Friday, July 3, 2009

What's my property worth?

One of the main concerns of property buyers is whether they are paying the right price for the house or apartment they have finally selected in France; while for their part, owners and sellers worry about the value of their property - is it going up or down? how much can we expect to get if we sell? is this a good time or should we wait?

Arriving at the value of a property is something of a black art and depends on a number of external factors, including the current state of the market, or whether there is a shortage or excess of certain types of property in a particular area - all these in addition to the condition, location and desirability of the property itself. Estimations of what a property might fetch on the market, in current conditions, can be arrived at by comparing the sale prices of other similar properties, but no two properties are the same, and some will sell while others will not. An estate agent can give you an estimation, based on his knowledge of the local market, while a formal valuation (for probate, an inheritance, a tax declaration, a bank loan) has to be carried out by a licensed expert immobilier who will charge a fee of up to 1,000 euros for a lengthy and detailed report about the property's condition and any other factors likely to affect its value.

Location, location, location

As a rule properties in a central location with cost more than their equivalent in the countryside, as most owners and buyers need to be near work, schools, shopping centres and other services. However some (city) locations are considered more desirable than others, and factors that enhance a property's value include access to public transport, open spaces, attractive view and absence of nuisance (noisy roads, factories, an airport, restaurants etc). Areas that are unattractive and where there is a high crime rate will detract from the value of a property. High density may deter some buyers looking for peace and quiet, while they may be attracted to a suburban or rural location.

Physical condition

The physical condition of a property includes the outside space, approach and aspect (north facing is less favoured than south facing and so on) as well as the land itself - flat or sloping, landscaped, liable to subsidence or flooding. The building's physical condition will depend on its age, the quality of materials used, how well or not it has been maintained, and considerations such as exterior paintwork, quality of windows and doors, state of the roof, floors and floor coverings, condition of terraces or balconies, as well as interior fitments and installations (electrical wiring, plumbing, kitchen equipment, heating system, air conditioning being among the most important).

Particularly disliked by potential buyers are unfinished or even completed DIY alterations, while those carried out by registered artisans and carrying formal guarantees are favoured. In co-ownership buildings higher floors tend to attract more light and therefore command a premium, but only if there is a lift in good condition. An attractive apartment will lose value if it is sited in a building whose common parts (lift, corridors, entrance, garden, pool) are in a state of disrepair or neglect.

Valuing for rental

Although the same rules apply, valuing a property for rental purposes adds a further dimension if you wish to have an idea of the rental potential of a property designed for letting. Recent reports show that that many buy-to-let schemes involving new-build properties have failed, as properties were located where land was cheap and therefore remote from public transport and other facilities, thus obliging renters to be in possession of a car. As a result, some fifty French towns (including Perpignan close to where I live) have reported a surplus of un-let properties built for investment. Poor quality design, construction and finishing have been further deterrents.

Valuing for investment demands an expert knowledge of local market conditions, in order to arrive at a realistic estimate of rental potential. Independent advice and a visit to the area and the proposed development are strongly recommended.

Finally, if you are a seller and your property has languished on the market for weeks or months, the following article will give you some tips on how you can improve your chances by preparing your property for sale, often at minimal cost.