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British Columbia’s Neville Adomi talks about real estate

20 September 2008 at 22:12 | 1802 views

Neville Adomi(photo) is one of the most successful and most respected African-Canadian business personalities in Vancouver, British Columbia, Canada. In this interview with Afri-Can magazine, he talks about his real estate business and offers extremely valuable advice to African-Canadians interested in real estate. His advice can also be relevant for Africans living in other parts of the Western world.

Afri-Can Magazine: Who is Neville Adomi? Please tell us a bit about yourself.

Neville Adomi: I am a happily married father of three wonderful kids. I have a Bachelors degree in Electrical and Electronics Engineering. About seven years ago while running my internet business back home in Nigeria I decided to get an MBA degree so I applied to the University of British Columbia and got accepted. I chose UBC because I owned real estate in Vancouver so my accomodation cost will be low and I also had a sister here. I am a licensed real estate and mortgage professional and I currently own a real estate brokerage.

AM: Why did you decide to go into the real estate business?

NA: A combination of various reasons: I had previously invested successfully in some real estate transactions and developed some interest in the industry as I noticed that unlike in most parts of Africa, it was quite organized and well regulated with legislation designed to protect all parties involved. After graduating from the MBA program at UBC and doing some consulting work for a while I decided to start my own business to be able to take control of my time and my future. I started an e-commerce business but my interest in real estate soon got the upper hand and pulled me into the real estate industry. I also believe that the real estate business will prepare me for my future goal of developing high quality real estate communities in Nigeria.

AM: Many African-Canadians do not own their own homes. What do you think is responsible for this?

NA: Affordability, credit issues, risk aversion and ignorance are some of the reasons. While it is true that significant increases in BC real estate prices over the past five years has eroded affordability for many African-Canadians there is still a good number of African-Canadians who can afford to own their homes. However, a large fraction of them are totally unaware that they can. In fact most of them believe they cannot due to lack of knowledge about the process and steps to owning your own home. Due to lack of well organised credit systems in many African countries people are used to purchasing real estate in cash. It takes a while after they arrive here before realising the financing options available to purchase a home.

Another problem that arises from lack of understanding of the credit system is that when some people end up incurring a lot of debt (mainly credit cards) and cannot afford to make the payments they simply ignore it instead of negotiating with the creditor to clear the debt. The outstanding debt ends up being sent to a collection agency and it gets recorded on their credit file. This drastically reduces their credit rating/score and diminishes their chance of qualifying for mortgage financing (the effect of a $50 telephone bill sent to collection can be just as bad). On the other hand some people are risk averse and prefer to rent rather than expose themselves to the risk of a downturn in the real estate market.

AM:What are some of the requirements to be a successful real estate agent?

NA: To be successful in the real estate business I would say you need focus, good interpersonal skills, persistence and lots of confidence. Honesty, reliablity, responsiveness, good communication skills and the ability to listen most of the time rather than talk are also qualities that would help you succeed in the business.

AM: What kind of assistance does your company offer to African-Canadians with a desire to own their own homes?

NA: First thing we do is sit down with our clients to get some insight into their situation because everybody’s situation is unique. Once we have a clear understanding of their needs and motivation we will do a quick initial review of their financial situation so that we can advise on how much real estate they can likely afford. If they wish, we help secure financing pre-approval. Once they’ve been pre-approved we do a thorough search to find properties that meet their needs and then investigate those properties further to make sure there are no issues that would negatively affect the properties future value and their enjoyment of the home. This process effectively narrows it down to those properties that would specifically satisfy their needs.

After that we take them on a tour of the shortlisted properties for them to choose the one that’s ideal for them. Once they’ve made their choice we will research and advise on an offer price, write up a binding purchase contract and negotiate the terms with the other party to the contract (I dare say that I am a good negotiator). Our goal is to get them into their ideal home at the lowest possible price and least inconvenience. We guide them through the whole process from property search, offer acceptance, closing, to moving in. Our services don’t end there. We follow up with our clients and stay in touch long after they move into their homes to make sure they are satisfied.

AM: Please explain, for our readers’ benefit, the steps people need to take to purchase their own homes.

NA: Their first step especially if they are first time home buyers will be to contact a good real estate agent to help them with the home purchase process which can be overwhelming. A good realtor will have a trusted team of other professionals you need in the home purchasing process. Next step is to evaluate their financial situation and get pre-approved by a good mortgage broker to know what price range they qualify for. Knowing their maximum price will save them from the emotional stress resulting from being declined for a mortgage on a property they fell in love with because their income could not qualify them for that mortgage. Then go shopping for a home in their price range with the confidence that financing is in place.

AM: Is it possible for a single person with a limited income to own their own home? If yes, how can they do this? If no, what should they do?

NA: This is a difficult question to answer because "limited income" is relative and not specific. The answer would depend on their income amount, monthly debt obligation, type of property they want for a home and its location. To put it in perspective, let’s use a 574 sq ft 1-bedroom condo in New Westminster currently for sale. If purchased at the list price of $149,900, a single buyer with a 5% down payment (100% financing ends on Oct 15, 2008) needs to have a minimum annual income of approximately $36,500 assuming they have no other monthly debt obligations such as car payments, student loan payments, credit card, etc and their monthly mortgage payment will be approximately $783.

AM: How do you see the housing situation in British Columbia in the next five years?

NA: Real estate prices like any other item for sale are driven by demand. The BC economy is strong and forcasted to stay strong. This in conjunction with BC being known as a beautiful place to live implies that we might continue to see positive net in-migration which keeps housing demand high. There is a lot of speculation on how the Vancouver 2010 winter olympics will affect the housing market after the games are over. The games will showcase Vancouver and BC to the world and I think it will have a positive effect on real estate values. I think it is worth mentioning here that the Olympics contributed (directly and indirectly) to the increase in real estate values we have seen in the past 5 years. Directly by economic growth and indirectly by investors’ speculation.

The double digit annual growth rates were unsustainable because household incomes were not growing quite as fast and so the market is currently undergoing an inevitable correction. People are speculating that we are heading for a housing crisis like that in the U.S. but I don’t forsee that happening because the Canadian economy is still strong and Canadian lenders (who are more conservative) didn’t engage in the type of lending practices that caused the housing crisis south of the border. I forsee a slight drop in values from now to next year followed by a slow, steady climb after the games.

AM: Thank you very much for your time.

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