Are you buying a house in France, where real estate agents easily charge 5% and sometimes even more? Then it is certainly worth asking yourself whether you should maybe buy a house without a real estate agent. Depending on the selling price, the brokerage fees can add up considerably. The average price of a house in France is between 200,000 and 300,000 euros. So, at a commission rate of 5% you pay a brokerage fee of many thousands or euros. Of course, in itself it might not be a bad thing to pay a specialist for doing his or her job, as long as that job means that the numbers still add up. The question is what precisely a real estate agent does for his brokerage fee. Why would you buy or sell a house via a real estate agent in the first place?
The value of a real estate agent in the selling process very much depends on the way you look at it. That means: whether you are the buyer or the seller. Basically, in France the real estate agent is in the service of the seller. There are also real estate agents that operate completely in the service of the buyer, but these ‘house hunters’ or ‘chasseurs d’appartement’ are – especially outside Paris – rare. This means that when you as a buyer contact a real estate agent, you cannot be sure that he will put your interest first. Below are the advantages and disadvantages of a real estate agent for the seller and buyer respectively.
|Advantages of real estate agent for the seller
|Disadvantages of real estate agent for the seller
|1. data base with buyers
|2. website for promotion
|2. increase in asking price
|3. access to larger real estate sites
|4. drafting contracts
|5. advice regarding mandatory surveys
|6. organisation of viewings
|7. commercial expertise when selling
|8. support during negotiations
|9. drafting compromise, organisation drawing session
It should be clear that a real estate agent can certainly be useful for the seller of a house in France (or in other countries). He finds you a buyer, takes a load from your hands during viewings and negotiations, and provides you with a piece of mind that all paperwork will be properly taken care of. Assuming of course that you are able to find a knowledgeable real estate agent, as there are – as in every profession – those who burn the soup.
|Advantages of real estate agent for the buyer
|Disadvantages of real estate agent for the buyer
|1. data base with houses for sale
|1. higher price
|2. guidance at viewings
|2. less room for negotiation
|3. limited visibility on regional supply
|4. fake sense of security
|5. not independent advice
|6. sales-driven viewings
|7. negotiations focused on high price
|8. contracts in favour of the seller
If you are the one buying a house in France, the balance between advantages and disadvantages of using a real estate agent is clearly skewed towards the downside. This is mainly due to the lack of independence. The real estate agent is not there to give you the widest possible overview of all houses that are for sale in the region. He can only show you the houses that he himself has in consignment. Houses that are for sale with competing real estate agents will not be shown to you.
Real estate agents are salesmen. They are hired by the owner to sell his house. As a buyer you might quickly get the feeling that the friendly real estate agent is trying really hard to find precisely the house you are looking for. That he is completely on your side and gives you a comprehensive advice on everything you need to know when buying a house in France. At a certain point you forget that the real estate agent is not there to point out possible disadvantages of the houses you are viewing. That every few years the nearby river bursts its banks and floods the ground floor. That during weekdays tractors pulling trailers packed with cows, manure, hay and other goods of the neighbouring dairy farmer rush through – all day long. That the roof is infested with longhorn beetles and that beyond the hill some field is used every Sunday by the local kids to organise a motor cross. The real estate agent wants you to buy. C’est tout.
As you can see with the advantages for the seller, the same is true for the negotiations. When the real estate agent solemnly swears to you that the seller really does not want to lower the price, but that this is a golden deal for such a pearl of a farm, then this does not necessarily need to be true. Perhaps there would still be a 10% slack in the price, but the real estate agent knows he also needs to earn back his commission for the owner.
In practice, it turns out that real estate agents are not always all that particular when it comes to drafting the sales contract. Sometimes these contain clauses that directly contradicts the interest the buyer. Especially as a foreigner, this can lead to a downright financial loss. So, also if it is about drafting a ‘compromis de vente’ the involvement of a sales broker is definitely no guarantee for a flawless transaction.
Many real estate agents persuade the seller of their usefulness by seducing them into believing that their effort doesn’t cost a thing. As the commission is charged on top of the asking price, the estate agent fees are borne by the seller. In practice, this means indeed that the estate agent fees are at the expense of the negotiation margin. Even when the seller is contractually bound to pay the real estate agent, in practice the buyer and seller together pay for the estate agent costs. Without the real estate agent, the seller could have earned more and the buyer would have paid less. That’s how simple it really is.
The moral of this story cannot be any other that that for the house buyer – especially in France! – buying a house in France without a real estate agent is much more interesting than searching via the real estate offices in the region. It simply pays off to start looking yourself for a house for sale by owner (FSBO). How exactly you can pull this off is something we would like to share with you some other time.