You don’t have to but it is a great idea to Force yourself to invest in French real estate. Let me explain why.
Most likely with your bank you can have the bank transfer 100 euros each month from your checking account into a special savings account so that after five years you will have 6000 euros in your savings account not including any compound interest you have earned. This is a Forced savings plan and a great way to get you to save money. You can learn more about this important habit in this book by David Bach.
Yes, at the end of five years you will have 6000 euros in the bank but what if instead you had French real estate?
You can also buy a home in France, one of the most beautiful countries in the world, and enter yourself into a forced savings program. Each month when you pay money off your typical French mortgage you are paying money against the outstanding principal of the loan.
As you are paying your loan down you also have the opportunity to see the market value of your French real estate increase assuming the right market conditions. In addition, you are no longer paying rent, which is good since rent is simply you paying the mortgage of another property owner.
Eventually, when the mortgage is all paid through your forced savings plan you will have your own beautiful French home rent free.
If you want to speak with an English speaking French mortgage broker so you can get the details you need to obtain a French mortgage you can contact us and we will place you in contact with a French mortgage broker at no charge or you can visit this page for direct contact.
The process of estimating the market value of French real estate is not easy.
The lack of a centralized database of French property sale prices means you really have to find a local real estate professional to get you a proper estimate of potential sale or purchase price of a French property.
NEWS: Have you seen our French real estate sellers’s guide that comes with a 100 percent money back guarantee? Here it is
If you want to do some research on your own here are some suggestions:
One Consult the Notaries of France website that shows pricing data and market tendencies
The notaries of France website can give you access to some of the data that is known by notaries. Remember the French notaries are the people who see all the transaction data. Here is the link to the French notary site in French.
Note one: This data does not disclose to you the individual value proposition of the property you wish to buy or sell. The data just shows overall pricing and size of French properties in a particular area. It is like you see the price of a car for sale but you don’t know the condition of the engine and drive train nor do you know if the interior is good or the tires are worn etc So this data is only a general overview.
Note two: This data also should not be seen as a minimum or maximum sale price, it is simply an average of reported sale prices during a certain period of time noted on the site. Remember as you estimate price, if as a seller you inflate the price you place your property on the market at, you risk the property never selling and potentially interest buyers never visiting your property. If you price your property too low you may make a loss. We recommend you do your own research, however, make sure you contact an English speaking French real estate agent to get final professional guidance.
Two Get Three Estimates
For French property sellers, we recommend you get a minimum of 3 estimates of the potential sale price of your property, preferably from English speaking French agents from different offices. It is really important you ask the agents to show you how they come up with prices they offer you and if they know well the neighborhood your property is located inside. Don’t expect the agent to give you an estimate over the phone. If they do, it is unlikely to be accurate. Your property needs to be visited to be professionally evaluated based on all it offers.
French property buyers you must ask your agent to do an evaluation of the property you are thinking of buying before you make an offer. You cannot simply look at the listing price and make an offer, you need to know if the price is reasonable or needs to be seriously reduced.
Wall Image Avignon. Photo by D. Hennessey
Three French Property: How much work needs to be done?
When you, as a buyer or seller, want to get the sense of the value of a French property you need to consider the work that needs to be done in the property. As a starting point, once you have the diagnostic reports you get a certain idea of how much work needs to be done, for example, to bring the properties electricity up to current norms, to make the home energy efficient etc. Buyers need to seriously consider a professional home inspection to make sure the diagnostic reports are valid and to get details on other parts of the property not covered by the reports. Sellers are better off fixing minor defects in the property so the property presents itself well. Here is a guidebook that can help you maximize the sale price of your property.
Note: If there is a large amount of work to be done it is often better to adjust the price down since as a seller you may not have the money to do the work or you may not chose to do the work in a way that will be attractive to a buyer. See advice of a professional to find out what work is appropriate.
Once you know the cost of the work that needs to be done you take the market value of a French property that does not need the work to be done and subtract from your estimate of sale price.
Four Adjust for features included in the home
Some French properties are sold with completed kitchens included, some are not. Other French properties are sold with appliances, some are not. Then again some French properties are sold with light fixtures, some are not.
If the property has an important feature like a garage or swimming pool the price needs to be adjusted accordingly. Be aware the condition of the swimming pool is important, if it needs work it could be more of a negative than a positive.
Note: You need to know the value of these items indicated above and adjust up or down as appropriate your estimate of the potential sale price of your French property.
House in Cannes Photo by D. Hennessey
Five Neighborhood value: close by
An identical apartment in a different neighborhood can be worth a lot more or a lot less. If one apartment looks onto a train track and the other to a view of the sea there will be a different value. If one house is on a busy street and the identical home is on a quiet side road the value will be different. You need to be familiar with lots of homes to get a sense of pricing this is why we recommend you speak to a professional French real estate agent in your area.
Six Neighborhood value: in proximity
If your French property is in safe walking distance to a school, library, bakery etc or on the bus route to work this can add value to your home in contrast to an identical property that does not offer these features. This is obvious but not always taken into account by sellers who see a photo or video of a home online and assume the listing price is the value of their home at a minimum. You need to know the features of the neighborhood.
Major roads close by not mentioned in any private or professional advertisement can also impact the value of your French property. Make sure you compare comparable properties. Seek professional advice.
Sea View Photo by D. Hennessey
Seven French real estate market timing
When there are more properties similar to yours available to buyers then your property must be priced more competitively to get the attention of buyers. When there are few similar properties for sale you can potentially increase the price of your property since there will be a greater demand.
The market changes at different times of the year. Once you know when the best times are you can plan as a buyer or seller to take advantage of this. Timing is one important item when it comes to buying French real estate.
Eight Make sure you do not price based on other list prices
List prices are wishes from owners and they do not represent the market value of French estate. As you work to estimate the sale price of your French property remember you are looking for the price it will sell for not the price to place it on the market.
Once you have an idea of what price it will sell for add a small not large amount on top to allow for negotiation.
As a buyer you may become aware of a very well priced property if so there may be no room for negotiation. This awareness can be something you will have learned from your professional assistance.
Nine Remember market value of a property is market value
Sometimes owners think the market value of their property is X and they place it on the market with an agent and demand a sale price of X plus the agency fee. This is not correct. The value of a property does not change because you have an agent working for you. The potential of selling the property does. So if the property sells with an agent you pay a fee for their service. If the agent does not sell the property you don’t pay the fee. Just like if you get an accountant to do your taxes you pay for their service. If you do your taxes on your own you don’t pay for the accountants assistance.
Note: The above information is for educational purposes only and is only as starting set of guidelines for estimating the value of a French property. As always seeking professional guidance is a wise choice and recommended by us.
NEWS: Have you seen our French real estate sellers’s guide that comes with a 100 percent money back guarantee? Here it is
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This is a very good way the French Government can Ignite the Real Estate Market Now
Even with the low interest rates, French real estate sales are still moving very slowly in most of France, however, there is a solution that the French government can use to ignite the French real estate market.
This is called a First Time Buyer’s Program
One of the biggest costs a French property buyer has are the notary’s fees that are made up of mostly French government taxes (state, department and commune).
A purchase of a pre-owned French house or apartment for 165 000 Euros at this time can have a notary fee of just over 13 000 euros! So the 165000 euro home actually costs the buyer close to 180000 Euros!
For a first time French property buyer who is scrapping together money to have the deposit for a new property the notary fee can directly impact his or her ability to afford a home. Many French property buyers have to include the notary fees in the mortgage application amount since the notary fees are so high as a direct result of French government taxes.
Note: The sample above was for French real estate of 165 000 euros purchase price which may not be a realistic purchase price in many parts of France, prices can be higher and therefore, the tax amount will be higher. If you buy a French home for 250 000 euros the notary fees are going to be closer to 20 000 euros! Indeed, the notaries fees can be less if you are buying a new French property but many times based on location or pricing buying a new property is not an option for first time French property buyer.
The solution – how it works:
In countries such as Canada there is a first time buyers program. This program allows first time property buyers to have an exemption or reduction on the property transfer tax when they fit certain criteria.
For example, in British Columbia, Canada, a first time buyer can obtain an exemption or reduction on the property transfer tax property when
The property is priced below a certain price range
The buyer is a permanent resident or citizen of the country (in this case Canada)
The buyer has lived at least 2 years in the province of British Columbia
The buyer has never had a property tax exemption before
The buyer has never owned an interest in a principal residence anywhere in the world at any time
The buyer must live in the property as their principal residence
**** A false declaration to obtain the benefit can also lead to a large penalty.
Current and up to date details on the British Columbia system can be found here.
Of course, you may think “this is great for first time French property buyers but what about other property owners who want to sell or buy? how can this benefit me as a second time French property owner who wants to sell now?”
The First Time Buyer Program has a domino effect and this is why one needs to be created in France
The French first time property buyer is the stimulater of the market. Once the first time property buyer enters the market with a successful purchase, his or her action allows the current French property owner to ‘buy bigger’ or ‘down size’ in the market place which continues to stimulate more activity. It creates a buying or selling domino effect.
The high cost of buying in France for French first time property buyers due to the government taxes paid by the buyer makes the market less active, creating a new French first time buyers program can make a difference. Encourage your local political representation to take action.
ESREA France: We are here to help make the process of buying a French property easier for English speaking people. We would like to see the creation of a First Time property buyer program in France for the English speaking people from other countries who come to France to set up business and stimulate the economy. If they are given a more affordable opportunity they are more likely to invest and stay long term rather than rent and stay short term. In addition, we would like to see young French people stay in France and buy a home and not leave the country to find work and a less expensive buying process. This program can a a win-win for all involved.
Please share this article to stimulate action. If you are interested in seeing a version of this article in French please contact us.
Members of the French parliament, can we make this idea possible?
A new study performed by Orpi the French agency network published Thursday December 10 2015 indicates that buyers are acting faster in their purchases. The time a French property is taking to sell is getting shorter.
The French network Orpi states 50% of apartments and 54% of homes they sold in 2015 sold in less than 60 days!
The main cause appears to be that sellers are becoming more reasonable in the prices they place on their French property as it goes to market.
Contact us we an help you locate an English speaking French real estate agent in your area of choice in France at no cost for our assistance.
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