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10 Questions To Ask Before Buying A Distress Sale Property In Lagos

• Posted by Opeyemi Quadri in Nigeria Property Market
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In real estate, you could buy a property valued at N10,000,000 for just N4,000,000 or cheaper with every valid document that will transfer legal ownership to you. It is called a distress sale.

What makes a property a distress sale

A distressed sale occurs when a property or other asset must be sold immediately for the seller to meet other financial obligations.

Often, it result in a financial loss for the seller as he’s ready to accept lower price or undervalued offer because he’s under economic duress.

What actually makes it distress sale is the fact that the seller is in urgent need of money to settle debts, medical bills.

The commonest among Nigerians right now is to sell their property to offset their travelling bill for those who want to permanently relocate their family abroad.

Benefits of Buying a distressed property

You stand a good chance of buying at a price that is below the market value when buying a distressed property.

You’re the price determinant, you call the shots, because the seller is willing and most times desperate to sell because of the urgency in financial obligation.

How real estate investors are leveraging on distress sale

There are real estate investors who have in reserve some money which they deploy whenever there is a distressed sale property.

They do this by refurbishing the property, if there is need to, and resell the property at the official market value.

Most times, they make at least 90% profit from such resale. That’s one of the ways to make more money from real estate.

While this sounds sweet and comes with an impressive return for the buyer, there are also challenges that could lead to lawsuit if you failed to carry out your due diligence.

Another drawback is  you might buy a substandard property, meaning you will be committing a substantial amount to money to fix the property.

10 questions you need to ask before buying a distressed sale?

While your eyes in on the profit, you also need to carry out a smart and fast research on the property to avoid buying a ‘fake’ or dubious property, or a family property, or property that has pending lawsuit in court.

Below are 10 things you need to do before paying for a distress sale property in Lagos:

1. Find out who the real owner of the property is
2. Find out if it’s a family property
3. Why is the owner selling it?
4. Does it have an impending lawsuit?
5. Does the property have legal titles?
6. The history of the land where the property is erected
7. The history of the community where the property is situated.
8. The topography of the area
9. The economic potentials of the area
10. Carrying out quality check on the materials used for the property

Find out the who the owner of the property is

You can achieve this by quickly deploying your reliable agents or property lawyer to go to the area where the property is located.

Find out if it’s a family property

One of the most cubersome properties to buy is a family property. If the distress sale is a family property, ensure that all parties are involved in the transactions.

Why is the owner selling it?

Most times, the seller would most likely tell you why he’s selling his property: to settle medical bills? For relocation? Etc. Avoid “I just want to sell’ the property

Does it have an impending lawsuit?

Past experience has shown that some questionable characters are most likely to put up a property for distressed sale when they know they stand a chance to win court case on the property.

Some of them do this when the property has a pending case in court and they have a slim chance of coming out victorious. They just want to collect any amount the prospective buyer is offering and they disappear.

Does the property have legal titles?

A completed apartment in places like Lekki, Ajah, Ikeja, Ibeju-Lekki, and other parts of Lagos should have valid titles.

It should have Certificate of Occupancy or Governor’s Consent, purchase receipt, and a government certified survey.

If the property has none of these, that should be a red flag. Even if it does, there are dubious people out there who could forge receipt and title.

One of the best ways to verify the C of O or Governor’s Consent on the property is to head to the Land Registry Department in the Ministry of Works and Housing at Alausa, Ikeja, Lagos.

Less than N200,000 should get this done. This is better than losing millions of naira on a dubious distress sale property.

Alternatively, you can commission a property lawyer to carry out the verification exercise for you if you outside Nigeria or you’re too busy to handle the verification.

The history of the land where the property is erected

Is the location notorious for cultism, incessant armed robbery, and avoidable violence? This is very important so that you don’t end up investing in a property where you won’t be able to live or rent.

The topography of the area

Some real estate investors prefer to buy plots of land during raining season. This gives them insight whether the place is a complete dry land as claimed by the seller or a swampy area that’s only liveable during dry season.

The economic potentials of the area

If you’re buying a distress sale property for rent and other commercial purposes, you need to find out the cost of rent in the location.

Key take away:

You definitely going to buy a distress sale cheaper than the actual market value, meaning you will be making in profit double of your investment in a short time.

Don’t be in haste to buy a distressed sale, do your findings before payment

Watch out for the red flags when buying an emergency property.

Do you want to buy a property?

Talk to Opeyemi Quadri on 08065277758 and fix a day for inspection. If you outside the country, I will get the video of your most preferred property to you.