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Bonjour French Property Insider Subscriber,
Sold by Heyler Realty, $1.4 Million Two Bedrooms, One Bathroom, Venice Ocean Avenue
You may have read in Parler Paris yesterday that earlier this week, we met with old friend, Sean McMillan of Heyler Realty, to discuss purchasing a property in Los Angeles. Because my daughter is wanting to spend more time in Los Angeles than in New York, and the New York apartment is a co-op with restrictions on rentals (what else is new!?), it might make more sense to move our investment from New York to L.A. This is why we decided to discuss the possibilities with Sean and how we can trade the value of the New York apartment for an L.A. property value.
Property in L.A. is hot. Property is moving so quickly that bidding wars are not unusual and of course, that inflates the perceived value and creates market bubbles. Areas of the city which were once affordable, such as Culver City, are now out of reach for the average wage-earner. We looked at "tear downs" for $1.2 million in neighborhoods we once considered undesirable, but obviously have room for growth.
Bidding wars can't happen in France because the seller is "morally" obligated to accept asking price. And asking price is usually only about 5% over the seller's "bottom line." This reduces the "haggling" and eliminates the possibility of a market bubble, helping to maintain some stability of the market. In L.A. it's a different story and it can feel like a kind of "free-for-all." This is why I am very pleased to have an agent on my side who can guide me through the jungle in L.A. called "real estate."
I am often asked by those interested in purchasing property in France to recommend "an agent" with whom they can work. To that I might say, "What am I? Chopped liver!?"
MLS search results in Culver City, CA under $1 Million
Yes, we are licensed real estate agents in France and can manage any kind of transaction, but the landscape is very different in France and our M.O. is the exact opposite of traditional French real estate agents. With no Multiple Listing Service MLS, in France and the aversion to sharing commissions among agents, the buyer in France has a tough time finding property without assistance from a buyer's agent or consultant. The sales agents have only their own listings to sell and therefore will tell the buyer just about anything to make a sale. Even our best agents with whom we work regularly, we trust only to a point.
Consultants such as us, paid by the buyer, work for the buyer not the seller, and therefore are not "married" to any one property or agency. This provides a kind of "insurance" for the buyer that they'll get good advice and can make the best choices. We do the due diligence on behalf of our clients and make a point to uncover any issues that would be significant to their decision. An agent won't do this -- it's not his job.
Americans aren't used to paying for this work, since they've had the luxury of agents working within the MLS system and needing only one agent to show them all the properties on the market. Therefore, they look for one agent they can trust. In France, there are thousands of agents and not one of them is going to treat the buyer with the respect they deserve, especially a foreign buyer who needs an extraordinary amount of "hand holding."
In our quest to learn more about California real estate, one is to expect about 1.25% of the value of the property in annual property taxes. This means that a $1 million property is going to incur about $12,500 a year in taxes. Compare that with Paris -- where a €1 million property would incur annual taxes of about €1,000 -- or .001% of the value of the property. So, a purchase in Los Angeles carries a very heavy ongoing burden, while property in France does not.
I'd really prefer not to be making an investment in La La Land at all, but the long term rewards seem worth it, especially when considering that it makes sense to have real assets/investments in two different currencies. It's the perfect way of hedging one's bets in today's very global world.
P.S. Through our association with a variety of professional, we are happy to be able to recommend their assistance to you for your wealth and tax issues related to living and owning property in France. Please see our Global Money Services page.
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