A real estate agent in France costs the seller between 4% and – in the case of cheaper houses – as much as 10% of the selling price. While in the Netherlands as a seller you only pay 1% to 1.5%. Why is the estate agent so expensive in France? Does he or she deliver so much more quality? The sales advertisements produced by the real estate agents do not reflect this. A superior quality is obviously not the reason for the high price of the French broker. We will gladly explain it to you.
‘MANDAT EXCLUSIVE’ – TIED TO ONE BROKER
If you hire a real estate agent in France, you have to sign a “mandat”. This is the official assignment for the real estate agent to sell the house. There are two types of ‘mandat’. A ‘mandat exclusif’ gives the real estate agent the exclusive right to sell the house. In that case, he always gets his commission on the sale, even if someone spontaneously rings the doorbell and wants to buy your house, without any assistance from the real estate agent. Such a ‘mandat exclusif’ is usually valid for a fixed period of at least 3 months and without notice it is automatically extended by 3 months.
‘MANDAT SIMPLE’ – MORE FREEDOM
The disadvantage of a mandat exclusif is that you are stuck with a real estate agent for at least three months. If he does not turn out to be very good, it is three months of lost time. Most people prefer not to keep all their eggs in one basket and therefore opt for a ‘mandat simple’, where they give the sales order to various brokers. Sometimes three or four brokers are hired to sell a house in France. At the same time! Each real estate agent has the opportunity to sell the house. But only the person who actually closes the sale collects the commission. The other three brokers are fishing behind the net. They earn nothing.
A REAL ESTATE AGENT IN FRANCE EARNS COMMISSION ON ONE IN FOUR HOUSES.
And that’s what’s causing the broker’s high price. The average broker has to share all the houses in his portfolio with three competitors and thus sells (on average) only one in four houses for which he has a ‘mandat’. But he does have to work for all four houses. Taking pictures, writing a description, advertising… And that’s why many brokers ask for 6% commission. After all: in the end they earn their commission on only one of every four houses, and receive only 6% divided by 4 = 1.5% for each house they commission. Exactly the same percentage as the Dutch real estate agent, but with four times as much work.
THE CLIENT PAYS FOUR BROKERS FOR ONE TRANSACTION
If you look at it this way, it seems more reasonable that a real estate agent in France asks for 6%. The system obliges the agent to ask for 6% when selling, in order to collect an average of 1.5% per order. On the other hand, you can say that the French system ensures that far too many brokers are engaged per house. Whilst on average 3 of the 4 brokers work for nothing. If the market were 100% transparent, 25% of the brokers could do the entire work of selling all the houses.
Conclusion: there is an artificial surplus of real estate agents in France, which is ultimately subsidised by the client.