The Nigerian Property Market – The Situation

THE NIGERIAN PROPERTY MARKET – THE SITUATION

This year we have experienced or read about mind-blowing transactions and so 2015 will be remembered as the year of big numbers but these sincerely happened before the election of same year. In this same year we are witnessing a drastic down fall with reference to change in “Premium transactions “.

The change in country’s leadership, policies & party in power has made a lot of deals go from active to pending and from pending to maybe never. As agents & representatives of property owners,investors or buyers you must understand its a network. Your network & alliance also has a lot to do with where your deals come from & same with your financial strength.

* REAL TALK *
The Change in the leadership of our country has brought a lot of stability to so many areas that have to do with input & not circulation of funds. The industry is currently suffering from the actions of corrupt officials. The fight against corruption has made a lot of billionaires go quiet and has only made the current situation worse aside that go off the radar & property market either in search of properties or sales.

According to information reaching us through a serving senator , we were made to understand that over $400,000,000,000 ( Four Hundred Billion Dollars) of stolen funds have been handed over to past and present political office holders in cheques to find a way to keep their funds or deposit these cheques in other banks most especially in their Country of origin. Now these people have decided to just keep the cheque and not deposit to any other nation or bank so they do not get traced. In real estate after service, integrity & trust…..Money is the next big thing.

The above amount mentioned if pumped into the entire country under the leadership of the present President of the country will go a long way. What is most disturbing is that as agents we wait on folks to decide on when they intend to rent, buy or sell properties. permit me to say with the current situation of the nation so many issues have come to thought. The past administration had a lose end to the ability of monitoring the way funds were spent and visibly embezzled. Properties were bought at prices almost twice their value and prices kept soaring higher than expected. The money gang were buying and some agents took advantage of these not so wise billionaires. Now the question we as professionals must ask ourselves are simple.

– Do we need a downward review on prices of properties?
– Have we tried educating property owners (our clients) on how prices are fixed?
– How effective has evaluation been lately?
– The market is crashing based on the fact that people had more than enough to buy properties less than a year ago and based on these facts they ended up buying some properties high than their real value. Once a property sells for a particular amount every owner in same area tens to increase his/her prices. As a property owner its a smart move but on what criteria was the increment in price done and who did make or submit the evaluation?

Today properties in Banana Island & Ikeja GRA are sold for obscene prices and we as agents have continued to encourage these acts just because we lack the integrity to tell a buyer the real prices a property should go for. While some of us have integrity and are willing to advice the owners, some have no conscience and all they have done most times is promise the owner price that are 150% higher than the real value of the property just to make sure they get the authorisation to sell.

Anyone will expect better from owners in such locations to be certain that do not even offer basic amenities like electricity will be constant in such areas. Permit me to let you know that every house in Banana Island has a generator & service charges go as high has 4 million naira on some prime apartments. One may start to wonder why these apartments charge so much on service charges but they do cover a lot but the biggest percentage has to do with petrol or diesel purchase for a year.
Living in an environment where 1000 sqm would not sell less than 330,000,000 ( Three Hundred & Thirty Million Naira)?
One should expect more from the owners of the estate. But if the only reason for purchase is location and to be associated or seen as one of the quiet pseudo billionaires? Well, I leave the rest to each reader’s angle to it.

*SMART AGENTS or SMART CLIENTS
Well we sincerely advice that all seekers of properties must first assess their representatives.
Is your representative more worried about the fee or about getting you something ‘most affordable’ yet deserving? Is your representative protecting you through the bargain and counter responses?
We must let every intending client (buyer or rent) that most times the prices your feel the property should go for is actually what the owner wants. One of the problems most buyers encounter in the process of a transaction is that they tend to negotiate an agents fee….That is the first mistake into a transaction when you are being represented. There must always be clear-cut terms.

The agent is your best friend when it comes to buying a property. You need an agent more than the owner of the property you are about to purchase. these are some reasons why : Your agent will update you on the current prices in the area you desire. Also agents will help liaise with the lawyer and sellers representatives (either way). So when trying to buy a property in Nigeria always pay the agent his full quote and demand for 20% – 35% fall on the asking price. When you do not take anything off anyone representing you as a buyer there is a higher possibility of saving more than the mi-nute 5% an agent is asking as professional fees. Anyone buying a property wants to save money by getting the best of deals and also be able to shake off some more expenses by negotiating the agent’s fee. Agents want to make their full quotes because in Nigeria clients barely pay you finders fee. A finder’s fee,inspection fee and also negotiations and counter offer are not free but a lot of clients do not pay for these services in Nigeria. These clients wait till they have an agreement on price with the owners of the property. Well this is utterly wrong. The agreement must be spelt out clearly and once the agent finds you a house you like it is mandatory that the client pays a finders fee. A finders fee has nothing to do with the value of the house. A finders fee covers the agents expenses in finding the property ( Petrol, Effort & Air-time) . A lot of clients call me and lay complains about agents asking for money after inspection. This happens mostly on the mainland and I have always told them you only pay for what you agreed on not what you never agreed to pay for. If any agent is expecting to be paid for anything the agent has the duty to make that known before the service is rendered not after.

Clients to must start to recognise the effort of dedicated agents who sincerely do the job. The issue of a finders fee’ is introduced to curb clients from wasting your time. Any client who has paid a commitment fee will not be willing to pay another agent for same property search. Once the finders fee is discussed and an agreement signed it also lays claims to a formal authorisation by the client to the agent to look for a property for him/her, simple wisdom.

We wish you a bigger 2016 and a more prosperous 2015 ending.

Abayomi Animashaun

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3 thoughts on “The Nigerian Property Market – The Situation

  1. Good and helpful write up.

    Personally, I am waiting for a ‘bubble burst’ in the property market. A lot of over-priced properties abound out there and the present economic turn vis-a-vis political environment doesn’t favour much realisable deals for us realtors. The reason for this is what you stated above.

    As regards finder’s fees, and other fees being charged by agents, it is important to state on what terms you are engaging a client and reach an agreement before making commitments.

    Cheers!

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