The real estate industry has grown prosperous and is helping Nigeria’s economy in its own unique way by reducing unemployment.
There are various tiers of participants in the real estate industry, but there is one group in particular that has generated debate over who should or should not pay them.
Estate agents are those guys.
A person or organization that coordinates the buying, renting, or management of homes and other buildings is known as an estate agent.
A letting or managing agent is a term used to describe an agent who focuses on the rental market.
Property that is up for sale is primarily marketed by estate agents, while legal paperwork is created by a solicitor.
People are constantly looking for specific kinds of homes to buy, rent, or let, and whatever they are looking for is undoubtedly out there.
Estate agents are responsible for bringing these two groups together in exchange for a fee or a share of what are known as “agency fees.”
This brings up the debate: who is actually accountable for these “agency fees”?
This article will compare and contrast how things are done in Nigeria with how they are done in other nations in an effort to make things more understandable.
Estate agencies who handle the letting of commercial property in the United Kingdom often charge (the property owner) a fee of 7 to 10% of the first year’s rent plus the first month’s rent.
They will divide the commission between them if there are two agents charging 10%.
Investment agents, who sell commercial real estate, often charge 1% of the sale price.
Residential renting agents charge different fees depending on whether they manage the property or just find new tenants.
Non-refundable charges to potential tenants can range from zero to £300 and are typically referred to as “Application,” “Administration,” or “Processing” costs (or all three).
Other than the fact that they cannot charge a fee for a list of homes, letting agents are not given any guidelines on fees.
Otherwise, they are allowed to set their own prices.
In many other countries, the seller consents to pay the agent a commission in exchange for finding a buyer and bringing them to the table.
In situations when two agents are engaged, this fee is typically expressed as a percentage of the sales price and could also be split between the listing agent and the agent who brings the buyer.
After paying the property seller in Nigeria, the buyer pays the agency charge.
Many purchasers have always been unhappy about this because they do not understand why an agency fee must be paid when the seller should be paying his agent.
It is debatable—and quite rightly so—that the buyer is always responsible for the commission. Why? because it usually comes with the purchase price. The sales price might have been reduced if the seller hadn’t agreed to pay a commission. And therein is the allure of purchasing real estate from unrepresented sellers since, by the same reasoning, such prices ought to reflect a net sales price free of a commission. However, the sellers of such listings haven’t fully figured this out, which constantly lets down potential purchasers.
Do you have any other information to impart? Comments are welcome below.