Right Sizing - Real Estate Client Budget Versus Client Wants
Right sizing is a term commonly used in the corporate world to refer to the process of trimming employee numbers to match the size of the operations of the organization in question.
The sad thing about this process is that when the organization is done right sizing, many employees end up losing their jobs.
Some organizations refer to this process as down-sizing, re-structuring, re-organization or re-engineering.
Irrespective of the fancy names used to describe this process, the result is the same . . . employee lay offs.
We can define right sizing to mean the process of matching roles to employees and dumping the excess baggage . . . employees who no longer have a role to play in the new dispensation, in the new structure.
How does right sizing apply to the real estate client looking to buy or rent a house?
Well, many real estate clients engage Lagos real estate agents to look for houses or apartments that meet certain criteria. And, more often than not, houses or apartments that meet those criteria are far more expensive than the amount of money these clients are willing to spend.
In simple words . . . there is often a disconnect between what the real estate client needs and what she is prepared to pay.
For example, a real estate client seeking apartments for rent in Lagos may ask for apartments that meet the following specification:Three bedroom flat
Close to Victoria Island
free of traffic bottle-necks
serviced with generator and security
good parking space
Compound with concrete or interlocking floor
All rooms ensuite
Good roads and
Modern neighbourhood (preferably an estate)
When you ask the real estate client what she is prepared to pay, she will probably tell you 150,000 - 180,000 Naira.
Now that is a tough one because locations close to Victoria Island that meet the criteria above are far more expensive than the client's budget.
Then there are real estate clients who tell estate agents that they have open budget.
When a property client says she has an open budget, it simply means that the estate agent should just find the property that meets her specification. When he finds it, she will pay for it.
Put simply, price is not an issue with this category of property clients.
Many clients who
claim to have an open budget really do not have an open budget because when the estate agent eventually tell them what the price is, they say, "hey, that's above my budget!"
The shock of the price then compels them to say what their budget really is.
For example, a real estate client who claims to have an open budget and a long list of criteria for the house she wants may be stumped when she is told a house is available that meets her criteria and the rental price per annum is 850,000 Naira.
That is when she will admit that her budget is 250,000 Naira max.
Be honest with your Lagos real estate agent. Be open with respect to your budget.
When you tell your estate agent what your maximum budget is, you save time and resources because your estate agent will then make recommendations that fall within your budget range.
In simple words . . . right size!
So, what does right sizing mean in the real estate world?
Right sizing, in the real estate world, means matching your budget with your wants.
For example, you want to buy a duplex in Omole phase 2 estate because you want easy access to third mainland bridge due to the fact that you work in Victoria Island. The intention is good and the rationale makes sense.
However, a semi detached duplex in Omole phase 2 estate cost 40 million Naira. And the maximum amount you have is 20 million Naira.
In this case, you have one of three options.
1. Wait until you can save as much as 40 million Naira or
2. Secure a mortgage to raise your capability to 40 million Naira or
3. Buy a 20 million Naira duplex somewhere in Ogba
Option 1 is risky because, from experience, if you do not buy a house when you have the desire for it, other things will happen along the way that could consume the money meant for the house.
Therefore, options 2 & 3 are the sensible options.
If you cannot secure a mortgage, then go with option 3.
Remember . . . adopting the "right sizing philosophy" enables you to focus your efforts on finding properties that match your budget. Doing otherwise is time-wasting and unproductive.
P.S: Contact Us to find your dream home.