To understand what the realtors are doing, let me tell you a short story.
Elizabeth Wettlaufer was born and raised in Zorra Township, a quiet rural town near Woodstock, Ontario.
She was born into a religious family and was raised a staunch Baptist. She went to college and earned a bachelor’s degree in religious education counseling in the 1980s.
She then studied nursing at Conestoga College and in 2007 she was hired as a nurse in Caressant Care, a nursing home for the elderly and was regarded by colleagues as very caring and professional.
However she was fired in March of 2014 over an incident in which she gave the wrong medication to a patient.
This is where her story with Caressant Care should have ended but things took an unexpected turn in 2016 when she entered an in patient rehabilitation program at the CAMH, a psychiatric hospital in Toronto for her spiraling substance abuse and alcohol use.
There she confessed to a staff about killing her patients. The staff reported the conversation and the police got involved.
After investigations, Elizabeth Wettlaufer was tried and sentenced to eight concurrent life terms in prison with no possibility of parole for killing 8 senior citizen under her care by injecting them with an overdose of insulin mainly when she was still working at Caressant Care.
You might be wondering, why am I telling you this grisly tale on a day like this?
It is because it perfectly illustrates one of the very few occasions a professional starts preying on the very people it is their job to protect and care for.
Let me put it another way.
Let’s say that you founded a business with a partner when you guys started the business you agreed on a 50/50 equity.
You worked your ass off and sacrificed for years to build the business.
Glory to God your combined efforts are blessed and the business is now worth $30 million USD.
Then your partner starts acting funny. Things escalate and you two can’t just continue together.
You want to walk away but instead of the 50% equity you own in the business, your partner is now saying your total equity is a mere 10% of the business.
10%? Outrageous. They must be mad if they think you will settle for 10%. So you hire the smartest lawyer you know and take things to court.
You are calm and confident the ruling will be in your favour because you have all needed evidence to support your case and of course, you have hired an extremely good lawyer.
What will you do when you get to court and instead of your lawyer arguing FOR you, they started arguing AGAINST you?
Instead of presenting evidence of the 50/50 equity share agreed on and signed at the start of the business, your lawyer is saying there was never a legally binding agreement giving you a 50% equity.
What will you do? This is the stuff nightmares are made of.
Of course in real life such thing will never really happen because the judiciary is highly regulated and most likely that lawyer will be disbarred, can’t practice law anymore and even if they start another career, the stink will follow them.
But what happens in an unregulated environment like Nigeria‘s real estate sector where realtors and developers are operating with little to no oversight from the government and no regulatory body?
Where you as an investor and home buyer are left to fend for yourself?
What you get is a wild wild west where unscrupulous individuals are looking to make money by all means possible. Business ethics, and basic human honesty be damned.
Property agents or realtors as they prefer to be called these days play a vital role in any real estate transaction. They have the connection to get you the house you are looking for in the location you want.
They understand the Nigeria property market and industry trends enough to offer you important information and advice that should not only aid your property search but help you make better informed decisions.
This professional understanding of the Nigeria’s property market puts them in the position to possibly negotiate for a better price on your behalf with the developer. Like I said, they play a vital role.
Most developers don’t do business directly with you, their buyers, preferring to transact with realtors who serve as a middleman between you and the developer.
This has given many of these realtors the freehand to engage in a highly unethical and downright scam act that what we in the real estate industry call ‘loading’.
Now, What is loading?
I was listening to a colleague of mine talk yesterday, Uche Emordi of Ownahome. He described how sometime last year he was touring a 5 bed fully detached duplex at Vintage Park estate, Ikate, Lekki.
The property is a semi-direct listing which means that he is not the person in direct talk with the developer. There is another agent, this agent talks directly with the developer then disseminates information to other agents that are trying to sell the property.
So upon initial inquiry the agent told Uche that the property is NGN550 million. Based on this, Uche came to do the house tour, record videos and all.
Midway through his video shoot, his assistant got a call from the listing agent, the price of the property had changed from NGN550 million to NGN650 million. An increment of NGN100 million.
Where did this NGN100 million increment come from? How did the value of a house that has been built and completed increase by NGN100 million in a matter of days with no extra value added to the property to justify the increase of NGN100 million? How?
There is another property in Pinnock Beach estate that one agent listed for NGN950 million. 950M?
Like I said earlier, we realtors understand the property market, pricing and trends and this particular property was not looking like a NGN950 Million property.
Sure enough, upon further digging and a conversation with the developer it turned out that the actual price of the property is NGN550 million.
Once again, where did the extra NGN400 million spring from? As a discerning investor or home buyer that you are, am sure you are now asking yourself, what exactly is going on here?
Loading is going on.
Loading is when the listing agent of a property because they are the middleman and the developer does not have any official communication to put their price out there increases the price of a property and pockets the difference after you have made payment.
A property is NGN100 million, they tell you it is NGN150 million, After you make payment, the developer takes their money and the realtor takes the NGN50 million plus whatever percentage they charged you for their services.
For example, let’s say they charge 5% agency fee. After you have paid the developer NGN150 million which is the price the realtor gave you, you will pay the realtor their 5% agency fee which amounts to NGN7,500,000. After this your business with them is done.
Now they will circle back to the developer and collect the NGN50 million they added on top and another 5% or whatever percentage they negotiated in commissions from the developer for bringing you to do business.
Is this making sense to you? I told you it is a wild wild west.
In a transaction like this the only money the realtor is supposed to make is whatever percentage they are charging you for their professional services and whatever percentage they had previously negotiated with the developer as their commission for selling that property.
But like I said because there is no oversight and regulation, some unscrupulous individuals will inflate the price of the property and walk away with both the money that is due to them and whatever amount they added to the original price of the property.
What are the effects of loading? Why am I worried? Why should you care?
Apart from the fact that it is the height of dishonesty and downright criminal behavior, loading is a major factor and contributor to the increasing cost of houses in Nigeria.
How? Walk with me…
Let’s look at the Vintage Park estate scenario. The agent increased the value of the property by NGN100 million. No added value, no new developments. Yet an increase of NGN100 million which brought the price of the house from NGN550 million to NGN650 million. Crazy but…
Let’s look at the Pinnock Beach estate example, the agent added a whooping NGN400 million. Almost half a billion. From thin air.
Had they sold that house at that NGN950 million, they would have made NGN400 million from nothing. literally from nothing.
It is outrageous, it is not real estate. It is speculation. This is what economic bubble are made from.
When people start making money by offering no value, from nothing, the bubble builds and eventually bursts leading to a collapse.
Loading is not only leading to exorbitant real estate prices, it is also endangering the very existence, growth and sustainability of Nigeria real estate market.
What about the effects of loading on developers?
A developer buys a land, builds the house, imports the materials used in building and fitting the house. Takes all the risks and after the house is completed, does his plus and minus and decides that NGN550 million is a fair price for the house.
A realtor who didn’t know when the land was bought, the foreign company the developer went to, to source for building materials used nor the import duty paid and took zero risks, financial and otherwise, comes and sells the house for NGN950 million.
Walking away out of that transaction with more money, more money than the developer who took all the risks got.
Remember that the NGN550 million the developer got is not all profit, while on the other hand the NGN400 million the realtor got from loading and whatever they made in commissions and brokerage fee is at least 98% pure profits.
What do you think the developer will do with their next project? Do you expect their price to ever be reasonable again? Of course not, he has seen from experience that buyers will buy no matter how unreasonable the price.
Now, what should be done? How do you prevent loading?
It lies with you, the buyers. The government are not ready to step in. The developers aren’t willing to take a stand against loading too, as far as the realtor brings a buyer. That’s all they are after and you can’t really fault them.
So it lies with you, so how do you the buyer stop loading. Before making payments for any house you are getting from a realtor, do your research. It is actually easy, just do a Google image search of the property, it will pull up all listings of that property across the internet.
Now if the price your realtor gave you is different, higher than what other realtors that posted same property are asking for the same property, then somethings is fishy.
Confront your realtor about it. Why the increase? The value of a property can appreciate, no doubt about that but they should be able to point out clearly the cause for that appreciation.
If they can’t, do the needful and go with the other realtor. As long as it is same property.
As for my colleagues in the industry who will read this and say, ‘Ugochukwu, what are you doing? You are a realtor too, building a leading real estate brokerage company’.
I apologise but I can’t allow a few bad apples in our beloved real estate industry to ruin things for us. Someone has to call them out, someone has to. I chose to be that someone. Damn the smoke I will receive.
If you look out of your window one fine morning and see someone getting robbed in broad daylight in front of your street and you quickly close your window, bolt your doors and lock yourself inside your room. Not only are you a spineless coward, you are culpable in that robbery.
‘But Ugochukwu what should I do? Should I go outside and get myself killed’?
Of course not, but you can call the police, you can raise an alarm, you can shout at the very least to notify the robbers that there is a witness and that their acts aren’t proper.
My dear reader, this article is me shouting, this article is me raising the alarm.
Help me shout, help me raise the alarm by sharing this article with your friends to sensitize them.
I am, Ugochukwu.
Send me a Whatsapp Message
