Saturday, July 18, 2009

Making an offer

One of the questions that regularly comes up in discussion forums is how to make an offer on a French property you have found and like, and wish to buy.

First, you can offer the full price and in this case, the vendor is normally obliged to sell - and you to buy. The moral here is not to make a (formal) offer on a property unless you do intend to buy (though you can later withdraw under the 7-day 'cooling-off' period); and if you are a vendor, you cannot normally refuse an offer at the full (asking) price, without making yourself liable at least for the agency's commission if you have signed a 'mandat d'achat'. The reason for the latter is that by signing the 'mandat' you instructed the agent to market your property and find a buyer, and by presenting a buyer, willing to pay your asking price, the agent has fulfilled his part of the contract, and is entitled to his remuneration.

If your offer is below the asking price, then it can be transmitted - at this stage, probably informally - to the vendor for consideration. If the vendor accepts, then the situation is similar to the one above. If the vendor refuses, the potential buyer can either raise the offer and continue negotiating, or withdraw from the negotiation, and look elsewhere.

Offers can be subject to certain conditions, which will later be incorporated into the pre-contract or 'compromis de vente' (see related post) and suspensive clauses as they are known may include issues such as planning permission, structural survey, or on the buyer's side, the transaction relying on his obtaining a mortgage or bank loan.

How much to offer? How much you wish to pay for a property depends both on what you think it is worth (you have done your research and visited similar properties) and what you can afford to pay. A vendor, for his part, has his own idea (and may have taken advice) about what his property is worth, and may also be looking for a specific sum required to purchase another property. So if the potential buyer's offer is too low, the vendor may hold out for a higher price - perhaps in your view unrealistically, but that is his right.

Offers are best communicated through a third party - such as the agent or notaire - rather than conducted face to face, giving the parties time for reflexion before accepting or refusing.

Finally, if you are a vendor and selling your own home in what is popularly described as a 'buyer's market', note that potential buyers of your property may have their own ideas about what it is worth or how much they can afford. You may be tempted to dismiss them out of hand, but courtesy and firmness are demanded, even when you find yourself faced with this situation. Imagine the reactions of those vendors to whom you may yourself have proposed a derisory offer for their loved and cherished property!