Realtor Rip-Offs: How Nigeria’s Property Market Has Become a Haven for Fraudsters
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Realtor Rip-Offs: How Nigeria’s Property Market Has Become a Haven for Fraudsters
By Alabidun Shuaib AbdulRahman
Nigeria’s booming real estate market has become a magnet for fraudsters, with unsuspecting homebuyers and renters falling prey to deceitful realtors. The lack of effective regulation and enforcement has created an environment where scam artists thrive, leaving victims with financial losses and emotional trauma.
Realtor fraud has become rampant in Nigeria, with scam artists using various tactics to swindle innocent citizens. Fake property listings, advance fee scams, and document forgery are just a few of the methods employed by these fraudsters. In some cases, scammers create fictitious property listings, often using stolen photos and descriptions, to lure buyers into paying for non-existent properties. Others demand payment for services not rendered or for properties that don’t exist.
Empirical instances of realtor fraud abound. The Lagos State Real Estate Regulatory Agency (LASRERA) said it has recovered hundreds of millions and properties from fraudulent real estate practitioners, returning them to their rightful owners over the past four years.
Mr. Moruf Akinderu-Fatai, Lagos State Commissioner for Housing, made this announcement at the 2024 ministerial media briefing of the Lagos State Ministry of Housing
According to the Commissioner, since the establishment of LASRERA in 2020, the agency has received a total of 1,702 real estate fraud-related cases to date. Out of these, 1,458 were mediated upon, and 1,144 were successfully resolved.
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In Abuja, the Federal Capital Territory (FCT) Administration reported a rise in real estate scams, with over 100 cases recorded in 2020 alone. The Economic and Financial Crimes Commission (EFCC) Abuja Zonal Office also made significant arrests, apprehending 15 suspects for real estate fraud in 2020 and recovering Billions from them.
Furthermore, the Nigerian Police Force, FCT Command, reported 50 cases of real estate fraud in 2022, with losses totaling billions. These statistics echo the need for vigilance and regulation in Abuja’s real estate market.
In Port Harcourt, the Rivers State Government has warned residents about the activities of fake real estate agents, with reports of over 50 cases of fraud in 2020. The Port Harcourt Zonal Office of the EFCC also made notable arrests, taking in 20 suspects for real estate fraud in 2021 and recovering millions from them.
Additionally, the Nigerian Bar Association, Port Harcourt Branch, reported 20 cases of real estate disputes in 2022, with many involving fraudulent activities. These cases highlight the importance of due diligence and verification in Port Harcourt’s real estate transactions.
Nationally, the Nigerian Institute of Estate Surveyors and Valuers (NIESV) reported that real estate scams account for 20% of all property-related disputes in Nigeria. The EFCC also reported 444 cases of real estate fraud nationwide in 2020, with total losses exceeding N10 billion with more prosecution and recovery expected.
One particularly insidious tactic employed by these fraudsters in Lagos is the offer of a “buyback option.” This entails collecting funds from individuals with the promise of a good percentage yield with ongoing projects as collateral, this is more of a ponzi scheme in the estate business. However, this is often a ruse to lure victims into making payments. Once the payment is made, the fraudsters vanish abroad, leaving the client with no recourse. They are often confident that nothing can happen to them afterwards due to their perceived connections with powerful political individuals. These fraudsters are fond of making their spouses directors in such companies where they will move abroad and claim their source of funds from Nigeria is from the company they co-own. These are usually done to easily launder funds fraudulently obtained from clients.
To contain realtor fraud, authorities should liaise with foreign agencies to repatriate such spouses for prosecution along with their partners and the Nigerian government must establish a regulatory body to oversee the real estate sector and enforce strict standards. Strengthening laws and regulations to include harsher penalties for realtor fraud and ensuring compliance is also crucial. Furthermore, launching nationwide campaigns to educate citizens on realtor fraud prevention and reporting would help protect vulnerable individuals.
The government must also provide training and resources for law enforcement agencies to effectively investigate and prosecute realtor fraud cases. By doing so, Nigeria can create a safer, more transparent property market, protecting its citizens from the scourge of realtor fraud.
Realtor fraud has become a significant threat to Nigeria’s real estate market, causing financial devastation and emotional distress for countless victims. The government’s inaction has emboldened scam artists, but decisive action can change this narrative. By regulating the sector, enforcing laws, and educating the public, Nigeria can ensure a secure, thriving real estate market.
Ultimately, it is crucial for individuals to verify property ownership and documentation before making payments, research realtors, and their reputation thoroughly, and report suspicious activities to law enforcement. Realtors must register with reputable professional associations, maintain transparent business practices, and cooperate with law enforcement investigations. By working together, Nigerians can combat realtor fraud and restore trust in the property market.
