Are you considering purchasing a distressed property in Lagos? While these properties can often come at a significant discount, it's important to do your due diligence before making an offer. In this article, we'll go over 10 key questions to ask before buying a distressed property in Lagos.
Understanding Distressed Sales in Real Estate: How to Buy a Property Below Market Value in Lagos
In real estate, distressed sales can offer buyers the opportunity to purchase properties at prices significantly lower than their market value. These types of sales typically occur when the seller needs to sell quickly to meet financial obligations, resulting in a potential financial loss for the seller.
Distressed sales in Nigeria are often the result of urgent financial needs, such as settling debts or medical bills and are commonly used to raise funds for those looking to relocate their families abroad.
While buying a distressed property can be a great way to save money and potentially earn a profit, it is important to conduct thorough research and due diligence before making a purchase. Buyers must ensure that they have all the necessary legal documents to transfer ownership and avoid any legal issues that may arise from buying a substandard property.
Real estate investors are leveraging distressed sales by purchasing these properties, refurbishing them if necessary, and reselling them at market value, often earning a significant profit in the process.
However, buying a distressed property can come with challenges, including the risk of purchasing a substandard property or one with pending lawsuits. As a buyer, it is crucial to ask the right questions and conduct thorough research before making a purchase.
Here are 10 important questions to ask before buying a distressed property in Lagos:
By conducting thorough research and asking these important questions, buyers can make informed decisions and avoid the potential risks associated with buying a distressed property.
Who is the real owner of the property?
One way to accomplish this is to promptly send your trustworthy agents or property lawyer to the location of the property.
Is it a family property?
In most cases, the seller will probably disclose the reason for selling the property, such as to settle medical bills or for relocation. Avoid accepting vague answers like "I just want to sell" without further clarification.
Why is the owner selling the property?
Based on past experiences, it has been observed that certain unscrupulous individuals may sell a property in distress when they are aware of their likelihood of winning a court case over the property.
This is particularly common when there is a pending court case and their chances of winning are low. Their intention is to collect any amount offered by the potential buyer and disappear.
Does the property have any pending lawsuits?
It is imperative for a completed apartment in areas like Lekki, Ajah, Ikeja, Ibeju-Lekki, and other parts of Lagos to possess valid titles, such as a Certificate of Occupancy or Governor's Consent, purchase receipt, and government-certified survey.
If the property lacks any of these documents, it should raise a red flag. Even if it does have them, there are still unscrupulous individuals who can falsify receipts and titles.
To verify the authenticity of the C of O or Governor's Consent, one of the best options is to visit the Land Registry Department in the Ministry of Works and Housing at Alausa, Ikeja, Lagos. This can be done for less than N200,000 and is far better than losing millions of naira on a questionable distressed sale property.
Alternatively, if you are unable to handle the verification yourself due to being outside of Nigeria or being too busy, you can engage the services of a property lawyer to carry out the exercise on your behalf.
Does the property have legal titles?
It is crucial to consider whether the location has a history of cultism, frequent armed robbery, and avoidable violence, to avoid investing in a property where living or renting may not be feasible.
What is the history of the land where the property is located?
Certain real estate investors may choose to purchase land during the rainy season as this allows them to determine whether the location is genuinely dry land, as claimed by the seller, or a swampy area that is only habitable during the dry season.
What is the topography of the area?
If you intend to purchase a distressed sale property for rental or other commercial purposes, it's crucial to research the rental rates in the area.
What are the economic potentials of the area?
Purchasing a distressed sale property can be a profitable investment since it is usually cheaper than the actual market value.
However, it is important not to rush the purchase process and to conduct thorough research before making any payments. Look out for warning signs when purchasing a distressed property.
Are you interested in purchasing a property?
If you are interested in buying a property, contact Vines Realty real estate specialists at 08004000300 or 07004000300 to schedule an inspection. If you are located outside of the country, we can provide you with a video of your preferred property.