Efficiency of distressed property sales in Lagos city, Nigeria

Abstract

With recourse to data obtained from the online multiple listing services (MLS) of the Nigerian Property Centre, this study evaluated the efficiency of sale of distressed properties in Lagos city using a 6-month interval of observations protocol, comprising of listings of less than 6 months, 7 to 12 months, 13 to 18 months, and 19 to 24 months respectively. Time-on-the-market (TOM) in this study was perceived to be the duration (in months) from the listing date to the date of data collection. Results of selected parametric and non-parametric statistical tests indicated that there was an insignificant difference in the observation of distressed properties that have remained on the market for at most 6 months and those with marketing time beyond 6 months. Similarly, properties listed for distressed sales in Lagos city were found to have continuously attracted lower purchase rates in the same manner as the non-distressed properties. These results avowed the phenomenon of inefficient sale of distressed properties in Lagos city, Nigeria. It was recommended by the study that individuals and institutions in property brokerage business in Lagos city should conduct a risk assessment of the diminishing likelihood of distressed sales and the incremental losses associated with lengthy listing periods.