Whether you plan to rent or buy your own property, there are all kinds of expenses you need to be prepared for. However, even the most attentive and experienced tenants and buyers often forget about one specific type of expences: estate agents and agency fees. Here is how much you will need to pay your real estate agent these days.
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1. Who should pay the fees?
Ever since real estate agencies and agents were invented, people have been debating the question of who needs to cover the fees. In case of renting an apartment or house, it’s clear that the fees should be covered by the tenant. However, what if the property is being sold?
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In most cases in Nigeria, the buyer is the one who needs to cover the agency fees in addition to paying the price of the property. However, in many parts of the world, the agency fees are actually included in the price set by the seller and are therefore covered by the seller. If you are buying property, you can try and negotiate with your agent or the seller about who needs to pay the agency fees. You may get the seller to slightly lower the price of the property to help you pay the real estate agency fees even if he doesn’t agree to cover the fees himself.
2. Real estate agents and agency fees in Nigeria
There are no government provisions regulating the fees charged by real estate agencies at the moment, but in an effort to keep the market fair for everyone, most agencies and individual agents have agreed on specific fees that should be charged in different kinds of property deals:
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- For property rentals, the agency fee is usually 10%. It is calculated and collected using the annual price of the property even if the tenant and the landlord agree that the tenant will pay month by month. It means that if the monthly price of the property is ₦25,000, which makes it ₦300,000 per year, the tenant will end up paying ₦30,000 to the agent for his work.
- For the sales of residential property, the fee is usually 5% of the total price paid for the property. So if you are buying a ₦10 million home, you will need to pay ₦500,000 to your agent for his work.
- When the buyer is purchasing a commercial property, the fee is normally as low as 1%. So for example, if you are buying an ₦80 million hotel, your agent will receive ₦4 million in fees.
3. What if there are two agents?
It’s not uncommon for Nigerian real estate deals to have two real estate agents working on a single deal, whether it’s a purchase or a rental. They both can represent different sides of the deal. Normally, you pay your fee to the agent who is working with the seller or the landlord, and that agent can split the fee 50/50 for bringing you as a customer to the table. However, this arrangement will likely be discussed without you and will not affect the fees you are already paying.
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