Stop, Look and Think Twice Before You Enter
When I was in New Orleans last week, my sisters and I met with a real estate agent. She told us that the market was so hot that she had posted a listing only an hour earlier and already had two appointments to show the property. What she meant by “posted a listing” was that the property for sale went up on the “MLS”—Multiple Listing Service for access by EVERYONE.
This is unique to the U.S. The MLS “is an independently owned and operated Real Estate Advertising Service Company for Real Estate firms, Mortgage firms, Insurance companies and other real estate related entities. MLS.com does not work directly with any real estate buyers or sellers. MLS.com does not receive any commissions or referral fees from any resulting transactions.”
Believe it or not, the service dates back to the 19th-century. “The first Boards of Realtors® were established as ‘Real Estate Exchanges.’ On certain appointed days, the Members of a Board of Realtors® gathered at the Board offices and ‘exchanged’ information about their listings. They, in effect, carried on an auction as they frequently came prepared to purchase certain property desired by their principals, but listed by another broker. This practice was common in the 1880s and 1890s. Shortly after the end of the 19th-century, the term ‘multiple listing’ was in use. It is mentioned as an activity of Boards of Realtors® as early as 1907. In the 1920s, multiple listing had become widely accepted. The expansion of this function continued through succeeding years and spread throughout the country with the result that today hundreds of local Boards of Realtors® provide Multiple Listing Services, in one form or another, to their Members.” (Source)
The MLS drastically changed the way real estate works for both the buyers and sellers. It means that everyone has access to all properties on the market at the same time. It means that every agent can sell any property because there is an assumed commission split (normally 50/50) between the seller’s agent and the buyer’s agent. It means that the agent, in effect, works more for the buyer than the seller as a buyer can work with one agent and have access to everything on the market at that time working with just one individual. It’s brilliant, and it works well for all parties involved.
This does not exist in France and is essentially why I have a job! For the average individual to find property in France, they must search different websites and speak with different agencies, each one listing a small group of properties. Usually the properties fit within some sort of “genre”—whether that be a neighborhood, an architectural style, a price range, etc. And if that doesn’t seem daunting enough, there are an estimated 30,000 agencies in France, double the number even 15 years ago. So, without someone’s help and guidance, maneuvering the real estate landscape could be not only difficult, it could easily also be a big risk.
The risk is that the agents in France don’t represent the buyers, they represent the sellers. They have only a few properties to sell and they will do whatever it takes to sell them. It’s not that they necessarily “lie,” but they very likely won’t tell you the entire truth…the kind of information that might prohibit the purchase. Add to that their inability to deal with a foreign buyer who has a huge learning curve to get up to speed on buying a property in France, and that’s where their eyes tend to glaze over. This is not high on their list as their work load just doubled or tripled hand-holding inexperienced buyers.
If another agent brings in the buyer, then they must share their commission. The commissions in the U.S. run between 4 percent and 8 percent on average, with 5 percent to 6 percent being common. The standard commission in France is 5 percent and that includes the Value Added Tax of 20 percent, so in effect, the French agent has about 4 percent to share…that is if they agree to share at all. Parisian agencies generally refuse to share commissions. Agencies in the rest of France are more open to sharing, possibly because properties in Paris tend to sell fast and easy so the partner agency isn’t quite as necessary in order to make the sale. The Paris agencies know that with a bit more effort, they can sell their own listings at full value without another agency bringing in a buyer and splitting their commissions.
We expect that a lot of you will come to France as soon as you can. The official date from which the government will allow entry by tourists, those without visas, is predicted to be about mid-June, but no official word has been issued yet. (For information about this, visit this site). My guess is that by mid-July, Americans will be back in France…big time. While the summer vacation months are normally the worst time of year to be visiting properties (the owners, agents and Notaires are on vacation), I have a feeling that many of you will be lapping up real estate agency windows and will want to visit properties, just the same.
If you walk into an agency, you will have immediately ruined your chances to let us work our magic for you. As a licensed real estate agency, we have the right to bring a buyer, and in many cases, can secure a commission share. Any commission we receive is then refunded to you, the buyer, as a credit against our own fees. We will not agree to getting paid by both parties…as I consider this to be a conflict of interests. Not all search firms operate this way, but we do. I hold a very high standard for our “raison d’être”—we work for the buyer, do everything in our power to protect the buyer and only wish to be paid fairly for the work.
It will be very tempting indeed. You’ll pass lots of agencies with beautiful properties in their window. If you walk into the agency and declare yourself as a potential buyer, then you have removed your option to allow us to protect you. Instead, if you take note of the properties that interest you and contact us to provide an opinion, then we can represent you from the beginning and do our best to secure a commission share.
Another option is that you can hire us via our Purchase Assistance” service, which comes with a fee (but half the price of a property search). This kicks in normally once you have already identified a property…but then again, you will have already missed an opportunity for us to voice an opinion on the property. You can also ask us to visit ONE property on which you have your eye set, and if we give it a thumbs up, then we can continue with our purchase assistance service. If not, then you may wish to hire us for our Custom Search Service.
The point is, that before you react too quickly while you’re looking at those agency windows and dreaming, before you enter the agency and ask to visit the property, just send us a text or email and let us do the heavy lifting for you. We will protect you, we will save you time and money, and we will ensure you make the best investment you can make…for you…not for the seller!
Happy property hunting!
A la prochaine…
The Adrian Leeds Group®
P.S. If you are considering a property purchase in France, don’t do it lightly. Let us help you make the smartest decisions to ensure you make the best investment you can. Contact us to learn more!