Real estate lessons for beginners
I have spent no fewer than seven years in real estate business. Sometimes, I rely on the interactions with new team members to be reminded about the ‘Rookie Lessons’ that form the baseline of helping a client with no prior experience in real estate to glide through the experience as well.
It is in that belief that I am sharing this recap from a team member who shadowed me for a few days ago during the course of my daily routine. Luckily, he literally experienced all aspects of the work as he watching on as a client closed on a property.
Walking down the sandy streets of Lekki housing estates with my shoes sinking in the sands of the estate of houses yet to be completed, I had a lot of questions on my mind that got me excited. I am one to ask a lot of questions. It sorts of left me while growing up because I had more or less developed the mind to answer questions instead of asking them. But this time it was different – I had to watch, take notes, and ask questions as we worked.
It was my first official tour into the Real Estate world and unlike with other jobs where at the beginning you are started with some theory or book knowledge, mine started with the fieldwork.
I was excited, because although I thought I knew a little about Real Estate (sebi, it is just about buying and selling of house?), I got a little deeper understanding of what the business of real estate truly entails in those days of working through pre-inspections, client communication and negotiations to name a few tasks I experienced.
Coming out, I had questions like;
- Why are houses so expensive in Lagos?
- Why are people so keen on living on the island? (Supposedly chasing the la Vida Loca life)
- Why are the houses already painted white while under construction – apparently, when the answer was revealed to me, I didn’t know that I knew the answer.
- Why are some houses on the island more expensive than the ones on the mainland?
- Why can’t there be fixed prices on houses instead of going back and forth on prices?
- What are the factors that influence prices in real estate?
- Why are some clients just so stubborn and want to give the agents a headache?
Turns out there was more to real estate than meets the eye.
But here are the things I learnt, which you should count yourself lucky to know before venturing into real estate.
1. PRICE IS DETERMINED BY SEVERAL FACTORS: The factors that influence the price of a house include the location (cost of land), the materials used in constructing the house, the benefits & features of the house, and in some cases even the value that a client places on the house. If the value of a house is N100 million, and a client looks at it and gives it a higher price, then that higher price becomes the new price.
2. SEEK TO UNDERSTAND BEYOND THE BASICS: As a realtor, you have to know your onions, or else you will just keep going round in circles and struggle to get business done. From knowing the best ways to present the house to understanding the market specifics, all this residual knowledge comes to bear in the expected results.
3. EACH CLIENT IS UNIQUE: I very quickly understood that not everyone wants to live in the house they buy; some of the buyers just want to buy the house only to sell it again at a higher price which is more money for them. And you as the realtor have to understand this when showing them options ass this will cut down the time you spend showing them options that they might just keep rejecting. Therefore, as a realtor, you have to be sensitive to the needs of people by keeping the options open. The essential need of an average Nigerian is to have a place to lay their heads somewhere after the day closes. In short, pitch the right houses to the right people – save yourself and the client time as much as possible.
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4. TIMING IS EVERYTHING: As a buyer, it is advisable to buy a house when it’s still at the building level (these are known as off-plan options) if you have the opportunity. By building level, I mean when it’s at its foundation level and all you have is the floor plan and all you can do is imagine how it will look like when completed. What most people do not want to do is take that leap of faith. A house at N250M at the foundation level can be N600M when completed.
5. HARNESS THE POWER OF QUICK DECISION MAKING: As a buyer, do not waste time when deciding IF to buy a house. Why? Because time is going and others are also looking at the same house. For every hour or day that you delay in making a purchase decision, the price is either going up and/or it will be sold to someone else who makes the right offer. Delay only brings regret.
6. KNOW HOW TO BARGAIN AS A BUYER: As a buyer, when pricing a house, don’t price it like you’re pricing yam in the market. You won’t be taken seriously and the assumption will be that you are just a shopper so your agent might ignore you or even the seller might. Without understanding the market, you might think that pricing a house from N40m to N32m is a good deal but it is just setting yourself up for a presumption to be made about you.
7. TAKE NETWORKING SERIOUSLY: As a realtor, ensure you build relationships, it’s very important. Attend functions, your next client may be there; you can never know. Your network is your springboard. Your network is also your net worth and in this case, real estate is the currency you will exchange.
8. DO NOT UNDERESTIMATE ANY POTENTIAL: I also found out that there are some very expensive houses on the mainland that are as exclusive as those on the island (I was surprised). The buyers of such options, invest very quietly and generally prefer not to be loud. The lesson here? Do not underestimate anyone during a potential real estate transaction.
Did you learn anything new?
Do you have more lessons to add for people who are just learning about real estate investing?
Did you have more questions to ask and get clarifications on?
Feel free to share them in the comments section and let us all learn from each other as if we are in a mastermind.
PS: I am considering creating a mastermind type of community where quick tips and information will be shared but most importantly where like-minded people interested in real estate can interact and share experiences. What do you think about that?
Till next time, I remain your friend for all things real estate.
For more insights on real estate investing, get Lerato’s e-book here.