“Sourcing A House Purchase”

 
“If only you’d arrived three years before these houses could be bought for nothing.”

“Two years ago, it wasn’t uncommon to receive multiple offers on a property within a short period of time.”

Conflicting advice. Did they mean houses sold aggressively because they were underpriced or that fewer of them were available for sale?

Mixed messages aside, we were here in the present and confident the regional real estate market could accommodate two fresh speculators.

We had determined from the outset to budget a ceiling of 200,000 Euros. However, factoring in the essential anticipated repair costs, we determined the 125,000 to 160,000 Euro range as most advisable. Anything priced less would likely inflate our projected renovation costs.

We sought a residence with: 1) functioning indoor plumbing, 2) contemporary electrical wiring 3) secure roof and 4) character of mutual concurrence. This fourth point should never be deemphasized. An ugly house rarely beautifies regardless of your capital outlay. Our aesthetic instincts became our compass.

Our goal was to find a house aesthetically, structurally and functionally sound. It should simply meet the need for our design vision and furnishings. Within our budget requirements, many available properties and locations were eliminated from the outset.

Buying Someone Else’s Vision

Houses requiring massive restoration including wiring, re-roofing or sewer line connections sever the cash flow artery. Worse, these post-purchase cash outlays cannot be financed by a mortgage, so they are immediate out-of-pocket expenses. Our inexperience with these major renovations would require recruiting and contracting local tradesmen. Forced dependency and cost uncertainty did not coincide with our long-term intentions.

We read numerous horror scenarios of secondary problem resulting when one buy a partially renovated house, namely someone else’s taste and vision.

This is strictly a subjective viewpoint, but one reinforced after the subsequent scouring of thousands of web site images of French properties for sale in numerous regional departments. Once a house is purchased with the intent of renovation, a high percentage of buyers will soon enough discover, that the cost for materials, fixtures and tools exceeds their budget and/or that they lack the necessary skills to implement their design vision.

The result of these buyers’ efforts becomes a typically overpriced and flawed vision. Initially, their properties are offered for resale at a price based on the owners purchase price, plus cost of materials and augmented by an estimate based on the value of their invested time. Few of these properties sell immediately and even fewer sell for the asking price.

After months with little response, a seller will lower the asking price. He will reduce it again, until one buyer feels he is able to tackle the impending obstacles and offers a lowball price.

If one buys such quasi renovation, it is important he assesses what skills he will need to overcome the prior owner’s limitations. He must also factor in the expenses required to undue previous financially imposed shortcuts.

As a California native and long-time resident, I see an attractive climate as an important component in a relocation. Call me spoiled, but snowbound winters and arctic winds are better left for Christmas greeting cards, than actually tolerating them for four months of the year.   

If you slice France below the Lyon region southward, you minimize the prospect of snow. If you discount any of the mountainous fringe regions bordering the southern topography, you almost completely eliminate the potential.

During our initial property search, my wife and I had several preferences necessary to achieve a suitable harmonious environment. First, we were both intrigued by ancient history and particularly the Roman heritage of France. France is filled with historical souvenirs, but the most distinctive Roman influence is in the South. Second, mountainous regions tend to encourage colder weather as well as precipitation. We preferred flatter landscapes with extended sun exposure. 

Third and equally intriguing, we liked the close proximity to an aquatic source such as the Mediterranean Sea with its extended beaches, water activities and relaxed disposition. Having direct air and train access to other European countries and cultures became an ultimate priority as well.

Within the process of our discussions and deliberations, we were subconsciously eliminating several southern regions and consequently selling ourselves on the merits of the Languedoc region. We had not yet even begun our online advance investigation. It is curious how research tends to confirm a suspicion one has already entrenched into his thought process.

Internet research is an invaluable tool for isolating regional distinctions, attractions and commentary. Subjective advice on French real estate is abundant, particularly sourced from British expatriates.  Some of it is illuminating; some is too personal and irrelevant to a buyer.

By 2004, all legitimate French real estate agencies had an online presence showcasing listings with digital images, pricing and text descriptions. By 2006, the level of professional presentation improved significantly as most listing agents found it prudent to take promotional images themselves. This tended to eliminate décor warts, needless clutter, disheveled unmade beds and noticeable wall water stains. After all, who knows better what a prospective buyer is seeking? Certainly, most of the French property owners attempting to sell their inheritances do not.

The sourcing and price comparison process is rarely straightforward because these agencies often market duplicate listings with conflicting asking prices. Worse, not all French real estate promoters are necessarily licensed.

Numerous foreign owned enterprises portray themselves as French real estate agents, but their status is legally suspect. Clientele often presume Anglo ownership and personnel will provide superior service. This assumption has rarely proven true. These agencies cannot legally conduct real estate transactions in France with notary agents (unless the Notary is compliant).

To earn transaction revenue, they must split commissions with legal agencies or assess fees to the seller based on the negotiated sales price. Their signed agreements with clients are operated on the assumption a successful seller or buyer will compensate their efforts, but the enforceability is dubious since their legal standing is wobbly. These agencies may prove useful in ultimately negotiating a favorable buying price or locating a potential future buyer, so their role shouldn’t be totally discounted, but certainly understood.

When it comes to asking prices, we later discovered, no one reasonably expects his posted price. Lower offers and bids are anticipated. Selling directly to avoid an 8% agents commission is not uncommon. From a gentlemanly 10% under asking to a low-ball 40%, nothing is considered truly insulting. Desperation selling based on a pending tax bill or Notary's fee typically fuel the best-priced transactions. We found within the Languedoc that few individuals are in a haste to do anything unless poverty is scratching at their portal.

Currency speculation, an uncontrollable component, may greatly influence an American or English person’s entry into the French market since the Euro is the primary currency. We entered the market officially in April 2004 when the value of the Euro was at an all-time high against the dollar at $1.35 USD, a gain of 20% from the previous year. Not so with British buyers whose Pound currency has been a model of consistent strength against the Euro.