ASSESSMENT OF THE EFFECT OF THE PROLIFERATION OF UNREGISTERED ESTATE AGENT IN REAL ESTATE MARKET OF ABUJA

ASSESSMENT OF THE EFFECT OF THE PROLIFERATION OF UNREGISTERED ESTATE AGENT IN REAL ESTATE MARKET OF ABUJA

ABSTRACT

This study, assessment of the effects of the proliferation of unregistered estate agent in real estate market is aimed at examining the activities of the increasing numbers of unregistered estate agents in Nigeria with particular interest in Abuja the Federal capital territory. To achieve this the following specific objectives were pursued: To examine the concept of real estate agency in Nigeria; To examine the activities of unregistered estate agent in Nigeria real estate market; To assess the impact of the proliferation of unregistered estate agent on the real estate market and to identify the challenges affecting real estate agency in Nigeria real estate market. The researcher adopt the use of questionnaire, observation and personal interview to gathered relevant data from the respondents while tables, simple percentage and descriptive statistics were used for data presentation and analysis. The study reveals that there have been increases in the number of unregistered estate agent in the real estate market which is majorly due to rising number of unemployment and regulated / poor supervision of the activities of real estate agency in the study area. The researcher therefore recommend that the capacity of the Estate Agents Registration Board should be enhanced to enable it better regulate the profession, unregistered and quack agents currently practicing should be tracked down and made to either go for training in the diploma or degree of Real Estate, work under a registered estate agent for a period of not less than one year or face having their offices closed and prosecution.

CHAPTER ONE

1. INTRODUCTION
   1. Background Of The Study

Real estate agents obviously perform a middleman function in that they bring buyers and sellers together. They build the bridges between people in search of landed properties and estate owners. Real estate is a special type of asset that almost everyone desire to own.

Real estate agency was introduced by the British during the colonial era, although before then, there were middlemen in land transactions. Estate agency grew from the old auctioneers who were chattlemen attracted by the exciting prospects of selling large estates. These auctioneers were mainly the lawyers who had easy access to the available properties in the market and kept the lists of estates for sale and prospective purchasers. These real estate practices became visibly lucrative during England’s Industrial Revolution of the nineteenth century. During this period, new wealth and employments were created. The desires for homeownership were largely satisfied. New lands were explored and built-upon or bought and developed. The market for property development widened considerably and the property markets grew exponentially. Then as more lands were developed, more properties enlarged the market base, and property experts were needed as people began to realise the complications that arose from marketing or buying properties.

Notwithstanding, more self-styled estate agents also emerged, and over time, the real estate business became marred by incompetence and unwholesome behaviors. Due to lack of control over the self-styled estate agents, there were many victims of obtaining and fraud. To safeguard public interests against unscrupulous practice of estate agency by unregistered estate agents and rogues in the 1970s and eagerly 1980s, the Nigeria government and the professional bodies governing estate practices have enacted the guidelines and laws guiding the practice of estate agency in Nigeria.

The law establishing the profession of estate surveying and valuation in Nigeria included the estate agency as part of the functions of estate surveyors and valuers in Nigeria. Notwithstanding, presently in Nigeria it is all comers affair and there is an association of estate agents. Entering the real estate market is easy, and requires neither qualification nor previous experience, this gives every rank and files opportunities to practice or become estate agent with the requisite educational qualification and registration with the right professional bodies.

Real estate market is not dominates with one particular profession, although there can be no doubt that some of practicing estate agents are members of the Nigerian Institution of Estate Surveyors and Valuers, there have been increase in the number of unregistered estate agent with or without requisite educational background. One needs to comment on the cut-price estate agent. Many believing that estate agency was a way to make easy 1money and believing that existing charges were too high in which perhaps they were encouraged by the media and such bodies sought to set up business charging in a variety of ways, but at a level significantly below the charges by the established agents in the area. Some charged lower rates of commission, others set fee for a specific service.

1.2       Statement of the Problem

Estate agency should be conducted by men and women with a background of professional knowledge who acknowledge and follow ethical standards prescribed by the leading professional bodies of the land (The Nigerian Institution of Estate Surveyors and Valuers NIESV) and the regulatory board the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON). The fundamental problem is that the term – Estate Agent is not statutorily defined in the context of real estate agency practice in Nigeria. The Nigeria real estate market is overwhelm with increasing number of unregistered estate agent (quacks) who are victims of circumstances and have to change their careers informally, they neither have formal training, educational qualifications, nor professional expertise in the art and science of real estate agency, and have taken advantage of an apparent lax in the system to encroach into the landed profession. Due to their numerical strength and lack of awareness on the part of the people, they are widely consulted and fall victims of several fraudulent practices and cheats which end up given the profession a bad image in the eyes of the public.

1.3       Aim and Objectives of the Study

The aim of this project is the assessment of the proliferation of unregistered estate agent in real estate market.

To achieve this aim, the following specific objectives shall be pursued:

1. To examine the concept of real estate agency in Nigeria.
2. To examine the activities of unregistered estate agent in Nigeria real estate market
3. To assess the effect of the proliferation of unregistered estate agent on the real estate market.
4. To identify the challenges affecting real estate agency in Nigeria real estate market.

1.4       Research Questions

This study arose from the need to answer the following research questions:

1. What is the concept of real estate agency?
2. What are the activities of unregistered estate agent in Nigeria real estate market
3. What are effects of the proliferation of unregistered estate agent on the real estate market?
4. What are the challenges affecting real estate agency in Nigeria real estate market?

1.5       Significance of the Study

The need for this study arose because estate agency as a profession in this country has seen an influx of numerous unqualified persons because there exists a conflict between professionalism and commercialism in the practice. These people come in to provide agency services in the real estate market yet they have no knowledge of either real estate or the market within which it is traded. As a result, the real estate market and particularly in Nigeria, is plagued by inefficiency and a lack of transparency. Transactions involving great sums of money are carried out in secret which keeps shrouding real estate in mystery and prevents many people from getting into such investments for fear of being defrauded.

In addition, the real estate market in Nigeria has seen a sky rocketing of prices of land and buildings as a result of speculation by investors. Valuers, who have as their basic role the determination of an estimate in monetary terms of the value of property, have played a major role in directing the prices in the Nigeria real estate market resulting in very high values for property. Although some valuers operate as both valuers and estate agents, there are those who have specialized in valuation and in most times these do not work hand in hand with their professional counterparts; the estate agents who are actively involved in the exchange of property. Without the involvement of professional estate agents to provide advisory services, property in the country has become too costly and these prices have ceased to represent the value of property which in turn has distorted the market and locked out potential investors.

The study therefore seeks to serve the needs of investors who may want to venture into the real estate market in Nigeria and particularly in Abuja the Federal capital Territory. The needs of the professionals in the practice of estate agency will be addressed therefore contributing to the practice of real estate agency professionally and if the research findings are implemented, estate agents will understand better their job descriptions and cope with the changing needs of a more vibrant real estate market.

Developers/landlords and tenants will also benefit from this study since it will be brought to their attention why they should only do business with professional estate agents and therefore protecting them from fraudulent practices.

1.6       Scope and Limitation of the Study

This research is undertaken to carry out an indepth assessment of the proliferation of unregistered estate agent in real estate market in Nigeria. The study limited to Abuja the federal capital territory as particularly, the study seeks to understand how estate agency in Abuja can be made more professional and make the real estate market more accessible to investors by reducing the activities of the increasing number of unregistered estate agency in the study area.

Limitation

The researcher faced various problems when carrying out this field study. Some of these challenges included:

1. Some respondents were unwilling to fill the questionnaires since they were suspicious about the study. Many perceived it as sharing very vital information which they were not ready to furnish the researcher with.
2. Delays were experienced from the respondents who took very long to complete filling the questionnaires and constant postponement of the picking date proved to be very frustrating to the researcher. This could be attributed to busy schedules and had both cost and time implications on the researcher since the set timelines had to be changed and many follow-up calls and visits had to be made which was quite expensive.
3. Landlords were hostile and very suspicious of the research.
4. At times some of the respondents did not fill in the questionnaires adequately and ignored certain sections that required the giving of opinions which made it difficult for the researcher to make adequate conclusions.

1.7       Operational Definition of Terms

Sole Agent: This is where a single firm is briefed and authorized to let, purchase or sell a property.

Joint Agent: A situation may arise whereby the sale, letting or purchase of a given property or group of properties is given to a number of firms to work under one umbrella, even through a coordinator may be appointed among the participating firms, no firm is superior to the other.

Multiple Agent

SUB- ESTATE AGENTS: These are estate agents who are appointed by another estate agent to assist them in carrying out and fulfilling the instruction and mandate of the client on a particular real estate transaction.

CONTRACT/VENDOR ESTATE AGENTS: These are those types of estate agents that are registered real estate contractors/vendors with a particular company or organization in offering their estate agency services. 

OWNER – ESTATE AGENTS: They are referred to as owners of residential and/or commercial properties to be let out while also acting as estate agents in marketing and finding suitable tenants to the same property. They usually don’t appoint estate agents to act on their behalf on the property to be let out or sale, but rather, they act on their own selves.

Estate: This referred to as large piece of land owned by an individual or group of persons. It is also described to mean a piece or large piece of land with different types of buildings/structures been developed on it.

Agent: An Agent is referred to as the person or business entity authorized and/or instructed to act on behalf of another person – client – in a business transaction with third parties based on an agency relationship they have created.

Estate Agent: Estate agent on the other hand is regarded to mean the person who carries out business activities in estate agency practice and whose duty is to sell, acquire, lease and manage various classes of land and landed properties on behalf of the client in consideration for monetary compensation usually referred to as commission.

1.8       Background of the Study Area

It was in 1976 that Federal Military Government led by Late General Murtala Mohammed enacted Federal Capital Territory Act (FCT) established Abuja after it has been chosen to be the administrative capital of Nigeria and with solely administrative functions. This was after the failure of Lagos due to the problems of inadequate land space for future expansion, terrible traffic congestion, poor drainage, acute housing shortage and associated costs, unbearable ethnic influence etc. The planned period for the transfer was to be completed in 1986. However, it was on 12^th December, 1991, that the final movement of Federal capital to Abuja became a reality. Abuja is located in the geographical centre of Nigeria (Figure 1.1) and lying between latitudes 6o 45’ and longitudes 7o 39’ north of the equator. The land of approximately 8,000 square kilometres was carved out from the then neighbouring states of Kwara, Niger and Plateau to serve as the FCT and the Federal Capital City (FCC) to constitutes about 250 square metres. From its designed capacity the FCC will contain 3.2 million people when the development of the city is completed, however, the Abuja population has exploded to 6 million with less than 50% of development attained. The government vested all the land in FCT in the Federal Government of Nigeria. The government also created Federal Capital Development Authority (FCDA), as its agency responsible for the spatial planning and development of the FCT.