Thursday, July 23, 2009

Your French estate agent

When searching for your French property you have basically three choices - to buy privately, to buy from a notaire who is licensed to handle property transactions, or to buy through an estate agent. About half of all property transactions in France are between private individuals ('entre particuliers'). Owners advertise their property for sale in one of the many specialist property magazines, in local newspapers and on the internet. The remaining 50% of transactions pass through estate agents, and a few through notaires, or at auctions or pubic sales through the court.

France is well provided with estate agencies, with until recently some 25,000 offices handling an average of 700,000 transactions annually (compared with just 14,000 agents in Britain for a market that is three times larger!). About half of these agencies are members of FNAIM, a professional membership organisation, with the remainder belonging either to a second body SNPI or operating independently.

Some French agencies are members of a national group, such as Laforet or Century 21, usually under a franchise agreement. Among the advantages claimed is that properties can be advertised all over France, whereas many smaller independent agencies argue that it is their strong local connection that is important. In my small local town, two of the agencies I use most often when searching for properties on behalf of clients, have been established for over 50 years in the region, and until recently continued to be managed by their original founders.

The profession is highly regulated under legislation dating back to the 'loi Hoquet' of 1972. Estate agents are required to have a licence from the local Prefecture which is issued only after a formal application detailing qualifications and experience, an absence of criminal record, and evidence that the agent has secured adequate public liability insurance, and a guarantee to cover any funds he might receive (such as deposits from clients, if he is licensed to receive these).

The 'carte professionnelle' is held by the owner or principal of the agency, and if he employs a negociator, that person must also hold a special permit to enable him to act on behalf of his principal. A negociator's role will include searching for and 'mandating' properties to include in the agency's list of offers, and taking clients on visits to view properties for sale, negotiating between buyers and sellers, and helping co-ordinate the transaction with the notaire.

Agents receive a percentage commission from the vendor for handling a succesful sale, under the terms of a sales mandate agreed between the vendor and the agent. The mandate may be either exclusive to a single agency or 'simple', in the latter case allowing the vendor to place the property with several agencies or even sell the property privately if he finds a buyer through his own efforts. In order to avoid any uncertainty over which agent introduced a buyer to the vendor, potential buyers are asked to sign a 'bon de visite' before accompanying the agent on visits to view properties.

Mandates are generally for an initial period of three months and then renewed periodically. They usually include a clause preventing the vendor from negotiating directly with a buyer introduced by the agency, for a period up to two years, without becoming liable to pay the agency's sales commission. Rates of commission in France tend to be higher (5 to 10 per cent) than in Britain but French agents have to cover a wide area, always accompany clients on property visits, and are burdened with high overheads.

Some estate agents also handle long and short term lettings, and the management of co-ownership properties on behalf of their owners.

New-build properties that are bought off-plan are normally marketed directly by the developer or promoter, but can also be bought through estate agents. Building land is sold either directly by its owner (or his agent), in the case of a single plot, and by the developer in the form of plots or parcels in a future housing estate (known as a 'lotissement'). Buyers can subsequently purchase a standard property from the developer's catalogue or have an architect design and supervise the construction of a purpose built property.