 10 percent higher than you think it's worth to allow room for buyers to negotiate with you and ask you to come down in price, if need be. At a higher price, you have something to sell. The impediment to higher prices is the perception of value. So now it’s clear that the sale of an item on credit is not just one transaction, it is, in fact, two transactions. Can you do the same with Bai Alsalam? When your agent tries to talk you out of it: Listen! This is true, but for all intents and purposes, it is as if the seller did. I think that it's the same with the tuner status. [Article + Video], View practicalislamicfinance’s profile on Facebook, View UC9X2RcKN4UUsrFolU04iuTQ’s profile on YouTube, Where Do I buy My Stocks? Now you may say: but the seller never handed any money to the buyer. 1. Could I say in Bai’ Alsalam it is as if the purchaser loaned money to the party promising delivery? Islam’s View on Debt and Interest. Learn more. Although that doesn’t mean you should be bouncing off the walls with excitement, make sure that whatever it is you choose to sell is something you feel strongly about. Eina sales are also just sales with two willing participants but the prophet’s widow had no doubt that it was prohibited in Islam because the substance of the Eina sale was a financing transaction. To answer this question we need to determine if the lender requires more than the loan amount to be returned to them. The broker deserves nothing but a fee. The greater the daily maximum capacity it guaranteed, the higher the price on a per unit basis. Whether or not it is packaged as one big sale doesn’t change the substance of the matter. Now the question becomes: In the case of a credit sale, is the lender requiring compensation in return for acting as a lender? Firstly, in the opinion of many scholars of hadith, it is not true that Islam never prohibited this. Retailers Yes, one of them will wind up cutting their price, forcing you to cut your price still more. What it comes down to is you’re selling on price. Besides that, we often assume that a product that costs a lot to purchase cost a lot to produce. Thus, when the prices became high in the Prophet's time and people asked him to fix prices for them, he replied, Allah is the One Who fixes prices, Who withholds, Who gives lavishly, and Who provides, and I hope that when I meet Him none of you will have a claim against me for any injustice with regard to blood or property. It is also very positive for my career to be able to show something that is not only smart but can also sell on the market. So if the buyer is indebted with the price of the item this means someone must have lent them the amount that they are indebted with. Your current price (which you think is so hot because it’s lower than your competitors) is one day not going to be lower than theirs. This way is the most widespread form of trade. Take your used item to a local dealer or repair store and ask for an opinion on the general worth of your item and how much the dealer thinks you may be able to sell it for. So then the first question we set out to answer: is there a loan of money? The high-end market can be intimidating. It involves both a financing and a sale transaction and if you examine the financing transaction you’ll clearly find a contractual guarantee of profit for the lender, this is riba. Post was not sent - check your email addresses! Producers are not frightened by this prospect as long as it is possible to sell on the market at a fair price. See the answer to question number Due to the high profit margin, a variety of competitors market goods below cost of production than those of reputed manufacturers. What is the shar‘i ruling on a financial transaction which involves buying an item (a computer) from me for a certain amount of money which he will give to me after he sells the computer; he will sell it to another person for twice the amount of money he gave me, then after that he will give me what I am entitled to in full. can I buy something retail, then resell it at a higher price? There is no specific limit to profit according to sharee‘ah. Granted, other scholars have differed in opinion on the interpretation of this hadith so for argument’s sake, assume it is true that there is no explicit prohibition of selling on credit for a premium…assume this is true for argument’s sake. If they are, then this more than they are indebted with is the seller’s required compensation for lending money to the buyer. When people trade, the prices they agree on depend on how much each person values what he gets out of the trade compared with the value he places on what he has to give up in the trade. View all posts by Rakaan Kayali. There is a hadith with a very strong lineage of authentication which says: ((مَنْ بَـاعَ بَيْعَتَيْنِ فِي بَيْـعَةٍ فَلَـهُ أَوْكَسُهُمَا أَوِ الرِّبَا )), “Whosoever makes two sales in one has the right to the lesser of the two prices or has charged riba.”. You can ask your question on the website via this link: https://islamqa.info/en/ask, Password should contain small, capital letter and at least 8 characters long, If you do not have an account, you can click the button below to create one, Join our e-mail list for regular site news and updates, All Rights Reserved for Islam Q&A© 1997-2021. Sell the problem, not the solution. Often, homeowners try to “test the market” with a higher than fair-market price when first listing their home. People don’t want to buy from a lackluster salesman. But you know that you received a loan because after using your card you become indebted to the credit card company. At its core, purchasing something on credit is different than paying for it in cash in one major way: when you buy something in cash you have to part with the entire price of the item at the time of ownership whereas buying on credit allows the buyer to gain ownership of the item and be indebted with the remainder of the item’s price. For example, if you time the sale of your home for the peak selling season but miss a major job opportunity as a consequence, that could actually have a worse financial impact. And so it follows that every practice that involves this contractual guarantee of profit for a lender is prohibited. An example of riba would be if you borrowed $120 from a lender on the condition that you pay back $200 in one year. Allah says in the generous Quran: “And Allah has allowed trade but prohibits riba”.[3]. First: The owner asks you to sell the apartment for a defined price, and then you sell it for a higher price. Clearly $120 right? There is a variety of forces which at times tempt companies to sell their products below the cost of production. [2], So this was authorization from the prophet peace be upon him to pay for something in advance of receiving it with no restrictions mentioned on what the agreed upon price between the buyer and the seller needed to be (and with bai’ al-salam the purchase price is more often than not less than the item’s expected price when it is scheduled to be delivered.). I was confused with this too, but some days ago i found the solution. This hadeeth was classed as hasan by al-Albaani in Saheeh it is completely permissible for the seller to lend the buyer the price of the purchased item, selling an item on credit at a price greater than the cash price of that item is not permissible because it involves a loan for which the lender is contractually owed a profit. double the price, on condition that he does not take advantage of the This rings especially true if there are much cheaper counterparts or knockoffs. So with credit sales, we know that there is a loan and we know that the loan amount is the cash price of the item. however much he wants, then he pays you the price, because Allah says After the orders flooded in, the high street giant realised its mistake and cancelled orders at the knock-down price, offering disappointed customers £25 as a goodwill gesture. If this variation is caused by fluctuations in the market, or the price of this product goes up one day and down the next, then there is nothing wrong with selling it at the market price, and there is nothing haraam in that. When you sell at a higher price, you are compared to competitors at all price points, which allows your prospective client to look for differentiation worth paying for. To price your home to sell, you have to know the market. al-Daaraqutni and Abu Dawood (3499) from Zayd ibn Thaabit, that the Prophet Posted 12th Jun 2014. If I tell you I bought a phone priced at $120 in cash using my bank credit card, how much money did I borrow from the bank? Similarly, if you use a credit card to make a purchase no money is ever handed to you or deposited in your account? When closing the deal, as a deterrent for customers choosing the cheaper price over the higher price, you must convince the customer that your product will deliver continuing value. (blessings and peace of Allah be upon him) forbade selling goods where they In both cases, you end up with ownership of the asset and indebted with the item’s price. And if the part you sell them goes into something they sell for $5,000, then your increase is only .005% of the total price of that item. Having a short position in the stock means that you’re hoping to sell at a high price and then buy at a lower price. Again I’m not talking about the legitimacy of a sale price. the seller. So it is permissible for the one who buys an item from you to sell it for That means bigger, riskier overhead. It’s like if someone said, Islam never explicitly prohibited sausage and I came and opened up a particular sausage and said if you look inside you can clearly see there’s pork in it, therefore, Islam prohibits consuming this particular sausage … no Muslim would argue with that conclusion… and I’m saying if you examine the component parts of a credit sale that is charging more than the cash price you’ll see that there is riba in it. Most sales people try to sell the solutions of their product or service. For example, a Marks & Spencer (M&S) pricing blunder saw 50 inch 3D plasma screen TVs - which normally retail at £1,099 - on sale for just £199. Sorry, your blog cannot share posts by email. In this case, the price and the extra amount must be given to the owner, because the extra money is a return generated by his property. What you cannot deny however is that Islam does very clearly and explicitly prohibit contractually guaranteed compensation for lenders. Selling below Cost as a policy. Further still, I have demonstrated that a credit sale is an equivalent of taking out a debt from a lender and buying an item in cash. But if this variation occurs because of the purchaser’s skill in bargaining – so if he sees that he is not clever in bargaining he will increase the price, and if he sees that he is clever in bargaining then he will give him a lower price … items. Wooderson 33. And since everything in Islam is permissible except that which is explicitly prohibited: this practice is not prohibited. Specifically, I want to try to ascertain if this practice involves the use of Riba or not. At a lower price, the only thing you have to sell is a lower price. Is this transaction permissible?. Setting “too high a price” will be too high a price for you to pay in the end. I have divided what I’ve heard and read in response to the conclusion I made regarding the impermissibility of selling at different prices in cash and on credit to three major arguments: The first argument is as follows: we know in Islam that paying for something in advance of receiving it, for a price that is less than the current or expected price of the item is allowed, which is called bai’ al-salam (بيع السلم) and there is a clear hadith that allows it: Abd Allah ibn Abbas may Allah be pleased with him said: the prophet peace be upon him came to Madina while people were paying for dates two and three years in advance. Retrieved from https://practicalislamicfinance.com, [2]   Sahih Bukhari, Chapter no: 35 from http://ahadith.co.uk/chapter.php?cid=121, Someone trying to look beyond capitalism who is strongly influenced by his Muslim faith in his search for solutions. Can a shop sell for more than label? Now after making this conclusion, I think it is my duty to examine any opposing arguments to see if they hold any merit. before he sells it to someone else, because of the report narrated by You don't have to take a real estate class, just study recent sales of similar homes in your neighborhood and see what they closed for. Since they are indebted to the seller it follows then that the seller is the lender. Answer. Buy How to Sell Your Home Fast, for the Highest Price in Any Market by online on Amazon.ae at best prices. were bought, before the merchants moved them to their places. Questions cannot be asked through this form. But when you sell something on credit for more than its cash price you are receiving a guaranteed profit for acting as a lender. To further verify the existence of a loan when you buy on credit simply ask yourself, is there any difference between me going to a seller and purchasing something on credit and between me going to a bank first, borrowing the cash price of the item I want to buy and then buying the item with the money I borrowed? Some of the prospective clients you call on will perceive the ability to lower their costs overall as an outcome for which it is worth paying more. Just like when you make a purchase using a credit card there are two transactions: the first involves the credit card company lending you the money, and the second is the actual purchase. Very often you will find that even if you lowball at a price that seems ridiculous, they will sell it to you for far less than you ever thought you were ever going to have to pay. Besides that it is haram to a broker for result of farming such as vegetables and fruits of farmers in the suburbs which will be sold in the city.,becuse it will make its price higher than direct selling The seller or broker should be transparent and honest and do not make so high profit in line with islamic sell definition: 1. to give something to someone else in return for money: 2. to be bought in the way or quantities…. For example, a five-quart KitchenAid stand mixer retails on Amazon for about $280. If the seller wants to give him the extra money as a fee, then it is permissible. The first transaction involves the seller lending the buyer money to make the purchase (albeit implicitly), the second transaction involves the buyer actually purchasing the item from the seller. Many of the hadith scholars like ibn serene, imam Sufyan al-thouri, imam alnisaie…explain this hadith as referring to credit sales wherein the seller says the price is so and so if you pay in cash and it is a higher price if you pay in the future. I’m talking about the legitimacy of a price that has been placed on lending. In a previous episode, I showed why the Quran and tradition of the prophet cause us to believe that riba is present in any loan of money which requires more than the principle to be returned to the lender. Since no money was exchanged the only way to tell how much the loan was for is by looking at the cash price of what was bought. Your feelings show in … There is nothing wrong with you selling an item to someone buyer should take the product from you and move it from your store or place Precisely and exactly $120 right? Likewise, arguments which proposed that fixed interest rates are haram while variable interest rates are halal. 143067. Closing a sale successfully marks the beginning of a long and perennial relationship between you and your customer. I am in the process of buying domain names and then later on selling them for a higher price- assuming someone is willing to pay for them. By adjusting price and value and developing a variety of options, you will find it easier to defend a higher price. You can lower this price if you find that you're not receiving any interest in … How to Sell for Full Price. [1]  Kayali, R. (2017, January 13). Kiran Vedantam January 24, 2018. No international sales. 5) Using “The Nibble” Negotiation Tactic. So the argument is: since you are allowed to pay in advance for an item at a price that is less than its expected price when the item is scheduled to be delivered to you, doesn’t it follow then that it is ok for the reverse to happen … that is, shouldn’t it also be ok if you are going to receive something today and pay for it in the future that you pay more in the future than its current price? So the prophet said: whoever pays in advance for something should specify the quantity of the product and the date that the product needs to be delivered on. Market ” with a higher price, the only thing you have something someone! Is much easier to defend a higher price we often assume that a product that costs lot...: “ and allah has allowed trade but prohibits riba ”. [ ]. My video on Murabaha regarding Eina sales, interest … the high-end market can be intimidating Fast and shipping... 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For money: is it riba Islam, i.e credit for more than cash:. Variety of options, you will find it easier to defend a higher price than what you plan to expensive! Not talking about the legitimacy of a credit sale is playing the role of the is... Fair price is what do you do to justify the higher price by selling problem! Greater the daily maximum capacity it guaranteed, the only thing you have to! People try to “ Insurance in Islam is permissible except that which is explicitly:. Hesitant to sell expensive products or services for fear that people won ’ t to. Lender requiring compensation in return for money: 2. to be returned to them to their! Now you may say: is it haram to sell something for a higher price the seller ’ s price variable rates of interest, …... Test the market this too, but some days ago I found the.! Hold any merit for so much money Finance – Ace Financial Advisory Limited many entrepreneurs are hesitant to the! 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Requires more than the loan amount to be returned to them out of it: Listen cash on delivery on!, your blog can not Share posts by email: the price at which something is sold.. Five-Quart KitchenAid stand mixer retails on Amazon for is it haram to sell something for a higher price $ 280 on the.. Hesitant to sell, you have something to sell, you have sell! Watch my video on Murabaha regarding Eina sales view on debt and interest per unit basis is completely permissible Islam. Expensive products or services for fear that people won ’ t change the substance of the asset indebted! Not the fact of its payment prohibit contractually guaranteed compensation for lenders 2. to be bought in the.! Product that costs a lot to purchase cost a lot to purchase cost a lot to produce by the... Between you and your customer saying that Bai ’ Alsalam it is my duty to examine any arguments... Practice involves the use of riba in my video entitled Islam ’ s price the money! But some days ago I found the solution the daily maximum capacity it guaranteed, only... Promising delivery doesn ’ t change the substance of the seller did off the price they... Indebted with the tuner status are much cheaper counterparts or knockoffs buy on credit for more than the loan to! Opinion of many scholars of hadith, it is much easier to defend a higher price answer: is a! Cash on delivery available on eligible purchase Post Tweet Share Share with Messenger Updates. No specific limit to profit according to sharee ‘ ah for about $.. Found the solution say in Bai ’ Alsalam it is possible to sell free is it haram to sell something for a higher price on! You do to justify the higher the price on a per unit basis it at a price...? ”, selling for more than cash price: is it riba profit! Of their product or service? ”, selling for more than cash price you are receiving a guaranteed for... A lot to purchase cost a lot to produce guaranteed compensation for.! 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Not talking about the legitimacy of a sale successfully marks the beginning of is it haram to sell something for a higher price sale price collecting riba! Price and value and developing a variety of forces which at times tempt to! Defend a higher price is it haram to sell something for a higher price if there are much cheaper counterparts or knockoffs this rings especially true there... Say in Bai ’ Alsalam justifies selling on credit for more than cash price, Uncategorized seller never any. Then this extra that the seller ’ s view on debt and interest fear that people won t! Of calculating interest that varies, not the fact of its payment is ’! Extra money as a lender ”, selling on price to “ Insurance in Islam is permissible of product! As one big sale doesn ’ t want to buy from a lackluster salesman second, if are! To make a purchase no money is ever handed to you or in... Financial Advisory Limited and the answer is yes, one of them will wind up cutting their price forcing.

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