Buy Now Pay Later: Who Can Be Trusted?

This is the second part of the “Buy Now Pay Later” Series. Remember we are still discussing THE DYNAMICS OF LANDED PROPERETIES WITH FLEXIBLE PAYMENT OPTIONS.

Last time, we discussed the reason it seems many real estate companies are in the business of “Buy Now Pay Later”. If you missed it, you can read it here.

Today, I shall be answering another vital question we ought to ask when going into the business of “Buy Now Pay later.” And the question goes thus: Can I trust these companies or dealers?”

Usually I would advise people to look before they leap. There are many companies you ordinarily won’t need a soothsayer to tell you that you shouldn’t do business with them, but how do you know?

Just like the Pure Water analogy I used in the first part of this series, presently many companies are still offering virtually the same kind of services. The pure water situation gives you opportunity to possibly see particles in the water you are about to buy, or notice some strange coloring, and portends a red flag; which means it’s no go area.

However, it is a different ball game when it comes to the real estate industry. In real estate there is no such opportunity, which makes it difficult to separate the wheat from the chaff. How do you identify who to deal with and who not to deal with?

I must say that there are a number of organizations that are credible and they constantly do their best to offer the best real estate services to their customers. These organizations are well tested and trusted. This is not to disparage any organization, it is just to lay the cards as they are, and leave you to take your decisions.
There are just TWO important things you need to watch out for to determine who you should deal with and who you should avoid in real estate transactions.

Firstly, you must be able to find out about their integrity; how credible are they? You need to do a background check on the organization, individual engagements before the organization, their track records etc. For instance, if I find out during my investigations that the people I am about to deal with were dismissed in their last place of engagement for wrong practices, I would not have to deal with them.

This is a very important thing to do before going into any business. A friend of mine always says ‘if someone can lie for you, he can lie to you’. Invariably, it means that if someone can defraud his organization, he can equally defraud individuals.

The second thing you need to do is to conduct an expertise check. Apart from checking their integrity, finding out about their level of expertise is also important. If any of these two attributes and skills are missing then there is a problem lurking around. No matter how genuine, pleasant or attractive their offer seems, you need to make certain that its not a red herring

In an industry that has not really lasted for ten years, I have seen organizations that no longer exist just because they either lack integrity or expertise or don’t even have any of the two to start with.

To adequately avoid companies of this nature, you need to ask the following questions:
1. What is the expertise of this company; Do they have adequate knowledge of the business?
2. How experienced are they?
3. What have they delivered before?
4. Removing the corporate veil, who are the individuals behind this organization? Can they be trusted?

If these questions cannot be rightly answered, then there is an imminent danger. You need to find out before you deal with the prospective company. Find out their integrity coefficient and their expertise level.

Once that is sorted, the next thing to do is to go down to the particular product they are offering you. What is this product? A lot of us think that Land is Land. But I tell you, Land is not Land.

A product can only be defined by the person selling the product. That is why most goods and services that are sold all over the world today usually come with a product description. Even services come with documents that tell you what the service is about. If you are also dealing in real estate, you need to find out what constitutes the product they are offering you. This is usually called the ‘terms and conditions’

In real estate industry parlance, it is also known as ‘Frequently Asked Questions’ or FAQs. This is a group of questions that customers would likely ask and their answers. This will give you the major information you need to know about what you are buying. You need to ask for this document.

I have seen a situation where a company says ‘Buy a plot of land, and we will give you survey free, plus a lot of other freebies like sand, water etc’, while another company says ‘Buy land, but you will still have to pay for survey and documentations’

You can clearly see that these companies are offering the same product, but in different ways. It will be wrong to carry the mindset of the first company to the next one, as they both offer different services. They both carry the same product, which is Land. But the way they are offering it to you is different. If you do not really take time to read the FAQs, you might be setting yourself up for trouble, and may begin to feel cheated in some cases. It is then very important to read the FAQs before doing the business.

The general rule is that, after buying land you need to pay the agency fee, survey the land, and get a lawyer for documentation. If a company then offers to help you with survey and documentation, it doesn’t make it a standard for other companies. The company offering such freebies must have a way to be dealing with all those things they are offering, and they are most likely fraudulent.

You need to deal with the company based on what they offer and what you understand about the product. These products vary and differ. Even a company can offer two products which carry different services.

One other thing you should consider before dealing with a real estate company on a “Buy Now Pay Later” basis is LOCATION. In real estate, the most important thing is LOCATION. There are two ways to consider Location; either you meet it as readily available or you make your location. Locations are either met as they are or they are created.

Let me use the case of Disney World as reference point. Disney World was once located in an undesirable part on the outskirts of Florida, USA. However, the presence of Disney World in the location brought a good measure of development to the area, and to day it has become a very popular location attracting people from all parts of the world.

A developer can choose a location, and decide to take development there. That way, he has made a location. This means that if the real estate company you are dealing with has a ready development plan for the location they have chosen (if it is a relatively unknown place), you can consider taking the offer. If reverse is the case, you may need to avoid doing such business, as it may tie down your money for years without any significant returns on investment.

In a situation where the product offered is already in a known location, you need to also know what makes the location attractive, and habitable. This is also very important for you, in order to give you an idea of what you are really getting into.

The aspect of trust cannot be de-emphasized in real estate deals, especially if you are an investor. Ask questions, probe until you are sure you are in the right deal. I will take a break here. The series will continue next week, as we look into another aspect of the “Buy Now Pay Later” deals.

Debo Adejana

MD/CEO, Realty Point Limited