Due diligencein any land or real estate transaction in Ghana is without question the only reason why you would not end up losing millions of your hard earned money or ruining your career as a broker /agent. This topic will be broken down into 3 episodes (Due Diligence I,II, III) due to it’s importance. Due Diligence I is a bit of a back story on how my career almost ended before it even started just because of negligence on this important process.
So I began my career in Real Estate as an intern in a registered real estate brokerage with a specialty in land sales after graduating from the University Of Ghana Business School (UGBS), as such I had my very first land request from one of my University’s professors (whom we will be calling Professor X herein). So the request was for a plot of land at North Legon and I remember the joy that I felt when he made this request. Unfortunately for me my company didn’t have any land options in the said area. I was not ready to lose my first client so I started pushing the options that my company had to Professor X but he seemed pretty set about his request.
As a result, I started making enquiries about land options within Professor X’s request and “luckily” two of my colleagues told me they had a land option selling in the said area. I was so excited about this development that I quickly informed Professor X without even going through the implications of this. I quickly scheduled for a viewing with Professor X and asked that my colleagues get me in touch with the supposed owner/ seller just so I can view the land beforehand (you never want your client’s to have a sense you have no knowledge about what you’re about to sell to them).
The quoted price made less sense to me at this point because the location, road network and developments around the area was extremely good. This gave me a sense that the land had been a bit underpriced but I didn’t want to get myself into that because all I cared about is “the first class” experience that I was about to give Professor X.
So we saw the land on the scheduled date, I brought out all the sales techniques that I’ve learnt from the UGBS and all the practical experience gathered from dealing with clients virtually my whole life (I come from a business oriented family where we operate in multiple wholesale and retail of products in the major markets in Ghana). I started with this pitch that I had been practicing over night and to no surprise of mine it all came through, Professor X was “extremely interested”! So there are three levels of interest that I pickup from my clients after my viewings:
1. Not really interested; Client did not like the options shown very much and further work needs to be put in to get client to buy.
2. Really interested; Still some work to be done, client’s usually have a ton of questions and want to make sure of all the factors before committing themselves.
3. Extremely interested; Client would like to sign all contacts involves immediately and they need not much discussions about the details.
So Professor X was on my Level 3 and asked that I get the account details of the owner so he initiates payment as soon as possible. The supposed owner of the land was in the UK so he asked that Professor X pays into his Pound Account which was being managed by his close friend who worked in one of these big banks in the country. Deposits were made and it looked like nothing could ever go wrong with this deal. I remember asking myself, “Is this how easy I’m always going to have this?” The little voice in my head kept telling me “This deal is too good to be true”, but all I could think of at the moment was just how much money I would be getting and quite frankly my brain could not comprehend how much I was envisioning to get annually.
I asked Professor X to immediately possess his newly acquired land after all ,deposits had been made and confirmed (in hindsight this suggestion was probably my career saver).
He obliged and started his project in a couple of weeks after the transfers had been made. As soon as the project began there was resistance from almost every where;
1. the allodial owners of the land.
2. relations to the supposed owner.
3. other supposed owners.
Professor X was at this point calling my phone non-stop for explanations to which quite frankly I was even also in search of. So I met all interested parties in the land and listened to every one of those stories and it was clear to me that chances of the deal going through and Professor X continuing his project were dire.
I started thinking about the options that Professor X had and it was clear by all indications that we needed to refund his money to him. “How do I get him all his money back when the deposits were made 2 weeks ago?“ I was hanging on to dear chance at this point.
Luckily for me Professor X’s money had not been transferred into the UK yet so the supposed seller’s banker gave me a date to come for all the deposits made. I went for all the money and returned it to Professor X and he was pleased but quite shocked that I was able to get him back his money.
(In next article- “Due Diligence III”, we’d talk about the importance & relevance of making all real estate payments through the banking system. This is in accordance to the Real Estate Agency Act 2020 – Act 1047)
This experience by far is the worst I’ve suffered since I began my career and this was all because I had let the deal get out of hand so much that I was left hanging on to chance! I did not take my time to do all the necessary checks before proceeding with the deal, I did not pay attention to the red flags, I did not do my due diligence, and most importantly I did not look of for my client’s interest.
So, this is how my career almost ended before it started. Professor X is still a very good client of mine by the way because in his own words “he loves my professionalism and dedication”. Some of my friends argue that this was a good learning process for me, and I do agree but the experience is something that I would never want to subject myself to, ever. The worst part of this is, my colleagues lost their jobs because of this deal and other deals that apparently they had been involved with but this very one was the catalyst to all that.
The essence of due diligence cannot be over emphasized. I always tell my colleagues that “In Real Estate you’re always one bad deal away from owing someone a ton of money and losing all you have been able to build”. Knowing the right channels and places to conduct these searches is as crucial as it can be and it’s in your best interest as;
1. A client; to involve a professional real estate broker/ agent. You can find these professionals in associations like Ghana Association of Real Estate Brokers (GAREB) or registered real estate brokerageslike CBC Properties Limited.
2. As a broker/ agent;to conduct all these checks before involving your clients no matter how long it takes.
This is the end of Due Diligence I. In Episode II we take a look at these channels and places where these searches can be done as well as the major indicators (red flags) you should be in the look out for when transacting in lands in Ghana in order not to find yourself in my situation.
