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By Maduka Nweke, [email protected]
The age-old adage, “necessity is the mother of invention,” has never rang truer for Nigerians grappling with the severe economic downturn.
Faced with rising hardships, many Nigerians are increasingly resorting to unconventional means to secure accommodation. Among the most notable of these methods is the auctioning of properties; a practice that, while common in many parts of the world, remains relatively unknown in Nigeria’s real estate landscape.
In recent times, Nigerians have found themselves navigating a real estate market in turmoil. With the economic crisis intensifying, securing a place to stay has become more challenging than ever, leading many property owners to offer their homes for sale via live bidding. Though property auctions are far from traditional in Nigeria, the growing demand for alternative accommodation solutions has spurred interest in this relatively uncharted territory.
Property auctions a rapid shift in real estate norms
A property auction is an open public sale where buyers compete to secure a property by placing bids. While this method is well-established abroad, it has yet to become a mainstream practice in Nigeria. Nonetheless, the rapid growth of Nigeria’s real estate sector has prompted real estate promoters to explore more innovative and unique models to meet the demands of an increasingly desperate population.
An auction, in its simplest form, allows potential buyers to vie for properties, with the highest bidder securing the sale once the auctioneer’s gavel falls. There are two main types of property auctions: the Faster Traditional method, where a reserve price is set to guarantee the seller’s desired outcome, and the more Flexible Modern method, which gives buyers more leeway in their bids. Regardless of the auction type, both methods promise a faster, often more transparent process than traditional real estate transactions.
Auction advantage (Speed and security)
According to Mr. Stepple Alonge, a seasoned auctioneer with the federal government, property auctions offer a streamlined and secure way to sell properties quickly. “Once the hammer falls, the winning bidder is legally bound to purchase the property,” he explains. However, he cautions that not every property will sell at auction, as there are no guarantees that the desired price will be reached.
While auctions are commonly associated with property developers and investors looking for quick deals, Alonge stresses that auctions can benefit a wide array of buyers and sellers. He suggests that for those looking to sell a property in a hurry, auctions provide a safe and efficient alternative, with the potential for the price to increase in the heat of the bidding process. However, he also warns that one must carefully weigh the pros and cons before venturing into an auction sale.
Short-term rentals gaining traction
Alongside the growing interest in property auctions, short-term rentals are also emerging as an alternative to traditional long-term housing. As business engagements and tourism increase, more individuals are turning to vacation rentals, which offer flexible, short-term lodging. These furnished properties, typically rented on a nightly or weekly basis, cater to tourists, business travelers, and anyone seeking accommodation for a brief period.
Vacation rentals, which are often more upscale and private than hotels, have become a favored option for those seeking more personalized, spacious accommodation. As more Nigerians explore these avenues, there is potential for this model to gain traction as a viable solution for those struggling to find affordable housing.
Challenges, opportunities in the Nigerian real estate market
Despite the increasing interest in auctions and short-term rentals, there is still considerable resistance to change within Nigeria’s traditional real estate culture. According to property developer Mr. Athanasius Anyanwu, many Nigerians remain attached to conventional methods of property transactions, resistant to the new dynamics introduced by auctions and other innovative models. He attributes this to a deep-seated familiarity with traditional buying and renting practices, which, although inefficient, have been the norm for decades.
Anyanwu explains that auctions, although widely practiced in other parts of the world, are foreign to many Nigerians. However, he believes that with time, and as economic pressures mount, more people will embrace the auction system. “Change is always met with resistance, but as more individuals experience the benefits of auctions, they will come to appreciate its efficiency,” he says.
Research before paying
For those looking to participate in property auctions, preparation is key. Researching the auction house, viewing the property beforehand and understanding the auction terms are crucial steps in ensuring a successful bid. Potential buyers must also be ready for the pace of the auction process, where decisions are made quickly and contracts are exchanged immediately after the hammer falls.
James Emson, Managing Director of Clive Emson Auctioneers, suggests that buyers familiarize themselves with the auction catalogues and terms before attending. He advises attending a few auctions as an observer to gain an understanding of the process and to help build confidence for future bids.
Moreover, it’s important to set a clear budget and stick to it. The auction environment can be fast-paced and emotionally charged, but buyers should remain composed and avoid overspending in the heat of the moment. Auctions can often yield properties below market value, but renovations may be required, so buyers should factor these additional costs into their bids.
Future of auction property auction in Nigeria
The introduction of property auctions in Nigeria may offer much-needed relief to those struggling with the skyrocketing cost of living and housing. However, it remains to be seen whether this model will take root and become a standard practice in the country’s evolving real estate market. As the economy continues to present challenges, Nigerians will likely continue to explore innovative solutions such as auctions and short-term rentals to address their accommodation needs.
Ultimately, while the auction model is a departure from tradition, it may be the very innovation Nigeria’s real estate market needs to foster greater efficiency, transparency, and accessibility for all. With careful planning and strategic execution, property auctions may become a key player in transforming Nigeria’s housing landscape.
