Last week ended with a trending property scam scandal dragging a reputable real estate firm into the mud. Some clients of that same real estate firm have had a few challenges with them in the last 2-3 years.
If they are truly reputable, why these sagas?
How can Nigerians in the Diaspora avoid a repeat?
And how can those who are already in this mess resolve it?
A Nigerian social influencer (who goes by the name: Praise Fawowe) that’s based in the US has developed a special interest in this messy issue and asked several thought-provoking questions on the way forward.
As expected, there have been several respondents with shallow opinions. But issues like this need sufficient research, deep thought, and analysis.
This article will do justice to the questions raised.
The Background Gist on Real Estate Scam
One of our brothers abroad accused a real estate firm of defrauding him of N40 million which constitutes payment for 20 plots of land.
Since 2017, he has not been allotted the plots he paid for. This got him worried, and subsequently, he voiced out on social media.
The Challenges So Far!
Why do we have these types of sagas in the Nigerian real estate sector?:
- Real estate firms can sometimes be victims of bad deals: Developers buy large expanses of land from the locals in transactions worth hundreds of millions or units of billions of naira. Sometimes they get defrauded. After due diligence and payment to one faction of the family, another faction surfaces requesting more money (their own cut, a renegotiation, or repayment). And of course, the first faction must have disappeared into thin air.
- Bureaucratic Bottlenecks: Most of the land developers bought at the Akodo-Ise area of Ibeju Lekki have not been excised by the government since 2017. According to the Land Use Act, the governor is the custodian of all land in his state except for local and federal government land. So, the government is an important go-to person even after you’ve made all payments to the previous owners of the land. Thus, politics can sometimes come into play.
- Real Estate Scam versus Dispute: Most issues that get to the public as real estate scams are mere disputes. In the number 2 scenario above, where the government refused to excise the estate, the options available are either to refund subscribers their money or reallocate them elsewhere. Not every customer will take it easy. Some will feel deceived.
- Severely Waterlogged Areas: Some developers buy land in seemingly good locations where they think they will do a bit of sand filling and sell-off. In one such project, for instance, a developer abandoned a project when he couldn’t reclaim just a plot with 100 tippers of sand. What a bad project!
Back to Our Case Study on Real Estate Scam
This particular case that was portrayed by Kayode Oladipo as a N40 million real estate scam is a mere dispute.
Several real estate potential investors don’t understand how the industry works. They hardly see reasons why they should pay for documentation (receipt, deed of assignment, and survey).
They see things from the angle of a TV set or refrigerator, where you should get your receipt by default immediately after payment. Paying for a receipt doesn’t make sense to them.
Also, no real estate firm will allocate your portion to you until you’ve made all payments (cost of the property, documentation, and development fees).
Even after you’ve paid for the land, you still have to pay for documentation and development before the land will be allotted to you.
If at any point in time, a subscriber wants a refund, only about 70% of his money will be refunded to him because of the managerial and operation costs already incurred by the firm.
And finally, it takes most real estate firms about 90 days to effect the refund.
These terms are similar in all real estate firms.
Don’t expect it to sit well with some buyers especially those who failed to read the terms of the agreement/contract before purchasing the property or those who just want to beat the system by blackmailing the firm.
How to Identify the Real Devils in the Industry
Not every omonile is bad, but most of them will show you shege!
Some of the easiest ways to identify a bad real estate firm are:
- They pay their realtors very high commission,
- They have a lot of bad reviews,
- The land they sell has very bad titles,
- Even after several years of existence, they still lack 1 fully developed or developing estate.
Conclusion
Honestly, you will cry like a baby if you fall prey to a real estate scam. Ensure you do your due diligence before you transact with anyone.
The most important things to check for are the track record of the firm, and the title of the property.
If you are already in a dispute with a seemingly reputable real estate firm, please calm down and work things out with them.
Their deals sometimes get dicey leading to losses in hundreds of millions or tens of billions on transactions that are beyond their control. Even with such huge business losses, they still have to refund their subscribers. It’s definitely not easy!
Finally, not every dispute is a scam. Please stop misleading the public with your choice of the wrong use of words.
Please read, “9 Amazing Rules to Avoid Land Scams that Will Blow Your Mind” to have a better understand of land scams and how they are perpetuated.
Donald Karo
