Income loss looms as empty properties, rent defaults threaten estate agency practice

Problems associated with the poor state of the economy in Nigeria have given rise to cases of empty properties and rent defaults which are, increasingly, threatening estate agency practice in the country.

For real estate sector practitioners, especially estate surveyors and valuers who dominate this practice, this is a major challenge as it means loss of an aspect of their professional practice and part of their legitimate instrument and source  of income.

Job losses, shrinking personal/household income and galloping cost-push inflation, which are reflections of the bad state of the economy in the country, have made it difficult and impossible, in some cases, for people to buy or rent houses and even pay their house rents by those who already have accommodation.

Besides increasing empty properties and rents payment default, this practice is also threatened  by falling rents, especially at the high end market which means low commission; dollarized rent  which is fast fading away because of high exchange rate, and marketing properties with defective titles, especially where the property owner is concealing or with-holding information.

Before the present economic situation, estate agency practice had been having its challenges as an all-comers affair where pseudo-professionals otherwise called quacks have been damaging  the practitioners image with their unethical and unwholesome activities.

The formation of the Association of Estate Agents in Nigeria (AEAN) about three years ago was an attempt by the professionals in the practice to sanitise it and give it some level of credibility.

Gbenga Olaniyan, CEO, Estate Links Limited, notes however that there are extraneous issues that challenge this practice, including the practitioner not being discerning with where he affixes his brand.

“Poor personal presentation, poorly trained agents, poor company profile/marketing collateral, inflation of property prices to accommodate additional commission  for agents (topping up), bureaucracy in land registration, sharp practices while conducting searches, and negative integrity perception are also some other challenges for the practice”, he added.

Olaniyan whose views were contained in a presentation he made at the AEAN annual conference also harped on the need for practitioners to cultivate good image, saying, “your image is your brand and you have only one opportunity to make that first impression”.

According to him, in order to give real service, an estate agent must add something which cannot be bought or measured with money and that is sincerity  and integrity, insisting that an organisation, no matter how well designed, is only as good as the people who live and work in it.

 He advised further that practitioners should be abreast of current trends, insisting that not being technologically current, not being professionally compliant, not acting within the scope of one’s competence and not agreeing or not documenting terms of engagement could pose a clog in the wheel of progress for practitioners.

In spite of the challenges of the moment, Olaniyan still sees prospects for estate agency practice, stressing that “there are no hard times for good ideas.”

According to him, there is bright prospect in Real Estate Investment Trusts (REITs)which, he pointed out, are of four types including equity, mortgage and hybrid REITs.

Equity REITs, he explained, invest in and own properties and, therefore, are responsible for the equity or value of their real estate assets, adding that their revenues come principally from their properties’ rents.

Mortgage REITs, on the other hand, loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans, while hybrid REITs is one that combines the strategies of both equity and mortgage REITs by purchasing properties and making loans to real estate owners and operators.