Hidden Cost of Buying a Property. May be None?. By Realtor Ikenna Nwosu 234-8030529372


Hidden Cost is a misused or abused cliché of some property buyers to refer to additional cost in a land transaction that are not communicated at the inception of the transaction.

While some property owners practice the hidden cost strategy to sell off their land, more recent developers don't. In between, property companies generally suffer from the stigma of the cliché of hidden charges

Whichever way you look at it, we have a very unprofessional practice in our hands.

Here are a few explanations, not excuses, for what is popular known as hidden charges.

1. Advertised Cost of Land

You find an estate advertised for, say N5m per plot. You plan and save up N5m, get to the property owner, only to find out you also have to pay for A, B, C....Z. �, sometimes, running up to 30% of the cost of land.

The question is why the entire cost was not advertised. These extra cost are broadly referred to as hidden cost. For some property companies, they are not hidden. You will find them on the Land Application Form or a pre-purchased form of the property. So they are not hidden because they are clearly stated on the Land Application Form, a document subscribers read before putting money down.

A deeper level of hidden cost is where such cost components are not advertised or stated in the pre-purchase paper work but introduced from the blues later. Now this is criminal. As a Property Investment Advisor, I kick against these "hidden cost" and go out of my way to ring it to the ears of every property owner I come across. I fiercely protect my clients from offers like this.

How do I get into a binding contract with you today with an uncertain cost item which I am obligated to meet in future!


2. Statutory Payment

This is a new way of communicating these so called "hidden cost". Some developers now call it statutory cost.

The explanation for this is that some of these cost are required by the government to consummate a land transaction. Some of these cost items are Survey cost, Deed of Assignment. Some companies add development fees, demarcation fees etc. Whatever it is and however long it is, the ethical thing is to communicate all cost components from day one and have prospective subscribers well informed to know what they are getting into.

Some Real Estate companies explain that the cost of Surveys, Deed of Assignment are determined by the government and property lawyers respectively. True, the services of Registered Surveyors and Property lawyers are employed for these.

An interesting perspective I hear a lot is that buying land is like buying a car, to the extent that the car dealership do not determine nor responsible for the cost of car registration, vehicle license, road worthiness, vehicle insurance etc. In the same vein, the cost of vehicles as advertised do not include the other vehicle related cost as mentioned. Estate developers seem to have a point with this. Do you agree?


3. Issue of Development Fees

Otherwise called infrastructure fees, development levies, according to some estate developers, will provide for estate common facilities like paved access roads, street lights, drainage, power supply etc.

Some estate developers who state on their Land Application Form, that development fees are required, do not state the cost. You will find that these estate in this category are located at future development areas. By this, we mean locations that required a number of years to be habitable. The land investment objective of subscribers of estates like this are not to developed their land immediately but in the future.

It does explained why the exact cost of development fees for estates like this are not stated because by the time these infrastructures are ready to be put in place in the future, inflationary effect would made nonsense of the cost feasibility estimation of building the infrastructure. So the solution is to, at least, state that such cost exist or will come up in the future. Oh, some investor friendly estate developers will also add that at such time in the future, what infrastructure and cost to be put in place in the estate will be determined by stakeholders land owners and Estate Management Association. Fantastic!

On the reverse, estates that are Ready To Build will likely have the specific cost of development levies, clearly spelt out on their Land Application Form or Pre-purchase paper work. Because these estates are immediately habitable, located in areas with other functional residential estates, it is feasible to estimate a cost that will be utilized immediately. Notwithstanding, regular price reviews are carried out and prices changes are immediately implemented.

In conclusion, when prospective land investors play the hidden cost line, I forgive them and go the length to explain most of the points raised in this article. However, when Property marketers, Land Surveyors, Property Lawyers go that lane, I get worried because they should know better.

To prospective land investors out there, there is no such thing as hidden cost of land when you are working with a responsible estate developer. Although, as the investor, you have your rights to due diligence on where you put your money, all cost components are stated on the marketing materials or paper work. Look for them and ask all the questions. You are the king with land investment markets.

Hidden cost or no hidden cost, land and by extension, real estate investment remains one of the most reliable, stable and rewarding investment there is to wealth creation. Don't allow the often over exaggerated negative stories to stop you. Always and always get a professional Realtor to guide you into the land investment that is good for you.[/b]

Happy Land Investment and have compliments of the season.

[b]Realtor Ikenna Nwosu
+234-8030529372
Real Estate Champions REC
recnig1@gmail.com
Instagram - @recnig
Twitter - @recnig
Facebook - @recnig

Ikenna is a passionate real estate professional who runs a successful property consultancy company and other businesses in Nigeria. He regularly writes on global real estate markets

Hidden Cost is a misused or abused cliché of some property buyers to refer to additional cost in a land transaction that are not communicated at the inception of the transaction.

While some property owners practice the hidden cost strategy to sell off their land, more recent developers don't. In between, property companies generally suffer from the stigma of the cliché of hidden charges

1. Advertised Cost of Land

You find an estate advertised for, say N5m per plot. You plan and save up N5m, get to the property owner, only to find out you also have to pay for A, B, C....Z. �, sometimes, running up to 30% of the cost of land.

2. Statutory Payment

This is a new way of communicating these so called "hidden cost". Some developers now call it statutory cost.

The explanation for this is that some of these cost are required by the government to consummate a land transaction. Some of these cost items are Survey cost, Deed of Assignment. Some companies add development fees, demarcation fees etc. Whatever it is and however long it is, the ethical thing is to communicate all cost components from day one and have prospective subscribers well informed to know what they are getting into.

Some Real Estate companies explain that the cost of Surveys, Deed of Assignment are determined by the government and property lawyers respectively. True, the services of Registered Surveyors and Property lawyers are employed for these.

An interesting perspective I hear a lot is that buying land is like buying a car, to the extent that the car dealership do not determine nor responsible for the cost of car registration, vehicle license, road worthiness, vehicle insurance etc. In the same vein, the cost of vehicles as advertised do not include the other vehicle related cost as mentioned. Estate developers seem to have a point with this. Do you agree?