Sometimes French real estate agents are contacted by owners and asked to market a French property without actually placing the French property on the open market.
This approach to selling a French property may sound exclusive and may see to be beneficial since the owner can avoid the neighbors knowing the property is for sale but this action can be dangerous to the owner’s financial well being. Read on to find out why.
Defining an ‘Off Market’ property
The French property owner asks a French real estate agent to market the property only to the agents network of clients and perhaps a few other agents. The goal is to sell the property by ‘word of mouth’. The property does not appear on open market websites. In contrast to ‘Off Market’, ‘Open Market’ properties are exposed to the general public and niche buyers, to maximize the potential sale price through the competition in the open market place.
Here are the potential dangers:
Property May Sell for Less than Market Value
Due to lack of open market exposure the home may in fact sell for less than market value. The open market creates competition for the sale of a property no matter what price range. Recently the Fleur de Lys Mansion was sold for 102 million Euros because 3 billionaires wanted the property and a multiple offer bidding war took place benefiting the owner. If only one billionaire knew the property was for sale the sale price will most likely have been less.
The Price of the Property May not be Correct
If the seller sets the price he may be setting it too low. Unless the seller has access to market data and is experienced in real estate there is no way they can be confident their own price is correct.
If the agent is setting the price and not bringing it to market how does the owner know the agent did not set the price low for a quick sale? Or simply to benefit the agent’s own buyer?
The estimate price the property is placed on the market at whether generated by the agent or the owner may simply be too low and only the open market will test the accuracy. Since, in most cases, a low price in an open market (lots of marketing exposure) will result in multiple buyers making bids.
The Property is Unique
One of a kind, unique properties need to be exposed to the open market to create a bidding war to get the owner the maximum sale price. If the property is unique and in the multiple of millions price range this French property needs to be in front of all the billionaires in the world not just the ones the agent knows. If the property is priced not in the millions the owner will still benefit from open market competition to bring out the buyers to bid.
Save on Commissions
If the owner believes he or she is saving money because the agent with the ‘off market’ property is offering to reduce his commission, even with the reduced commission the potential financial loss because the property was under priced can often be a lot more than the owner was saving in commission.
In fact, since the agent may be selling it directly to his buyer and getting all the commission the owner may be paying less commission, getting less than the market value but the agent may get more than he may get in the open market since he is not sharing his commission with another agency who brings a buyer.
‘Off market’ French properties like For Sale by Owner Properties (FISBO) or ‘Particulier à Particulier’ as it is called in French lack market exposure that helps create a true market price effect. Can the private owner be sure his personal sign in the window, his ads on ‘le boin coin’ and Particulier à Particulier (FISBO) website ad are really hitting all interested buyers that are working with active agents?
Unacceptable Terms
An ‘off market’ French property may receive an offer than contains clauses requesting repairs and other actions to be completed that would not be present in an offer on the open market when the buyer is not the only one who knows about the property. Sellers can refuse repair issues etc and make them the buyer’s responsibility when there are many interested buyers.
Make sure you are using the most resourceful and well connected French real estate agent when you go to sell your French real estate. Remember an experienced agent can still market extensively a property to generate the top price without having to tell the neighbors ( Unless one of the neighbors wants to bid on the home.)
Get the right English speaking French real estate agent for you by contacting us here.
Below you can get your free introduction ebook about French real estate mistakes to avoid
Get your FREE copy today
Request below via the sign up form. Just scroll down, add your email and click Subscribe
This request also entitles you to our biweekly ezine and you can unsubscribe anytime.
Note: Details on our 110 Tip electronic French real estate buyer’s guide plus checklists is here.