Does the bank need to own the commodity before selling it to me on a Murabaha basis?

This is one of the most important points in understanding Murabaha: the bank is not supposed to sell you something it hasn't acquired through the proper contractual process.

Steps

1. In practice, the bank might appoint you as their agent for some steps in the purchase, but the agency and the sale must remain two distinct phases.

2. If you're reviewing a financing offer for a car or other goods, simply ask: Who bought the asset first?

3. And when was the final sale agreement made with me?

Source

• AAOIFI — Sharia Standard 8: Murabahah