Friday, July 24, 2009

Valuation or estimation?

There is a lot of confusion about French property valuations, when it comes to finding out what your property is 'worth' whether you are a potential buyer or seller.

Any French estate agent will offer an 'estimation' to a potential vendor in the hope that the vendor will offer the agent a mandate to market and sell the property. This is part of the process of estimating at what price the property might reasonably be expected to fetch in the current market. It is a combination of guesstimate and knowledge of local market conditions, related to the sale (or non-sale) of similar properties in the same price bracket.

A formal 'valuation' (same word in French) is conducted by a qualified 'expert immobilier' and is usually undertaken in the case of a loan or mortgage application, or for reasons of probate and inheritance.

The expert will use a number of criteria, including
- the overall image of the area where the property is located (is it sought after, declining, improving etc?)
- the location of the property (close to public transport, parking, open spaces, not too close to noisy industrial or commerical premises etc)
- the state of the building (exterior, facade, roof, entrance, public areas, stairs, lift etc)
- date of construction - older buildings are preferred to those built in the 1960s and 1970s which often lack charm, while very modern buildings which use the latest materials and techniques (sound insulation, double glazing etc) are also favoured
- the property itself (in the case of an apartment) ground floors are sometimes unpopular compared to higher floors, provided there is a lift; in all types of property, critical factors include the state of the interior décor and fittings, electrical wiring, plumbing, heating, ventilation, floors, windows, disposition of the rooms, presence or absence of a balcony or terrace, state of the garden etc.

Particularly disliked by potential buyers are DIY renovations carried out by the owner, with a preference for work undertaken by registered artisans with the requisite guarantees.

Many areas of France are designated as 'zones at risk' including flooding, rock falls, avalanches etc and these may detract from the value of a property.

All these elements are taken into consideration by the expert valuer, with weightings attach to each criteria, in order to arrive at a formal valuation. He will charge a fee for his services.