Estate agency in its simplest form can be described as the letting, sale or purchase of land and / or land and buildings on behalf of a client.
In our case, an agent can act for either a buyer, seller, lessor or lessee.
Basically the word “estate” comes into it because land and buildings are referred to.
- Background to the practice of estate agency in Nigeria.
We are gathered here today to discuss a subject matter with 3 key words “issues”, “challenges”, “estate agency practice in Nigeria”. However before we go into them, it is important that we take a brief look at where we are coming from, so that when we begin to talk about our key words, they can easily be related to.
From all records available the first set of Estate Surveyors and Valuers in Nigeria started off about 1968 / 1969, upon returning from the United Kingdom where they had not only studied and graduated in Estate Management, but had also spent time working and gaining experience in some private and public institutions in the United Kingdom.
These young Estate Surveyors and Valuers proceeded to gain employment into many of our public and private institutions whilst a few immediately set up private practice to service an economy that was vibrant and had all the signs of bludgeoning into one awash with petro money particularly with the discovery of petroleum oil and its exploration by the oil majors – the oil boom.
A few years later, the Federal Government gave teeth to the profession and its practitioners by enacting Decree No. 24 of 1975.
The profession of Estate Surveying and Valuation was here to stay.
With the oil boom, there was an influx of expatriates. There was increased wealth – oil money was everywhere. With it came increased demand for goods and services. But most particularly, came an increase in demand for real estate particularly buildings – residential and commercial space. The supply of available accommodation was totally inadequate taking into consideration it’s inelastic nature – compared to the demand.
With this pressure, it suddenly became a source of “quick money” to link Landlord and Tenant, buyer and seller and make a commission or agency fee.
But this was only one part of the story.
On the other hand, with the practicing professionals, there were lots and lots of other professional briefs, asset and property valuations, feasibility and viability studies, developments etc. The intellectual, trained and experienced labour pool to handle these “more demanding professional tasks” was small and shallow. This meant that the main professionals focused on these tasks whilst employing a lot of non professionals to take charge of estate agency as it was assumed that its intellectual requirements were limited.
Estate Agency was left in the hands of the lower cadre of staff who were not mainly professionals but who however still acted for their firms, and with the level of ongoing activity then, were appraised of the quantum of fees they earned for their principals.
It was not too long after that these cadre of trainees began to leave to set up their own firms / agencies with their claim to experience and training being what they had garnered from the firms where they worked.
In Lagos for example this gave rise to very strong estate agency businesses like MADOKS & CO, OCC (Oguns Commercial Company), PENCO BROTHERS, FELIWARD to mention a few.
The ease of entry into the practice of estate agency, the lack of professional requirements and the quick financial rewards to be made with little or no input other than linking Landlord to tenant and buyers to sellers was not lost to a lot of other business men.
They also soon ventured into estate agency.
The proliferation and watering down of estate agency as a serious profession had started in earnest and basically the foundation for the challenges of the practice of same in Nigeria and which we are suffering today were laid.
- Challenges of estate agency practice in Nigeria.
In examining the challenges of estate agency practice in Nigeria, it is important to separate these challenges into 2 categories – internal and external.
Internal challenges, I will describe as those that border on issues personal to each and every estate agency practitioner and our professionalism.
External challenges, I will describe as those outside the ambit of our direct control but which still impinge negatively on the practice of estate agency today.
C.1. INTERNAL CHALLENGES.
- Office location and layout.
How many of our practicing firms pay serious attention to the location of their offices? When I refer to location, I am talking about address, high street, secondary location etc. How accessible are these offices to a client when they need to locate or visit our offices? Many practitioners forget that estate agency is actually comparable to a retail business and for retail businesses, the more visible and accessible one is, the higher the patronage.
In terms of office layout and presentation, how ready are we to receive visitors? How clean and receptive are our receptions and offices when clients do come?
- Personal Presentation.
When the clients see our “TO LET” and “SALES” boards, and make their way to our offices, are they impressed by our personal presentations as professionals. Can they truly be convinced to take us as serious professionals? Is our dressing professional? Are our staff dressed professionally?
When a client visits your office for a meeting over a transaction where our 5% fees should be N1,000,000.00 (One million Naira) only, can he visibly be intimated by our office and personal presentation that out of “fear” and respect, he refrains from asking if we will accept N100,000.00 (One hundred thousand Naira) only as negotiated fees?
iii. Quality of staff.
A lot of us will still notice, that like our forbearers in the profession, many still regard Estate Agency as a department or unit that can be undertaken by just anyone. The end result is that attention is not paid to the quality of staff who run our agency departments. They are sometimes industrial trainees (IT students) or outright none estate surveyors.
In the end we forget, that 75% of contact made by the consuming public of our services is through our agency departments. Their perceptions of the entire practice, profession and professionals are formed from these contacts.
- Staff training, capacity building.
One area where professional estate agents have failed is in the area of training – training for themselves and their staff.
How many of us principal partners and entrepreneurs have attended knowledge building courses and programmes apart from the Institutions CPD’s (which for many is just another day to get away from the office and be amongst colleagues and friends, whilst fulfilling all righteousness)? How many have attended managerial programmes on office management, staff and personnel management etc? How many of us have sent our staff for capacity building training sessions? How many have even organized in house training sessions for their staff?
A lot of times our surveyors resume work with the simple job description of “you will be in agency department” or “valuation department” or even no department at all. Sometimes they just work based on what is passed onto them by the Principal Partner or Manager. There is no formally documented job description.
Rarely are the fresh intakes given an orientation talk about the firm, the customs and values of the practice etc. Rarely is there even something as basic as an introduction to the already existing staff.
- Poor customer service.
If there is one thing that you would be suffused with whilst dealing with staff in some of the retail outlets and professional offices abroad, it is the high quality of customer service.
If there is one thing that leaves you wondering and shocked when dealing with professionals in Nigeria – and this is not just limited toEstate Surveyors, it pervades our entire system – it is the lack of and very poor customer service one receives.
Again, it transcends from the preceding 2 paragraphs (iii) and (iv). One cannot give what he neither has nor understands.
Based on my little experience with estate agency and the feedback received some of the major challenges with practitioners and their firms include but are not limited to
- Non answering of phones
- Lack of knowledge about property enquiry
- Unfulfilled promises
- Lack of courtesy, respect
- Poor feedback
- Poor after sales service
- Use of technology.
As shocking or surprised as it may sound to a lot of us, many firms do not have a functioning website, nor do the principals and their staff have e-mail addresses. Infact, many firms still have not made internet connectivity in the office a priority.
A lot of us are still using yahoo and hotmail addresses even for official communication.
Our gsm phones that can perform so many other functions are basically for receiving and making calls.
vii. Lack of trust amongst professionals.
How many of us will willingly give out the addresses or sometimes names of our clients or principals. The fear is that our colleague on the other end will directly or indirectly cut us out of the transaction by closing the transaction behind our back.
Unfortunately this is not just a baseless fear, it is reality and I am certain that everyone of us has an experience to share in this regard.
viii. Poor marketing of our firms and services.
One of the areas where estate agency firms have failed is in the proper marketing of their services. Our marketing is still limited to some customary channels that are yielding little or nothing whilst exploration of new channels is avoided.
Very little is provided for the marketing of our products in our annual budgets and more often than not marketing is done on an ad-hoc basis.
One thing that we all forget is that marketing is the key to achieving anything and everyone must be involved one way or the other in it.
Are we aware that down to our letter headed paper, complimentary cards, TO LET signs, branded cars, etc they are all marketing tools and could help speak volumes about our firms and the services we render?
c.2. External challenges.
When we refer to external challenges, the issues are those directly outside the ambit of our immediate control.
Some of these challenges include but are not limited to the following.
- High demand for real estate compared to supply.
It is ironical that the high demand for real estate compared to the available supply, rather than being a positive for the profession can sometimes act as a challenge.
There is so much pent up demand with the national average of housing shortfall put at 16 million units.
The challenge this creates is that most Landlords, react in various ways, that end up diminishing or reducing the significance of the role estate agents play or can play in a property letting or sale.
– Where there is huge demand, they jerk up their asking rents to such unreasonable figures, and when they cannot achieve it themselves, call in the estate agent to come and hopefully accomplish the impossible. Any advice to the contrary about high rents and rent reduction is usually seen more as an admission of failure than the exercise of professionalism.
– Most Landlords will pre-let their homes sometimes at the development stage because a lot of prospective tenants would have approached them directly. There is very little tenant audit or diligence undertaken and it is only when the management troubles arise several months into the tenancy that the estate agent is called in to do what should have been done at the on set.
- Poor quality control of construction and finishes of many developments.
Many estate agents are called in to let a property only after the development is finished. It is at that stage that as professionals we discover, that the property is either unlettable, or can only be let at a highly reduced rent for reasons of poor construction, layout / design, and finishing. At a point like this where the firms board remains on the property for several months, it is misinterpreted as a sign of inefficiency and lack of aggression on the part of the agent.
iii. Lack of an efficient mortgage system.
Nigeria, as earlier mentioned has a 16 million units housing deficit.
One of the main reasons for this is the inability of developers to provide large numbers of housing because of the slow and cash – based take up rate.
With an efficient mortgage system in place, estate agents would very easily quadruple the levels of business transactions that are currently being undertaken.
- Poor information flow in the market area.
Today most landlords and vendors fix the rental or sale values of their properties based on a number of factors, devoid of professional advice.
Rental or sale values are arrived at based on hearsay (usually false and exaggerated) and they hold onto these positions believing that by some chance / happenstance their unrealistic value will be achieved by the estate agent who has been briefed.
- Poor IT (Information Technology) penetration.
Again, as in the challenge of firms and our inability to use information technology, the consuming public are also guilty of the same lack luster approach to the use of technology.
I.T penetration is still less than 25% of our population and is actually most prevalent amongst the ages 45 and below who use it for a variety of other purposes other than searching for real estate.
Try selling a 25 year old a plot of land in GRA Onitsha for N50,000,000.00 on Twitter or Facebook !
- Large presence of non professionals.
One of the biggest challenges to estate agency and professionalism is the huge number of non-professionals involved in the practice. Entry requirements are basically non existent so everyone who has a telephone and has heard of the 10% agency fees, immediately becomes an estate agent.
What this has done is that the real professionals are out numbered almost 100 – 1 and the resultant effect is that the sharp practices of all these non professionals are equally used as standards to judge the core professionals and in the final analysis we are all tarred with the same brush or paint.
This has led to the fact that estate agents are basically regarded as fraudsters and generally unreliable people.
vii. Lack of / poor documentation for real estate.
Another major challenge for real estate practitioners in Nigeria is that of poor documentation or the absence of any documents at all.
Less than 3% of Nigeria’s land mass is titled. Nationwide, there exists less than 150,000 Certificates of Occupancy. Nigeria has a total land area of 970,000 square kilometers. Even based on an average plot size of 600m2, we should be looking at over 1,500,000 Certificates of Occupancy.
The lack of documentation has impacted negatively on sale transactions with a lot of personal trust coming into play sometimes to the detriment of the surveyors who would be victims of deception by the vendors and this unfortunately only surfaces after money has changed hands.
viii. Slow judicial process / system.
Today, the average land case takes, 15 years to resolve.
The average Landlord and tenant litigation takes 4 – 5 years to resolve.
These are usually without prejudice to the fact that both parties can still go to appeal at higher courts. In that case, we need to add another 30% – 50% to the durations already stated above.
- Money laundering decree / EFCC.
The biggest challenge to our profession of estate agency today is the money laundering decree and the requirement by the EFCC (Economic and Financial Crimes Commission) to force professionals to divulge information concerning transactions of their clients once it is over N150,000.00 (One hundred and fifty thousand Naira) only.
It is so big a threat that all one can say is that if it is fully implemented, then we can very easily loose 90% of our estate agency business.
I have decided to outline my recommendations regarding how as professionals we can increase professionalism and reduce the challenges that inhibit the practice of estate agency in Nigeria.
- As professionals, we must make a conscious effort to always put our best foot forward, bearing in mind that everything we do (negative / positive) rubs off not only on us but also the profession that we represent. It is a burden that we bear not only for the present but also the future of our profession. It is not a light responsibility.
- We must continually build capacity in our staff, through trainings, seminars, etc. If we continually have (i) above in our mind, then it is easier to understand.
iii. First class customer service is one of the tripods on which any business – especially where there is daily interface with clients – stands. We cannot afford to downplay it or its significance.
- Technology and its application is the future. If you have not keyed in, TODAY is the time. How can you market and sell real estate with technology? We must stop the use of yahoo, gmail etc as our main email address.
At our current status our email addresses should read email@example.com, mezueassociates.com, etc. That is one of the ways we can be taken seriously.
- We must continually educate the consuming public and governments at all levels about our services, and products through articles, comments and response on national issues.
- Election of more Associates and encouragement of more surveyors to join the professional cadre.
- Multiple listing services.
- Creation of and technology updated for real estate transaction database.
vii. Amendment of Land Use Act. This will ease access to land. It will make titling easier, less cumbersome, and will encourage a lot more people to obtain same. It will encourage banks to accept more real estate as collateral.
viii. Judicial reform – creation of commercial courts etc. This will facilitate faster resolution of land and other commercial matters that are very often time sensitive.
- Creation of financial products – mortgage backed securities etc.
- NIESV must continue to play a leading role in everything property related and in the process continue to be relevant not only in the affairs of members but also the nation.
- Strengthening the Association of Estate Agents in Nigeria; all estate agents are encourage to join to help sanitize the practice.
Estate Agency remains one of the services that Estate Surveyors and Valuers offer as professionals. There are many others, asset valuations, property / facility management, feasibility and viability studies etc.
However, the significance of estate agency cannot be under stated. It forms the bedrock on which our performance in the other aspects of our profession are built.
The challenges as enumerated will never be totally eliminated, but with a gradual implementation of some of the recommendations already listed, there will be a drastic reduction and better playing field for all in the estate agency field.
What is key, is that as much as possible practitioners must be determined to sanitize the practice for the good of all.
Anything else will continue to result in what we are currently going through where we are first and foremost regarded as fraudsters and tricksters.
Thank you for reading.
(PAPER PRESENTED AT THE NIGERIAN INSTITUTION OF ESTATE SURVEYORS AND VALUERS
ANAMBRA STATE BRANCH ;- MANDATORY CONTINUOUS PROFESSIONAL DEVELOPMENT )(MCPD)
HELD ON FRIDAY 5TH OF DECEMBER, 2014.