When we discussed risk/return analysis of real estate investment in Nigeria, we explained that real estate is a low-risk investment. The most dreadful risk in real estate investing is real estate seller scams.
Real estate seller scam is a scam where a land or house buyer parted with money and either got nothing in return or got a substandard property. It is an act of fraudulently selling a house or presenting an unsolicited offer to purchase a property.
This can be exemplified by a land deal a relative had some years ago which went sour:
Hope you are following the storyline?
This brings us to a rule to observe when buying real estate in Nigeria:
Rule 1: Ensure you document everything. Duly signed Deed of Assignment and Receipt of Payment are key-documents that every land buyer must have. All other existing documents in the possession of the seller must also be relinquished to the buyer. Without the dual key-documents, the land still belongs to the seller.
Video the documentation with your phone if you have any form of doubts.
Rule 2: Choose cheques, bank transfer or direct deposit into the seller’s bank account over cash payment. Such types of payments are traceable and can serve as evidence if the deal goes sour.
If you are buying land from omoniles, ensure documentation and payment are tied together as a single event that occurred the same day. Duly signed documents should be collected after the payment is made.
This brings us to a new rule:
Rule 3: If they are not available for allocation, don’t make payment. You are at the mercy of the seller once you’ve made the payment but it’s yet to be allocated. Omoniles can be very trickish. They can show you an attractive location in the community but later allocate you elsewhere.
This brings us to a fresh rule:
Rule 4: Take possession immediately. Even if you have an intention of selling off the property in future, ensure you take possession now by, at least, fully fencing and gating it.
At this point, the deal has become a full-fledged real estate seller scam and it is such an unethical real estate practice.
This brings us to the rule below:
Rule 5: Investigate the authenticity of the land and the character of the seller.
Your legal practitioner will be useful here. S/he needs to check:
This brings us to rules 6 and 7:
Rule 6: Never ever pay into an agent’s account. Request for the account details of the owners and let it align with the names on the deed of assignment. The agent and seller should not use your transaction as a medium for settling their previous deals especially when they had some sort of disagreement.
Rule 7: Always ask for the history of the land before you buy. A land history reveals what makes the seller of a piece of land the owner of the land. Eg. inheritance, purchase, contract etc. The land history will let you know if there might be complications or land disputes in the future. That way, you know whether you should avoid the piece of land or not.
Rule 8: Buy from trusted real estate companies. It is safer to buy land from a reputable real estate company or through a reputable real estate agent than to buy from omoniles. The world is presently a global village. You can always get information about a company’s fraudulent behaviour online (if any) by searching Google. The easiest way to conduct such a search for example is to type site:websiteURL (fraud) or site:websiteURL (scam). Using De Donnies Homes as an example, you should type site:dedonnieshomes.com (fraud) as shown in the image below. Follow-up the links that appear to know if the organization involves in shady deals.