Denoising: 16 Signs of A Fraudulent Real Estate Business

Feb 05, 2024


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Denoising: 16 Signs of A Fraudulent Real Estate Business

Being able to tell an authentic real estate agent from a fake is a top priority. This is to avoid losing millions of naira and ultimately not getting the desired value. This is why Zerodip.Ng goes through top measures to verify and approve the registration of real estate businesses on our platform. In the jungle, not everyone has this ethos. These are the top warning signs to look out for when searching for authentic estate agents.

We may not tell you who the fake estate agents are, but by reading this, you know who the real estate agents are not.

1. An authentic real estate agent sells land with appropriate documents and titles. They will always offer you a Deed of Assignment, a Registered Survey Plan, or any other legal title or document. Find them here. The fake ones will never give you the right documents. They will attempt to sell the land with a contract of sale. In this article, we have established that a contract of sale does not guarantee that you own a property.

2. The authentic estate agent will give you a registered survey plan that has all the necessary markers for the land. These include the beacon numbers, which show you the exact boundaries of the land. A fake one will show you a survey coordinate and expect you to fish for the land yourself. Any document claiming to be a survey plan must be registered at the surveyor general's office. These are nine things to look out for in a survey plan.

3. An authentic real estate business will allocate your land upon payment. There is no dilly-dallying about it. No real estate business can claim authenticity if they will allocate up to a month, or more, after payment.

4. Documents are public materials. The Freedom of Information Act of 2011 emphasises that public information must be readily made available on request at all times.

When a real estate business cannot readily give you access to verify the documents on a property, you should flee.


The Freedom of Information Act of 2011

Freedom of Information Act by Ibi Mboto


5. Due diligence is very important in every industry. Everyone involved in any business negotiation must do proper due diligence before agreeing to any deal, verbally or in writing. When a real estate agency does not give you enough time to do your proper due diligence, it is a serious red flag. One way they do this is by putting a time limit on FOMO bait. FOMO means "Fear of Missing Out." This is when people are faced with a "sweet deal" that will expire if they do not "take action" before a predetermined time. For example, the agent may say that if you do not make payment before noon the next day, the value will go up.

Further on this, if your seller or developer will not share the titles or documents for verification, then you have to count your teeth with your tongue. If they decide they will not show it to you, then you are being set up to lose your money.

6. Part of your due diligence should be to find out how long the "developer" has had land yet to be developed. This is important if you are buying from a developer who claims to be developing an estate and "will hand over the house on completion." If the land has been laid bare for a long period of time, then it's worthy of suspicion. Some go to the length of constructing a perimeter wall and gate. This is "to show that the community is safe" or for any other reason. But if, upon completion of the perimeter fence and the gate, the inside is still undeveloped, check if they plan on doing so or if there are pending legal cases on the land. Also confirm if there may be potential legal cases with federal agencies such as the Asset Management Corporation of Nigeria (AMCON). AMCON has had a history of recovering estate developments from debt-ridden developers, leaving investors out on a limb.

In 2023 alone, the agency recovered nearly two trillion Naira in debt. This reportedly includes properties worth nearly two and a half billion Naira belonging to Glano Nigeria Limited alone. Another recovered land was an undeveloped land of 11.56 hectares belonging to an undisclosed party.

When there is a confirmed court judgement or a cease and desist on a land, do not go close to it. Hire professional attorneys to verify the legal status of the property. Also, contact the Ministry of Lands for more points of inquiry. Verify everything, from the owner to the land titles.

7. To avoid injury and possibly death due to the collapse of a property, find out how the property was approved for construction. The developer or estate agency should provide you with the approved building plan. If possible, check the budget that was mapped for the development and consider how they catered for the materials used. If the property is a new build, you may decide to weigh the cost of quality and standard building materials against the budget and find out how reasonable the ratio of budget to production cost is.

It may sound like paranoia, but no measure is complicated enough when looking out for safety.

8. Do not let marketing tactics cloud your judgement, especially when requesting land titles such as a Certificate of Occupancy. When a real estate business cannot provide you with a CofO or a Governor's Consent, then you have grounds to be suspicious of them.

Sample of a Certificate of Occupancy

Certificate of Occupancy Le... by lydiaagu

9. Some fake estate agencies will attempt to lure you into signing a contract before allocating you the land. Most times, they may sneak in a line in the contract that says you have received all necessary documents pertaining to the land. They are clearly fake and are looking to trap you in a legal situation.

10. An authentic real estate agency will not request full payment when they have failed to fulfil their contractual obligations to you. A fake one may even include a "non-refundable deposit." Watch out for those markers, as they show potential legal battles.

11. As highlighted in Number 7, you should take measures to ensure that the property is built with high-standard materials. A simple eye test will help you know how strong and durable a material is. For example, if you touch the wall and the paint leaves a chalky stain in your hand, then it shows sub-standard paint has been used for the property.

12. If the seller or developer is not available or always "insists that you go through the agents," then you have cause for concern. While the seller can insist on letting the agent in on the progress, they should not let you deal solely with the agent.

13. When the documents are "still in view" by the government, the agent or developer cannot expect you to agree to a fee or even make payment. If they do, then it raises questions of concern, including:

  • What if there is no approval for the sale?
  • What if the documents are inauthentic or nonexistent?
  • What if the "still in view" fails?

The bottom line is that you should confirm and verify all documents.

14. That a developer has a known name does not shield them from the responsibilities listed here. Hold them to the same standards as you would anyone else. This is to avoid losing money from defective land titles and documents.

15. Only high-level government officials should have access to police officers. Though the Nigeria Police Force makes it possible for anyone to apply based on certain criteria, some take advantage of it to limit people's access to themselves. When an estate agent or developer does this, it is not, on its own, a signal that they are dubious, but when they do not allow clients access to them or their services, especially those who are signed clients, then it is suspicious.

You should have access to your developer (the project owner) when there is a need. Anyone who limits your access after collecting money from you in exchange for a service is likely a fraud.

16. If you post videos or other content online about your services, you should provide an opportunity for comments and other feedback. When you block comments, hide them, or delete them, you are showing that there’s something wrong.

Authentic real estate businesses will not be shy about accepting criticism about their trade or business practices.

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We try to make sure that the information here is accurate at the time of publishing. But the property market moves fast and some information may now be out of date. Zerodip accepts no responsibility or liability for any decisions you make based on the information provided. Graphics and images used here are for information purposes - we do not have ownership right over them.

Denoising: 16 Signs of A Fraudulent Real Estate Business

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