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Selling a property in France. What do the notary and the broker cost, and who pays whom?

If you are selling a property in France, the notary costs will be charged to the buyer. These costs are around 7 to 8% and consist largely of taxes. The notary himself is only allowed to keep a small portion of these fees. So he does not really earn a lot. Unless you’ve given the notary an official sales mandate and he actually comes up with the final buyer. In that case you as a seller will have to pay him an extra 3%… the so-called ‘frais de négociation’. The mandatory part, i.e. the fixed notary fees, is calculated as a percentage of the selling price. You can check the amount using the french notary fee calculator on Immonot.com.

The real estate agent in France, on the other hand, is paid by the seller. If you put your house or other property in France up for sale with a estate agent and he (or she) finds a buyer for you, you yourself will have to pay the estate agent’s commission. There’s logic to this. As a seller, you have hired the real estate agent, have given him (or her) an official order and have validated this with a contract (mandat de vente). The real estate costs for houses under three hundred thousand euros are on average around 6%, although this is usually negotiable.

The strange thing is, that many estate agents in their sales pitch to sellers insist that it is the buyer who pays their commission. The reasoning of the broker is as follows: “If you put your house up for sale with us, we will take your own asking price as a basis, to which we will then add our commission. We use this higher amount as the selling price, so in the end the buyer pays our commission. It costs you nothing!” Because of this consistent false narrative in the real estate business, many people have come to believe that it is indeed the buyer who pays the broker. To illustrate that this is truly nonsense, I have made some comparative calculations.

1. A PROPERTY SALE WITHOUT A BROKER.

For example, to avoid paying real estate agents fees all together, you can offer your home through a specialized site with French properties for sale by owner (FSBO) . In this example, we are basing the calculation on a house that is worth €200,000. At least, let’s pretend that that is the net amount you want to receive for it. Because you foresee that a potential buyer will want to negotiate, you add 10% negotiating room. So you publish your house – with an attractive description and lots of beautiful photos – with an asking price of €220.000,-. If everything goes as you expected, you can sell your house after negotiations for €200.000,- and you will get the amount you hoped for.

FROM THE BUYER’S POINT OF VIEW, IT WORKS AS FOLLOWS…

At least, that’s how it worked for me when I was looking for a house in France. The buyer is looking for houses with an asking price more or less matching his budget. He knows that he can probably negotiate to get 5 to 10% off. And he also knows that after his offer is accepted, he has to add about 7% to the selling price for the notary costs. So that he will wind up paying a total sum more or less fitting his budget. As in the example: €220,000 becomes €200,000 after negotiations, to which 7% notary fees are added. With his budget of €215,000 he can buy the house. Everyone is happy.

2. A SALE WITH A REAL ESTATE AGENT.

As a seller you still want to receive €200,000 in hand (‘net vendeur’) for your house. The real estate agent – who knows the regional market and the achievable prices quite well – says: “No problem! We’ll just add my 6% commission to your price, so that the buyer pays my commission. Then we arrive at €212,000, plus some reserve for the negotiations … we publish with an asking price of €220,000.”

EXCELLENT ASKING PRICE*.
ACTUALLY, YOU ALREADY THOUGHT OF IT YOURSELF.

Unfortunately, in spite of the involvement of the broker, the budget of the prospective new owner has not increased. The buyer is still aiming for a purchase price of around 200,000. Negotiations are therefore much more difficult, because there is less wriggle room. But the buyer stands firm: he can not afford to pay more than €215,000, and that includes notary costs. So the selling price comes down to €200,000. Only in this case you, as a seller, still have to pay the estate agent. The extra costs amounts to €12.000,-, which brings your net proceeds to €188.000,-. Everyone is happy, except you.

3. ANOTHER OPTION.

Let’s imagine the real estate agent is realistic enough to build in 10% bargaining space right from the start. So he increases your net asking price of €200,000 with his commission of €12,000 and then adds another €20,000 of negotiating space. With a published asking price of €232,000 he builds up enough margin to secure your €200,000 net result. That sounds nice, but it also creates new problems. Firstly, the risk that the buyer will no longer even attempt to contact the broker about your house. After all, it is published at €32,000 above his budget of 200.000 net (215.000 all-in). Anyway, suppose he does go into the negotiations… he makes one offer, there’s a counter-offer and eventually you finish the deal at a price of €210,000. The buyer now has a real problem, because with the slightly higher notary costs he has to find more than €226,000. And if he doesn’t get his financing, the sale will be cancelled. And you yourself are not really happy either, because you only get 210,000, minus the 12,000 euros for the broker. So with 198,000, still receive €2000,- less than you hoped for. Unless the broker is willing to accept 5% commission. From the goodness of his heart.

REAL ESTATE COSTS AND COMMISSION AT A GLANCE

Anyway, you see, it’s all pretty complicated. So it’s important that you write down all these scenarios for yourself, with your own desired minimum ‘net seller’ price, the negotiation margin, and the notary fees. Unfortunately, you cannot influence the financial situation of the buyer. But you can try to put an attractive offer online, without a brokerage commission and with a reasonable negotiation margin of 5 to 10%.

Below you will find an overview of all the calculations. You can download this image, print it out and and hang above your bed, as a reminder of the wonderful times you had when Immogo helped you to focus your Real Estate pricing policy.