Thursday, May 27, 2010

Sudden surge in new-builds.......

Fifty-four new apartments and villas, out of a total of sixy-two available, were sold in a single weekend recently in France. A sign that the property market is picking up?

Certainly the predictions are optimistic according to various experts quoted in Le Figaro who cite another example of nearly 70% dwellings sold on a development by Nexity, and a rise in building permits of 25% recorded in March and April alone. In the first quarter of 2010, sales of new developments have risen by 5.3% against a dramatic 59% fall in 2007/8, with around 75% new starts already recorded in 2010.

This year sales of new-builds are forecast to reach 106,000 in addition to 100,000 much needed social housing units.

Already there are signs that new property prices are rising, up by 8.5% for studios and 8.9% for properties of four rooms and above. Reasons given are the need for new-builds to comply with the new BBC norms ('batiment basse consumption') for low energy consumption, with tend to add around 10% to building costs.

Source: Le Figaro 27 May 2010.

Monday, May 17, 2010

Making an offer on a French property

It is virtually always possible when considering buying a French property to propose an offer that is below the asking price. The crucual question is By how much?

Properties offered for sale by estate agents should have been subject to an estimation of the property's value, before being formally taken onto the agency's books with the completion of a 'sales mandate' by the vendor and the agent. The mandate sets out the agreed asking price of the property, the commission payable in the event of a sale, and the term of the mandate - usually three months renewable in the case of a simple mandate.

In discussion with his client, the agent may have gleaned an idea whether there is any room for manoeuvre in the event that a potential buyer makes a formal offer on the property. Almost invariably owner/vendors have an inflated view of the value of their property, which they may have loved and cherished over the years, and are now reluctant to part with. Emotional reactions may cloud their judgement and many do not, at this stage at least, always listen to the advice of the agent, who may have his own view of the property's saleability. (A reputable agent would not take on a property that is so over-priced as to render it unsaleable).

Buyers considering making an offer should consult their agent and listen carefully to his advice. There can be certain legitimate grounds for proposing an offer, for example if the state of the property means that extensive renovation works are required. In this case asking for a price reduction is justifiable, and you could support your request with builders' estimate to prove the point. Asking for a price reduction simply because a particular property is priced at more that you can afford leaves little ground for justifying your request. In this case, you would have to turn elsewhere and find something cheaper.

Potential sales often collapse because of intransigence by either buyer or seller, even when the two sides are only a few thousand euros apart. More often it is an unrealistically low offer by the buyer which is put forward, against the agent's better judgement, that effctively kills the sale. Well instructed agents will know or have a feel for how much leeway is possible, and may know from past experience that offers at or below a certain amount have been refused by the vendor, and simply refuse to pass them on.

Even in what is currently regarded as a buyers' market, many owners are simply withdrawing their property from the market, as many may be second homes or there is no particular urgency to sell. In every case, it is wisest to listen to you estate agent or adviser, who knows the market, knows the property and - above all - knows the vendor.

Wednesday, May 12, 2010

Getting the best out of your 'agent immobilier'

Your first contact as a potential property buyer in France is almost always through a local 'agent immobilier', a member of a licensed profession uniquely authorised under French law to handle the sale of properties entrusted to them by their client-vendors. As French agencies tend to work a little differently from their English counterparts, it is useful to know what to expect - and what not.

Many first approaches are made by email and a common frustration for non-French buyers is what they see as tardiness by the agent in responding to their requests for 'more information' about one or more properties. Having worked in a busy French agency, a three-person office of a group of four, I can explain how life really was. We routinely received 20 to 30 emails per day. In addition to potential buyers seeking general information, many emails concerned ongoing transactions, as well as requests from vendors to consider taking their property onto the agency's books.

In addition there were phone calls, mainly from French buyers; visitors arriving at the office either unannounced or by appointment; visits to make to view properties with the client; or to a vendor to prepare a mandate for sale, take photographs and prepare the sales description for the office window, magazine advertising and the website. Every sale also absorbed numerous man-hours preparing the documents for the Notaire's dossier, with some agencies, such as ours, even preparing the initial sales contract ('compromis de vente') and taking a 10% deposit on account.

As a result, general enquiries arriving by email tended to sink to the bottom of the pile, particularly if they were vague requests for more property details (often no more than we had posted on the website), compared to phone calls which could be dealt with quickly or visitors arriving in person.

We also learnt over the years that 90% of these general-enquiry emails produced no result - no subsequent phone call, no visit, no sale. We also developed a fairly accurate profile of the typical property buyer as someone who:

- knew or had visited the region
- were often already known to us
- knew what they were looking for (house, apartment, land etc) but prepared to be flexible
- phoned a few days ahead to arrange property viewings by appointment
- had allowed sufficient time to visit us and several other agencies (a minimum of several days) and make return visits if necessary
- had their finanaces in place and were ready to sign an initial offer or the 'compromis de vente' and pay a deposit to secure the property
- might come back for a second visit
- might come back in three to six months time

Most had NOT requested information by email but had probably phoned us after identifying a property or several, mainly to check their availability and to arrange viewings. Very few were travelling a long distance to view only one property they had identified or 'set their heart on'.

To make the most of your property search visits, I advise clients to be reasonably certain of which region and type of property they are interested in; to listen to the agent's advice about alternatives, prices, locations, lettability, offers; allow sufficient time for visits and preferably by appointment; try not to visit too many properties too quickly; to be aware that the same property may be with several agencies; to be honest with the agent about whether they are really in a position to buy or simply making a preliminary visit to get a feel for the market.

Following these simple guidelines can help ensure that your dealings with the French agent are pleasant and productive. If you are not used to the French property buying system or do not speak French, then firms such as ours are available to help you from initial property search through to completion and settling-in.