SPECIAL: Maneuvering Unfamiliar Territory: The French Real Estate Market
French Property Insider Volume XII, Issue 21 Thursday, May 21, 2015 • Paris, France
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If you are a lover of Provence then you will appreciate this authentic 18th-century five-level home in the historic center of the beautiful city of Arles! The house of 157 m2 total with beautiful architecture offers generous room and numerous possibilities with its courtyard and four bedrooms, a cellar of 34 m2 (perfect for a movie theater or music room) and an exceptionally large terrace of almost 27 m2 for incredible views over the rooftops of Arles.
Special Note: The agency fee on these properties is included in the asking price so the only additional fees you pay are at the closing.
Bonjour French Property Insider Subscriber,
NOTE: For those who may not know, Adrian lost her mother, Gert, this week and is in New Orleans to be with her family. Today's newsletter is a sort of TBT (Throw Back Thursday) featuring an issue from about a year ago, but still timely today.
I just received a letter from a potential client who wrote, "I am visiting Paris this weekend to begin the search for a flat with my husband to have an initial idea on what the market is like."
My first thought was "Good luck!" If you're an American where real estate business thrives nights and weekends when the buyers are off of work, then it might be a shock to discover that the French real estate agencies are closed nights and weekends and the sellers don't want to disturb their precious time off. It's the first of the many cultural clashes a foreign buyer might experience.
Another question that I get over and over again is, "Can you recommend a real estate agent we can work with?" In the land of the MLS (Multiple Listing Service), where every agent has every property at his disposal and where every agent fully expects to share his commission with another agent, this is a very normal question to ask. Most buyers work with one agent who has discovered that building a business based on making more 'clients,' than simply 'sales,' is much more profitable in the long run, thinks they can land in Paris (or anywhere in France) and find one agent who will suit all their needs.
Of course, this is false thinking. One agent represents only his agency's listed properties. That agency's listings are usually limited to properties in the district or "quartier" and the agency nor the agent may be willing to share their commissions with another agency, particularly on properties under 500,000€ where the commissions are smaller. There are independent agents, of course, who are working for themselves 'on paper,' meaning that they are hired as independent contractors, but still have an allegiance to one agency.
There are "buyers' agents," who will search for properties for a client, but the agencies run from them, knowing full well they will be seeking a share of commissions. There is no doubt that the best properties don't land in their laps -- why would an agent with a high quality listing easily offer up the property knowing their commission will be shared?
French agents are doing a better job these days of speaking English and working with foreign buyers, but it's not their job to educate a foreign buyer and protect them from the pitfalls that lie ahead in a system unknown to them. A North American client, used to having one agent hold their hand through the whole process, will be demanding on an agent in France who doesn't think it's his job to mentor the client.
In fact, the only job they have is to sell the property at the best price, so that means "buyer beware." An agent really doesn't care if the buyer is making a good purchase or not -- whether it's a good property or that it suits the buyer. They simply want to make their sale.
Agency with its list of properties in the windowFrom my experience, most buyers who are loathe to pay the agency commission think the agents and agencies "are laughing all the way to the bank." The standard agency commission in France is 5%, but this rate is negotiable between the seller and the agency and therefore could be higher or lower. Still, on an expensive property, particularly in Paris where apartments are in excess of 10,000€ per square meter, the commissions seem like a fortune and the effort made by the agent can be perceived as less than worth it.
In this case I am the first to defend the agents and the agencies. There is a huge amount of paperwork involved in preparing a property for sale, then there is the marketing of the property and finally the showing of the property before a sale can be achieved. This all takes a lot of time and physical energy. We joke in Paris about wearing sturdy comfortable shoes -- as you're sure to wear out your shoes or your feet trekking from one property to another.
Some properties sell quickly, but other properties may waste their time and sit on the market unsold for months. All an agent can hope for is to average out the sales or target mostly quality properties -- and some agencies have earned the right to be selective in what they will represent and what they won't.
A North American buyer may also be shocked to discover there are no required inspections, title searches or title insurance when buying property in France. The system here relies on the notarial system to clear the title and provide a proper deed. It also provides for consumer protection to require the seller to do a series of diagnostics of the property for the knowledge of buyer. And if a property is within a "copropriété" (homeowners association), such as they are in all multi-family dwellings, then complete information about the building is disclosed prior to purchase.
The French system is filled with consumer protection tactics, that might frustrate a North American buyer who is used to fending for himself and going through the purchase process a whole lot faster. From the point of making an offer and having it accepted, it could be weeks or even months before the first document -- a pre-sale agreement (the "Promesse" or "Compromis de Vente") is signed and then two to three months before the final "Acte de Vente" (final deed) is signed and he receives the keys to the property.
Patience is the key word here! But the risk is greatly reduced as a result.
There is a reason we, as property consultants, exist. Our job is to assist and protect the buyer and to ensure the buyer makes the best purchase he can make at the best price without falling into the proverbial pitfalls along the way. The agents work with us readily as we offer up qualified clients without their sacrificing commissions and time to educate the buyer. It's a primary reason we have been successful in finding high quality properties -- we're often the first to see a property before it's put on the open market.
Of course, it isn't necessary that a buyer employ a consultant...but the small extra cost is usually well worth it when considering the risks a buyer takes maneuvering in unfamiliar territory on his own.
P.S. Looking for a long-term rental apartment in Paris for three months to three years? The Adrian Leeds Group can help! We can assist you in finding the ideal furnished or unfurnished apartment based on your specific needs and budget, or view an apartment you've already found. For details or to book our services, visit Long-term Apartment Search or email email@example.com.
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