The use of network marketing in the business has come a long way. It is also known as multi-level marketing. It is a strategy where the sales force is compensated not only for sales they generate but also for the sales of other sales persons they recruit. This type of strategy is also called Referral marketing. The use of this strategy was made popular by foreign pharmaceutical companies who came with special supplement products such as Forever Living products and GNLD to sell in Nigeria. Different benefits were given and different targets set for the sales force.

However in the process of using this strategy there are has been some other variations used by different companies to dupe unsuspecting people of their money. These schemes are known as “Ponzi schemes”. Ponzi schemes is different from network marketing so should not be mistaken. Ponzi schemes are fraudulent investment operations where the operator, an individual or organization pays returns to its investors from new capital paid to the operators by new investors, rather from the profit earned through legitimate means. Operators of these schemes usually entice new investors by offering higher returns than other investment in the term of short term returns that are either abnormally high or unusually consistent.

The introduction of network marketing into real estate was started by Real Estate developers and firms who are involved in developing large estates with lots of plots to sell. This type of strategy has its merit and demerit. One of the merits is the ability to sell large number of plots within a short time as there is a large coverage by the marketers. The marketers are recruited from different backgrounds and all they need do is sell lands to friends, family members and referrals. It is a cheaper way of reaching those far away. The commission for the sales force always covers the agency fee (5% each) to be paid by both the seller and the customer and so takes the pressure off the marketers in getting clients who are unwilling to pay the agency fee.

Every marketing strategy has its own merits and demerits as no one is particularly a perfect one. The agency fee which is also referred to as commission whether direct or indirect is on the high side and these has made it difficult for smaller firms to attract competent sales force. The stipulated agency fee as agreed by the regulatory body is a total of 10% but with these firms, they give as high as 15% direct commission and 10% indirect commission. The introduction of other forms of benefits such as generations has made the agency fee to be above normal that it scares away some marketers who have been defrauded in past by Ponzi schemes.
To accommodate these high commissions, the valuation of land has shot up above the original value. In areas where the land is supposed to be low, prices are soaring higher and higher. Another demerit of this strategy is that most of these firms do not conduct proper training for the sales force and in most cases they do not understand what real estate is. Also because, the process of recruitment does not follow proper human resources procedures, the competence, intelligence and experience of the marketers are not tested. Every Tom, Dick and Harry who knows nothing of the profession calls himself a Real Estate consultant.
Some of the prospective clients have found themselves in trouble because of the irregularities of the sales force on hand and the estate firms on the other hand. On the part of the sales force, some fraudulent marketers have made away with clients monies or those whom they recruited. And on the part of the estate firms, some of their lands are under committed acquisition by the state or federal governments.

These are lands that are irredeemable. In most cases, clients who have paid for these lands find it difficult to get back their payments in full as the firms will not want to lose entirely after paying a huge commission to their sales force. It is very important that you check those you recruit and also see the correct documents before you buy a land from these Estate firms.
Network marketing has its own merits and demerits but the most important thing is that one needs to know where to draw the line and differentiate it from a Ponzi scheme.

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