Real Estate Commission Lagos Nigeria – Free Tips To Cut Real Estate Agent Commission
Real estate commission Lagos Nigeria – Nigeria real estate agent commission is between 5-10 percent when you buy or let property in Lagos Nigeria. In simple terms, real estate agents charge 10% real estate commission for letting and 5% real estate agent commission for sales.
First time home buyers and tenants in Lagos Nigeria often misunderstand this. The question you should actually ask and understand is . . . ten percent of what? Five percent of what amount?
Let me explain.
The agency fee real estate agents in Lagos Nigeria charge is a percentage of the total value of the transaction.
This means that for letting, the amount you pay to the real estate agent is 10% of the total rent paid to the landlord.
Practically, it means that you pay a higher real estate commission if the landlord insist that you pay for a longer tenure at the time you rent an apartment. Let’s take an example to drive the point home.
Suppose you rent a 3 bedroom flat with rental price of 350,000 Naira per annum. You will normally be required to pay two years rent in advance. So, the total rent you will pay the landlord will be 700,000 Naira. The real estate agent commission in this particular case will be 70,000 Naira. That is, 10% of 700,000 Naira.
If the landlord is magnanimous and agrees to let you pay a rent for one and half years, your total rent will be . . .
350,000 + 175,000 = 525,000 Naira
In this case, for the same apartment, you will pay real estate agent commission of 52,500 Naira . . . a saving of 17,500 Naira on the estate agent commission. And you achieved this by negotiating the tenure you are required to pay for.
Bottom line.
You can limit the financial burden on your pocket when you rent an apartment by skillfully negotiating the tenure you have to pay for.
Negotiate the rent tenure and
Cut your agency fee amount
That way, you save yourself money you can invest in other areas of your life.
Unfortunately, many landlords insist on two years rent in Lagos Nigeria. Before now it was pretty easy to get a landlord to accept one year rent or one and half years rent, but now it’s pretty difficult because many landlords, especially retirees, depend solely on the returns from their property to live reasonably well. Therefore it’s important to them that you pay a lump sum they can invest or lock up in fixed deposit for future returns.
That strategy also pays real estate agents because it means that they can collect large sums from a single transaction as real estate commission.
Another way to limit your expenses when you rent a house is to negotiate the commission you pay.
For example, for a rental apartment with a large enough rent, you can negotiate the real estate agent commission from the customary 10% of the value of the transaction to 5-8% of the value of the transaction.
With respect to property purchases where the value of the property is sizeable, you may succeed in negotiating the real estate commission down from five percent to four or three percent.
Every amount you save adds to your bottom line. So, use the power of negotiation to your advantage.
A word of caution.
While negotiating real estate commission is a smart move, DON’T become “penny wise pound foolish”.
When you find a really good deal, a property that is more or less a giveaway because the owner is in some financial crisis, don’t over negotiate the real estate agent commission and lose out on the deal.
