Investing in property in Nigeria is an exciting step, but many potential buyers underestimate the full costs of owning a property .
Beyond the listed price of the property, there are various additional expenses, including agency fees, due diligence checks, and post-purchase costs, that can significantly impact your budget.
In this guide, I will walk you through each step and expense to help you budget accurately, avoid surprises, and make an informed investment.
Why Understanding the Total Cost Matters
Knowing the complete financial outlay for buying property is crucial, as it helps prevent budget overruns and ensures a smooth transaction.
Many buyers get caught off guard by the hidden costs of property ownership.
Understanding these costs up front enables you to make smarter financial decisions and feel more confident about your investment.
Agency Fee
Real estate agents play a key role in property transactions, helping buyers find suitable properties and handling various stages of the purchase. In return, agents charge a fee, usually a percentage of the property’s selling price.
This agency fee varies based on the agent, location, and property value, but it typically falls between 5% to 10% of the purchase price.
When choosing an agent, it’s essential to clarify their fee structure up front. This ensures transparency and helps you factor this cost into your budget.
Experienced agents often provide value by helping you find the best property and managing the process efficiently.
Inspection Fee
Inspection fees are paid to agents or property owners when you view a property in person.
This fee covers the logistical costs of showing the property and can vary, especially if the property is far from the city center or requires multiple visits.
While the inspection fee may seem minor, it can add up if you’re viewing multiple properties.
If you plan to see several options before deciding, consider including these cumulative inspection costs in your overall budget.
You may want to also consider virtual viewings first before a physical viewing.
Due Diligence Fee
Due diligence is a critical step in the property-buying process.
It involves researching the property’s ownership, history, and legal status to ensure you’re not purchasing land or buildings with legal issues or disputes.
Engaging a lawyer for due diligence protects you from fraud, illegal sales, and future ownership problems.
A due diligence check typically includes:
● Title Verification: Confirming the property is owned by the seller and is free from legal issues, mortgages or liens.
● Property Search: Checking land registry records to confirm the title and ownership details.
● Physical location Verification: Ensuring the property can be used for your intended purpose, whether residential or commercial . You want to also be sure about the location of the property, which matches the property documents provided ,and that the land is free from government acquisition.
Due diligence fees vary based on the complexity of the property’s history, but they are essential for protecting your investment and securing your ownership rights.
The Property Purchase Price
The actual purchase price is often the largest single expense in the buying process. This cost varies depending on factors such as location, property type, and market demand.
For example, properties in high-demand urban areas like Lagos or Abuja tend to be more expensive than those in less developed regions.
While negotiating the purchase price, it’s wise to review recent property trends in the area.
Understanding local market conditions can help you make an informed offer and assess whether the property is priced fairly.
Documentation Fees (Legal Fees)
Legal documentation is a crucial part of property acquisition, as it ensures the transaction is binding and protects your ownership rights.
Without proper legal documentation , you don’t own a property.
A qualified lawyer can help draft and review documents, including sales agreements, title transfers, and deeds. This process secures your investment and minimizes the risk of disputes.
Key documents include:
● Deed of Assignment: Transfers ownership from the seller to the buyer.
● Governor’s Consent: Required for properties under certain land use laws to validate the transaction.
● Certificate of Occupancy (C of O): Establishes legal ownership over a piece of land.
These fees can vary, and it’s best to get a detailed breakdown from your lawyer so you understand all related costs.
Comprehensive documentation ensures a smooth transaction and provides a record of ownership, safeguarding your investment for the future.
Survey Plan Fee
A survey plan marks the exact boundaries and positioning of the property. Survey plans are required for land purchases, as they establish the legal boundaries and help avoid future disputes with neighboring properties.
The survey plan is particularly important for land in developing areas, where boundary disputes can be common.
Surveyors are licensed professionals who map the land, confirming its boundaries and alignment with official records.
Survey fees depend on the property’s size and location, but a valid survey plan is essential for clear ownership.
Post-Purchase Costs: Securing and Developing the Property
Once the property transaction is complete, you may face several additional costs depending on your plans for the land. These post-purchase expenses are often overlooked but are critical for those planning to build or secure their property.
Securing the Land or Property
If you’re buying land, you may want to secure it immediately. This can involve constructing a fence, installing a gate, or even arranging for periodic monitoring by security personnel.
Fencing is often one of the first steps to establish your property boundaries and enhance security.
Securing the property prevents unauthorized access and protects your land from encroachment.
Building Costs (if applicable)
If you intend to develop the property, construction costs are a significant expense.
This includes materials, labor, permits, architectural design, and other related fees. Construction costs vary widely based on the scope of the project, quality of materials, and labor availability.
Planning these post-purchase expenses will help you avoid budget overruns and ensure you can proceed with your property development smoothly.
Conclusion: Planning for a Complete Budget
Buying property in Nigeria involves many hidden costs beyond the advertised price.
From agency fees to legal documentation, survey fees, and post-purchase expenses, each component affects the overall investment.
By understanding these costs and planning accordingly, you’ll be better equipped to make a well-informed decision and avoid unexpected expenses.
If you’re considering a property investment, it’s wise to work with professionals who can guide you through each step, ensuring your transaction is transparent and legally sound.
With the right support, you can navigate the Nigerian property market with confidence and secure an asset that appreciates over time.
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