BUYERS BEWARE!

In layman’s real estate terms, “Buyer Beware” simply means that you should be armed with all your facts before you proceed with the purchase of a property. The emotional travail and stress of buying a house are well known. A big contributor to this stress is when hope for settling down is later turned into disappointment. Last week I came across some distressed clients who felt they had been cheated by other Agents in their purchases and now want legal redress. Usually a property for sale does not spell out the problems that may lie ahead for the potential buyers. Sometimes a house’s serious issues are hidden but it is wise to heed the phrase “buyer beware” with caution and all seriousness. Most times, however, there is no clue to what problems may be ahead of you. Homebuyers just have to go see and then decide for themselves whether to proceed or not. Some common examples of deal breakers (the immediate problems that may cause homebuyers to remove a house from their list)

External Issues

Among the typical deal breakers I come across are a house’s proximity to high-tension wires. Nigerians have not been well educated on this and therefore a lot of residential homes still exist near or under these electric poles. The radiation from power lines has been found to cause serious health problems. There are things that can be good or bad depending on the needs of the client. Being close to a commercially zoned area could be undesirable for someone looking for peace and quiet. When a house is located on a busy street, it’s often a significant enough safety concern for parents of small children or families with pets that it is a deal breaker. Busy streets also create a noise issue, however, that does not rule out busy streets for everyone. “A busy road could be a turn off for someone with small children, but a real benefit to someone who needs access to public transportation.

Other significant causes for concern may include old roofs, old septic/water tanks, fumes, and smells. A home buyer turned down a property recently because it was near a petrol station. Another classic make-or-break issue is the quality and safety of the surrounding area ie, the number of armed robbery attacks.

Internal Problems

Water issues are notorious deal breakers, and homes in sand filled water logged areas are more difficult to sell. One must be vigilant for dampness on walls, this can be an expensive mistake. The cost of service charges can be a problem for some buyers.

A client told me the worst place she saw while house hunting: “There were hundreds of huge dead cockroaches inside the door, her son was afraid to go inside the house so she left  

Intangibles

Not all problems are obvious or explainable. Owners being evasive can mean they have something to hide. Some deal breakers cannot be explained; some people just have a feeling that it is not right for them and pull out. A client said he had a funny feeling while checking out an apartment and that was enough reason to leave immediately.

Having a list of deal breakers means knowing what to watch out for before you sign the sale documents. Buyers need to work with a good estate agent that understands their needs and can identify listings that are in line with those needs. I personally advise visiting the home at various times with friends and family before buying and talk to neighbours. You may find out things that are not evident in the sales documents

ESTATE AGENTS FEES

The term “Estate Agent” seems to conjure up various emotions in people, ranging from annoyance, anger, disgust, fear, amusement and suspicion. None good, I must add that this is not peculiar to Nigerian Estate Agents alone, but Agents around the world. The sad reality is that many so called Agents in Nigeria are mere cowboys and opportunists out to make a quick buck! The reason they succeed in getting away with this is the clients who use them so they can pay minimal fees and cut corners. The problem with this is that anyone willing to accept mediocrity will ultimately pay for it in other ways and that is usually by meeting a 419 Agent, getting a bad service or a worst case scenario, the Agent disappears with their money. Because this happens so often, most Estate Agents are often viewed with suspicion before they have even started their work.

 During the week I was approached by someone who claimed he had been cheated by an Estate Agent. The Agent had collected the rent on the landlords’ behalf and disappeared with the money! When I enquired from him where he had gotten the Agent from, he said the Agent had approached him and told him that he did not have to pay any fees, as this would be collected from the tenants, so the landlord gave him permission to let the property, without any checks. The 419 Agent proceeded to collect three sets of rent for the one property and promptly evaporated into thin air. The name he gave the landlord was different from what he gave to the tenants, all fake. No one had an accurate description of him, no address and the phone was turned off and not traceable!  Whilst I sympathise with the landlord, I am fairly certain that he was trying to save money by not using a legitimate Estate Agents service, which would entail paying fees. The saying “you pay for what you get” rings very true here.

 Another fee paying incident that occurred recently was in a Lease renewal case. The Agent who had originally placed the tenant three years ago on behalf of the landlord who resides abroad, had been contacted by the landlord to renew for another two years on his behalf. The rent on the property had gone up substantially in the three years, so the landlord of course wanted market rent which the tenant did not want to pay. A tug of war ensued between the tenant and landlord of whom the agent was the mediator and negotiator. After a month of negotiating and sending emails, telephone calls etc, an acceptable amount was agreed by both parties. The Agent sent a formal letter to both parties to confirm the amounts and his fees. The landlord despite the one appointing the Agent to manage the property point blank refused to pay fees, saying it should be the tenant’s responsibility. The tenant point blank refusing saying the first set of fees three years previously should cover the management forever?

My advice would be that legitimate Estate Agents must cover themselves by stating in their formal letters of contract/offer, how much their fees are, the period in question and for what specifically. Where an Agent is appointed by the landlord, the landlord should pay his fees. Where an Agent is appointed by a tenant, the tenant should pay the fees, both initial and renewal. This is clear and simple and stated in the Lagos State Tenancy Law. Yet still we get so much confusion over fee payments and amounts.The unfortunate truth is that no formal training has been given to most Agents

DUPLEX OR TOWNHOUSE?

Whenever I advertise a property as a detached house, I still get calls asking if it is a duplex, townhouse or bungalow? I get asked this question so many times that it may be best to explain what the differences are. A detached house is a single unit property (usually having a downstairs and an upstairs) that sits on its own plot of land, not joined by any other property. A duplex normally refers to a residential property and consisting of two separate living units sharing a common wall. A Townhouse is a row of residential home usually constructed as a two or three-story unit all joined by a common wall. Parking space is sometimes included into the building. A bungalow is a single story low level residential unit, usually on its own plot.

 

It was interesting that the President made an unannounced visit to the Police barracks in Ikeja recently. I guess he saw for himself what we have all known and continue to see at all the barrack accommodation littered around Lagos, from Falomo, Bonny Camp, Victoria Island, Surulere, Yaba etc, they are all eyesores. Not only barracks but all the so called Low Cost blocks of flats that were put up years ago to support the population of low income workers. Even our University accommodation halls are now a sight for sore eyes. Public infrastructure has long been and continues to suffer from a lack of maintenance which seems to be a boil in the backside of the nation. Everywhere you turn; there is evidence of infrastructural decay, from our roads, airports, hospitals to our housing estates. When will it end? It will be interesting to watch and see what will come out of our Presidents visit to the barracks. It may well serve as a shake up for other areas of infrastructural rot

The continuing lack of electricity to homes, has meant that there is an over reliance on generators. Unfortunately a lot of so called affordable generators are the loudest noise producing machines to be ever invented by man. These machines can be so loud that prolonged use of them can make you deaf once they are turned off, because the silence is an assault to the senses. I experienced this at a friend’s place, where the racket from the generator was so loud and had been on all day, therefore we had gotten used to the noise. When good old NEPA brought the light and we waited for a few minutes before agreeing that it would be safe to turn off the generator, the silence that engulfed us was shocking!. It took about 15 minutes before we felt comfortable in the silence to start talking normally again. We have become desensitized to the noise pollution and filth around us.

 Some new serviced estates have sprung up along the Lekki Expressway corridor, that are surprisingly well managed and good quality, moreover they start out affordable for those who can get a foot in quickly, and seem to appreciate alarmingly over a short period of time. I must stress that this seems to only happen to one particular developer that I am aware of. The units get sold out so fast, leaving other developers wondering has has happened to their own units. A bench mark is also set for other developers in terms of quality and pricing. It is well known that competition is good and brings about regulations and lower pricing in commodities. Let us hope that this formula works for the future of our housing market  

POWER GENERATION AND 10,000MW OF FALSE PROMISES

The New Year has started with the Federal Government yet again promising that by the end of 2013, we will see electricity generation rise from its current estimated output of 3000mw to 10,000mw? It will be recalled that over the last few years we have been promised an increase in power generation at the beginning and end of every year, yet nothing comes of it. The one constant in our lives and homes, is our generators and fuel supply, without which we would have no life at all. We can rely on our generators to provide power as and when we want it, not PHCN. The power generation in the country is at best, comatose. Power can be taken ten times in one hour, damaging electrical appliances and leaving one to foot the cost of these losses or in many instances, no power is supplied for days or weeks. The issue of power generation despite promises of privatisation, seems to be a growing one with no end in sight.

Most estates now come as serviced, with power supply for which there is a charge. Of recent a number of estates have cancelled this service due to complaints from residents that they are being cheated by the ever increasing diesel charges. The residents are then left to buy their own individual generators and supply their own fuel. The problem with this is that most estates are built with the houses adjoining one another or in close proximity, thereby not leaving much space to do anything other than park one or two cars, if at all. Noise becomes a big issue as the neighbour has no control over the size of generator his neighbour can buy or the fuel spills that go with refilling the generators. The surroundings then become noisy, choked up and filthy, leaving the residents living in misery.

During the week I visited an estate in Lekki 1 that had ceased its power provision to residents at the end of last year. Some residents are moving out despite their leases not expiring yet, as they will not run their own generators. This estate has ceased to be a desirable option for those who want their comforts met at an extra cost. 

An estate that can successfully provide services for its residents, will be a much sought after estate. Unfortunately there is no pleasing some residents who will always insist on disputing charges, even when the charges have been broken down to its last kobo, and when they signed they bought or signed the lease on a property in the estate knowing full well that the estate is to be serviced. Some of the larger estates have two or three industrial sized generators so that there is continuous power supply to residents and charges are collected up to one year in advance.

On the Lagos Island it is common to see prices of properties and services listed in $. Whilst I do not agree with this, the accepted thinking is that these properties are targeted at the expatriate community who understand the value of the dollar better than the naira. Unfortunately these properties alienate the wider Nigerian market who may also be able to afford to live there. A lot of high end properties are not being sold or let as quickly as previously, some are remaining empty for two years or more while the owner looks for a “corporate letting” or expatriates only. The property market needs a shakeup in all areas of its operations

 

WHEN RICH MEN DIE, WHAT HAPPENS TO THEIR PROPERTIES?

Monday

When rich men die in Nigeria, is seems the controversy over their properties lingers for years after their death and sometimes for a lifetime. Whether or not they leave a will behind,in many instances makes no difference whatsover to who gets the proceeds of his wealth. We have heard the stories of prominent families where the children have publicly been at war with one another for many years after the deaths of their fathers. Recently a prominent Nigerian died leaving the family home to his wife in his will. It is reported that the older son has taken up residence there, saying that in their culture, the first male child will take over the fathers property. What then does this make the law? An ass?

Tuesday

The Minister for works has promised that from next year, all construction projects below N5 billion (approx $157m) will be handled by Nigerian contractors with the necessary capabilities! He said that this policy was designed by the Federal Government to help build local capacity and promote local content in the industry and rely less on expatriate companies. He said that over 80% of the of the capital budget of all tiers of government is expended on in the construction and engineering industry, which is dominated by foreign contractors and consequently creating a loss in income for the country. The policy he claims is aimed at redressing the imbalance. We sincerely hope so.

Wednesday

The Federal Government has approved the allocation of N2billion(approx $63m) for the construction of the official residence for the vice president in Abuja!  In 2009 N7.1 billion was allocated for the design and construction of an official residence for the then Vice President. We are not clear what has become of that residence. The new official residence is reported to be contracted to Julius Berger and must be completed in 20 months as the Vice President currently resides in the guest house meant for president’s visits! Also 2.2billion naira was approved to construct an additional banquet hall to host presidential ceremonies

Meanwhile, N1.5 billion was allocated for the development of a rail line and N1 billion for health care facilities! Reporters were told at a meeting that the N50 billion allocated overall for infrastructure development for the FCT was inadequate and further intervention funding would need to be found!?……

Thursday

I had to visit some large estates along the Chevron Alpha beach area, which are still in the finishing stages of construction and still fairly inaccessible due to the untarred roads. What struck me about these estates that have been so widely marketed for years, is how poor the infrastructure and quality of construction is. The completed units have been empty for so long that they are already showing signs of decay due to the proximity to the ocean and the high salt content in the air. The developers are obviously having financial challenges as they are not getting the returns on these properties that they had projected for loan repayments. With so many properties lying empty it makes a mockery of the government policies to build more affordable homes for people

Friday

I got a call from a gentleman who wanted my thoughts on setting up an on-line interactive property site. Whilst I thought the call would be brief, he went into facts and figures, keeping me on the line for at least 20 minutes. I jokingly told him I would charge him consultancy fees, to which he spent a further two minutes laughing. I was certainly amused by his proposition, which is what kept me on the phone for so long, but what was clear to me was that he had not researched the property market well enough to realise that his proposal while having good intentions, may not work in the Nigerian property market, which in reality adheres to no regulations or law. I wish him luck anyway!

OWNING vs RENTING

Monday

Everyone I know in Nigeria wants to own their own home, yet not many can afford to do so. In a country where more often than not, you will certainly have to purchase a home outright or if you are fortunate (maybe unfortunate) enough to get a mortgage, then you spend almost double the purchase amount acquiring a property.

Apart from the actual cost of the property, there are other costs to be factored into the purchase, valuation and survey fees, mortgage fees, estate agents fees, legal fees, transfer fees, all the government tax charges etc. Some people are so interested in building the biggest and flashest mansion anywhere they can get land, they forget that the location may not be best suited for living in. They then find that they cannot live in, sell or rent out the property, due to location constraints.

Research needs to be carried out on area prospects (excluding your home town!) before building, as this may help prevent unfortunate mistakes that will make your property unliveable. Renting may be the best option until you can afford what you really want

Tuesday

On the topic of building in the “wrong” location, I was contacted by someone who had put up a 15 bedroom house which he wanted to use as a small hotel, in the Ogba area of Lagos. He started the project five years ago, and was not able to complete it due to over stretching himself financially. He now wants to sell it for “anything reasonable”?

I have said in past articles, that a property is only worth as much as someone is willing to pay for it. Especially a property built in a swamp area with no infrastructure around it.

Wednesday

It is almost the end of the year and the much promised 265 days of rain we were told to expect by the environmental agencies earlier in the year, did not arrive ( maybe it passed over Lagos!). Of course there has been the odd day of heavy rainfall, but nothing compared to last year’s flooding. The Harmattan season will soon be here and we can forget about rain for a while. Temperatures have been so high recently, hitting 32-34c most days, with humidity rates overwhelming. It makes it difficult to work or be outside. Viewings have to be conducted early morning or evening, to prevent heat stroke.

Thursday

Another building collapsed in Lagos, killing the only two daughters of an elderly mother. At the time of writing this the mother was recovering in hospital, but has not been told her only children have been killed! It is a travesty that is played out daily. Unqualified builders build properties that do not stand the test of time, collapsing one day and killing inhabitants. Who is held responsible? The owner of the property? The builders? Or the regulatory agency that passed the building as safe? In most instances none is held responsible and the surviving family members are left to mourn and foot the cost of their loss.

Friday

New residential estates are springing up everywhere in Lagos! Small, medium, big, serviced, unserviced, accessible, inaccessible, well built, poorly built, semi-affordable, very expensive (quoted in $ only), furnished, unfurnished. I could go on, but I am sure you get the drift.
This clearly highlights the need for good quality maintenance of these properties. It is sadly an area that is lacking and needs more input and expertise. A lot of good estates are built, but over a year or two, you begin to witness deterioration in the infrastructure. Facilities management has a long way to go

LAGOS IBADAN EXPRESSWAY SAGA

Monday

Hallelujah!  Superb news today, the Federal Govt has terminated the contractors who were to have repaired the Lagos Ibadan Expressway from May 2009 for 25 years under a design, build, operate and transfer (DBOT) scheme.

For many years that stretch or road has steadily gotten worse causing numerous accidents and loss of life. The 105km expressway is the busiest in the whole of West Africa. Each time I have to ply that road, I have prayed every step of the way. It is a living nightmare. The road is crater ridden, with thousands of oil tankers dangerously parked on the sides of the road. Armed robbery is a daily occurrence. It has become a health hazard and this news could not have come sooner. Well done Fed Govt, I hope many more much need infrastructural repairs will be undertaken to lift the country out of this quagmire of decay, it has fallen into
The contract has been deservedly allocated to Julius Berger and RCC Nigeria Ltd. I know it will take some years to be completed, but we all look forward to some sanity on that road henceforth!

Tuesday

Someone called me today to visit what was previously a hotel, but the owner wanted to turn the 40 room hotel into one bed self contained accommodation for, young people, singles or short stays. This is the third such request I have received in the last two months. It appears that some hotels are folding up due to management issues and the owners want the hotels converted to short stay accommodation. What the owners need to be aware of is that the facility management of this type of accommodation needs to be reliable and immediate. Things like generators cannot afford to break down and have long down times. Security and cleaning need to be top notch! There is no need seeking clients if the facilities are run down.

Wednesday

The Lekki-Ikoyi link bridge that is being built by Julius Berger is approaching completion and is a beautiful sight to behold especially at night when it is lit up. It is a vast improvement on the landscape and surrounding squalor that we are accustomed to seeing. The Government should contract out all the road and bridge building works to Julius Berger. From what I gather the Third Mainland Bridge, despite being shut for repairs for four months, still has a repair problem.

Thursday

The talk on power privatisation seems to be a recurring subject that is not going anywhere. If anything, power supply seems to be more elusive now than at any other time. It appears that from the day after the resignation of the last Power Minister, the power supply to the whole nation dropped by 80%. The cost of diesel has once again risen as demand is high.

Friday

Every day we see different figures and deadlines put out by the Federal Government for the increase in megawatts of power. In 2009 we were to expect 6000mw by that year end, instead it dropped to 2300mw. In 2010, we were told to expect 10,000mw, it never rose beyond 2,500mw. In 2011, we were again told it will go up by year end, again nothing. In 2012 we saw an improvement between June and September to about 5000mw. It now seems back to the original 2,300mw. We are again now told to expect 10,253mw by December 2013…