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Professional advice is indispensable

REAL ESTATE
By | May 13th 2010

By Harold Ayodo

Professionals in any field have special skills and knowledge beyond that of an average person. And in real estate the role of conveyancers (property lawyers), valuers, estate agents, land officials, architects, engineers and surveyors cannot be taken for granted.

Their involvement might cost more money and time but it is the best way to cushion against fraud in transactions.

For instance, a registered estate agent can provide an in-depth comparative market analysis. This entails comparing your desired property with others sold in recent times and determining the right price and the right market.

Registered agents can also help you find the best available deals in the market, even the ones that are not explicitly advertised. On the other hand, professional valuers can effectively appraise and determine the value of your desired property.

Valuers are not only critical when buying a dream home but during divorce and meeting mortgage requirements.

However, extra caution demands that you settle for a valuer who knows the market area to include factors that may determine the price.

Avoid fraud

Another advantage of hiring professionals is they may be liable for negligence should they fail to detect fraud. To save costs, however, a section of investors in real estate opt for short cuts by overlooking professional advice.

A home, for instance, that would cost Sh6 million would eventually go for Sh8 million after fees paid to professionals are factored in.

An average lawyer, for example, would charge 1.25 per cent of the purchase price of the property and an additional 16 per cent value added tax (VAT). Therefore, legal fees for property worth Sh10 million is Sh125,000 plus an additional Sh20,000 being VAT.

However, legal fees would increase in some cases as property transactions are unique and some may require more time and professional input.

Property transactions are generally supposed to be completed within 90 days but others drag even after payment of the ten per cent deposit of sale price.

Interestingly, there are prospective investors who even attempt to bargain with professionals to reduce costs.

However, negotiation of professional fees — for instance, to lawyers — is illegal and amounts to gross professional misconduct.

The lawyers are supposed to charge according to provisions in the Advocates Remuneration (Amendment) Order. Bargaining, therefore, results to undercutting.

Gross overcharging of clients by lawyers also amounts to unprofessional behaviour, which is supposed to be reported to the Advocates Complaints Commission (ACC).

The writer is a lawyer and journalist.

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