Wait and pay
If you are not in a hurry, you can wait. But with the weak economy it doesn’t look like you’ll be getting more for your home in a year or so. Prices are going down, so it stands to reason that the longer you wait, the less you will get in the end. And what if for some reason at some point you will be in a hurry to sell? What if you find a new home and you’ll have to sell to avoid double costs? You risk having to sell for a painfully low figure just to stay out of trouble.

What does not selling cost?
Imagine, your home is worth 200.000 euros and you still have a loan for 100.000 euros, at 4%. This means you pay 4000 euros a month only in interest. But a house needs to be maintained, as well. If you don’t do anything, the quality will go down rapidly. As a rule of thumb, you can count about 5% of the value in maintenance fees, for indoor and outdoor painting, repairs and other upkeep. That is: 5% of 200.000 equal 10.000 euros. If you don’t do any work, this is the value your house will loose in intrinsic quality.

Almost 25.000 loss a year?
The calculation above shows that your house costs about 14,000 euros a year. Every year you do not sell your house, this is what you lose. And imagine the market going down with 5% as well… That is another 10,000 euros down the drain! A total of 24,000 euros loss.

Do you want to sell?
Let’s say you’ve put your house on the market for 220,000 euros. This makes it a bit more expensive than other properties in the same category but hey… you were not in a hurry. But when you realize that not selling also costs money, it might be better to just accept the hard truth and immediately go down to – say – 197.500. This strongly augments the chance for a quick sell so you can get on with your life. Just imagine what will happen if you wait a couple of years and then lower your price to 200.000? In the mean time all the comparable properties in your area will also have become cheaper, so it will still be as difficult to sell. What’s more… all the house hunters have seen your house on the market for a long time and will have started to wonder wether there’s something wrong with it!

Dare to go down!
Conclusion: if you are certain you want to sell, think ahead for at least a year en save yourself all the hassle and angst of seeing the market crumble around you. Cut your losses in advance and price your property just a little below the competition in your area. You’ll sell quickly and avoid further value loss.

The house that I live in now, we bought as a bramble infested ruin. The roof had been redone in 1991, but all the rest was ‘as is’ or ‘dans son jus’ as the French Agents Immobilier call it eufemistically. There were dirt floors, no plumbing, a soggy smelly pit where there used to be a pig stie, a huge empty attached barn and of course no electrical wiring. So basically it was an empty hull, and pretty hulky at that, measuring a good 300m2 (35×9,5) of built surface. This on one hectare (10.000m2) of land.

With my former sleep depriving building project experiences, I decided that this time, I would invest in a project manager. I happened to know one, Patrick, who was volunteer refferee at my volleyball club, president of the Judo Club and the book exchange of the Lycee, and communist councilman in his town. I mean… at least he wasn’t in it for the money! So what are the advantages of such a maître d’œuvre?

1. Market knowledge
Here is a guy who has been constructing houses and other buildings all over the region for 30 years. A former ‘charpentier’ who had studied, and worked himself down from the roof to the drawing room. He knows everybody in the business. All the craftsmen, plumbers, electricians, masons… And they all know him. When I asked some of the people I worked with earlier about him, they all said he was a pain in the ass, no added value and generally a stand-in-the-way. Since these were the people who had let me down on more than one occasion, I took this as high praise. And I was pretty certain that these ‘professionals’ had never been and would never be selected by Patrick.

2. Price wise
Another thing Patrick knew like no other, is the normal price level. He made very detailed specifications of the jobs to be done and send these out to the different craftsmen. Of course he sent several per ‘corps de bâtiment’, so as to be able to choose. This, in the end meant we hired a maçon from 100 kms away, but thousands of euros cheaper than the ones in the area. Also, this process showed the value of the maître d’œuvre. He immediately disqualified several tenders from companies that clearly were too busy to take on my job and pre-added overtime for their workmen in the tender. By the way, Patrick did not always go for the lowest price. He wanted the best guy for the job (not the most desperate one) for a reasonable price. I think the tender process in itself paid for more than Patrick’s fee.

3. coordination
Every thursday, there would be a meeting of all companies active in and around the house. This way, they could coordinate their work to avoid being in eachothers way. The craftsmen grudgingly complied, but during the process discovered they were actually winning time for their crews by investing two hours in this réunion de chantier.

4. control
We were living 4km from the building site, and Patrick was at 15 kms. Every once in a while he would just pop up and walk around the premises, going through the waste bins, actually checking the thrown out wrappings to see if the right materials had been used. It wouldn’t be the first time, he said, that clients paid for 16cm rock wool but were delivered 8cm. Once hidden in the walls, only the energy bill might be an indication of any wrongdoing.

5. representation
Personally, I know just as much about construction as two guys that know nothing. So when I into conflict with a builder, it was nice to have Patrick to fall back on. For instance, our charpentier, responsible for the attic floors and (thus) the ground floor ceiling, was M. Rossignol. A lean little guy, climbing all over the house with his team. I asked him to raise the big oak beams in the living quarters by about 30 cm, so the ceiling would not be right over my head. Rossignol was not happy. He explained that in these old farms the ceilings were always low. That they were built like that traditionally. Logical, because in 1900 all people were shorter and a low room is easier to heat. But I’m 185 cm! And we were going to put in geothermics! I spoke to Patrick about it and he walked me over to the carpenter, pointed at me and said: “M. Rossignol, je vous présente: le client!”. Made it clear that if I wanted 30 extra headroom, I should just get it. And I did.

Thank you, Patrick!
In the end, I can conclude we have never had a construction move along so smoothly. Of course, we’ve had some setbacks due to plain stubbornness of workmen and one wintery weekend all our electrical wiring got ripped out, so it had te be redone. But all in all we lost little sleep and the quality of the renovation is outstanding. We paid our maître d’œuvre 10% of the total building cost, but I’m certain he earned us at least double that. And still does, because the low heating and maintenance costs (including 10 years guarantee on all work done.

By the way, our house is for sale. You can see the renovation process here. Start at the bottom and ork your way up. The sales add is on ImmoA3.
The maître d’œuvre in South-Burgundy is Patrick Souteyrand, 71500 Louhans.

Counter-attacks on our clients

We have found that it is difficult to take the strongly guarded ‘agency fortress’. As soon as the Agents Immobilier (AI) realise one our clients is promoting his property through our international network, the defence mechanism kicks in. Of course the promotion channels we use partly overlap the ones of the AI’s. Logically, they are not happy seeing the same property all over the web for a price 6% lower than what they are showing on the same websites. We’ve had several clients that were intimidated or pressured by their agent(s) to back off and leave the selling to them. These are their strategies:

“It hurts the negotiations”

One of our clients recently asked us to take all his advertising down because two of the local agents both told him they were ready to accept offers from very interested clients and the ‘net price’ shown on many sites could hurt the negotiations. It seems the two agents – who are normally competitors in the region – have decided to work together to throw a stick into the wheels of our campaign. Our client, the owner, is afraid to miss out on a sale and asks us to take down all the ads, virtually destroying all the hard work we’ve already done. We obviously think the danger of missing out on a deal is fictional. First of all because we seriously doubt there are real clients ‘about to make an offer’. And secondly, if these clients see the net price on the web, but have already seen the house with an agent, they will just have to accept that the agent came first and the fee has to be paid.

“The price needs to be the same everywhere”

This is another wonderful argument from the AI clients sometimes repeat to us. The agent will tell you that it is not allowed to put different prices for the same property. This is bl@@dy nonsense, of course. A private seller can publish his own net price at the same time (an on the same sites) as the agency with his higher price. The agency is competing with the owner. If he is professional enough to find a buyer before the owner can do the same, he will have rightly earned his 6%. Does the owner beat him to it? Then they were outsmarted by an amateur (perhaps with a bit of professional help from Immo à Trois). Tough luck.

“Let me do the negotiation”

One client made the mistake of sending a private buyer that came through our network to go visit the house with his local agent. For the seller, this seemed like a logical solution. The AI has the keys, he is on the spot and can show the buyer around. But then the buyer actually decided to buy the house. Not only did the property agent claim his full 6% fee, he also tried to convince the seller not to pay us our 1%. He claimed he did all the hard work, including lots of advertising, organising visits, negotiations… Immo à Trois had ‘only’ found the buyer.

If you ever sign a ‘mandat de vente simple’ with an AI in France, and you also want to try to find a buyer yourself, tell the AI to add the clause to the contract that if you manage find a buyer privately, he can still do the final sale, but he will not get his full 6%. We think 2% is about reasonable for a sale that has been thrown into his lap, as compared to 0% he’ll get if you do the visit yourself and leave the paperwork to the notary.

*Part of our motive for starting Immo à Trois is that we think the real estate agency fees in France are unnecessarily high. We think the total external costs on a sale should not surpass 3%. If there are agents out there willing to let us do the promotion work and find both seller and buyer in turn for a much more reasonable fee, we are open for suggestions.

Good news for sellers of property in the luxury category. If they manage to market their home in international media, they may profit from this new development. Especially if they choose to do so through the private sales channels, like Immo à Trois. This gives them the extra edge of about 4 to 6% more negotiation room. In most cases the price of a very decent car.

Attention Crooks!
Talking about foreign investors… there are some people posing as investors to lure the sellers into an international scam, know as the ‘rip deal’. There is no risk, as long as you never accept to go somewhere with a large wad of cash to do a ‘profitable’ and tax free money exchange. Read more about this scam here.

Prices of real estate go up almost all over France

A PDF with extensive information can be downloaded from the notary public site. Click on the image to download.

The development of French house prices seems like good news for home owners trying to sell their french property. But of course we must take into account the fact that prices have dropped considerably in the past two / three years. According to the statistics, we are back at the level of 2009. Click on this link for more information.

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UPDATE: september 8. It now seems the government wants to soften the blow by allowing a deduction of 5% per year from the fifth year. (this used to be 10%). There are even some voices that want to turn back the new law entirely. Like often in France, the soup is not eaten as hot as it was served.