Fourth post in this series about what you should be aware of in the process of buying a home in Uzège. Download the full brochure here.
Prices and other costs
Prices should include the agent's fees (anywhere between 4 and 10 per cent of the property price). The price should be followed by the letters FAI if this is the case – and note that it never includes the notaire's fee. When you are considering a property, always ask what the price quoted includes. Ask for an estimate of any additional fees and don’t forget to add on 19.6 per cent for VAT on any extra fees.
The estate agent’s commission
Although estate agents’ fees (“commissions d’agence”) are not fixed by law, their amounts must be included in the offered prices - that’s what “FAI” stands for (“frais d’agence inclus”). Those fees are freely negotiated between the estate agent and the seller, and vary between 4 to 10% (subject to VAT at 19.6%) of the “prix net vendeur” (net price to the vendor). Their calculation mode must be clearly indicated in the “mandat” signed by the seller.
Remember that no French estate agent will ever ask you for money upfront. Their fees are paid to them by the notaire following the signature of the “acte authentique”.
The notaire’s fees
“Notaire’s fees” (“frais de notaire”) is a global term used to describe the legal costs of the purchase, which include taxes to be paid on the purchase, the notaire’s expenses and the notaire’s own remuneration. Unlike the agent’s commission, those fees are paid by the buyer and are fixed by the State. They represent an average of between 6 to 8% of the purchase price for an existing property. In addition, the buyer also pays the costs of the Land Registry searches carried out by the notaire – usually as a separate item.
Offers should be made via the estate agent. Remember that your offer becomes legally binding only when you sign a compromis de vente. Don’t be afraid to make an offer for a property just as you would in your home country.
Can I get surveys done?
Surveys are not usually undertaken in France, because the profession of surveyor does not exist in the same way that it does in Britain for example. If you are concerned about certain aspects of the structure of the property you are purchasing or renovation issues you could contact one of the growing number of English-speaking surveyors working in France, or you could arrange to visit the property with a local builder to get opinions and costings.
If you intend to do this, it is better to act before you agree a price and sign any contract – especially if you anticipate doing a lot of renovation. If you need a survey, but do not have time to carry it out before you sign a contract, you should ask the notaire to include a “clause suspensive” in the compromis de vente to ensure that your purchase is subject to a satisfactory survey.
Transfer of funds
At the time of the compromis de vente, you need to arrange transfer of funds to pay the deposit of (usually) 10 per cent of the net purchase price. From this point on, if you withdraw from the sale, you could lose your deposit – unless it is for one of the reasons listed in the “conditions suspensives”. Plan ahead of the acte authentique to transfer the balance of your payment (in Euros) to the notaire's account in time for the signing date. The house will not become yours until all the funds required (including mortgage funds) for the house purchase and all associated fees have been sent to the notaire’s bank account.
Exchange rate risks
If your funds originate from come from a non-euro country, beware that exchange rates can put your purchase in real danger. We strongly advise you to buy insurance against this risk from specialized currencies dealers. Use a foreign exchange company to transfer the funds for your purchase. This will normally give you a much better deal than using a high street bank.Here’s an example. A few months back, each dollar bought 0.85€. So to buy 10,000€, you needed $11,800. Within two months, the rate had dropped to 0.80€ - so suddenly, the cost of buying the same 10,000€ had jumped to $12,500. That’s a $700 hike. Apply that to the purchase of a 400,000€ home: that’s a $28,000 price change.
Rough budget estimate
As a rule of thumb, we suggest that you always add 20% to the advertised cost of a property to obtain a rough estimate of your final cost: 7% for the legal (so called “notaire’s fees”) fees and purchase tax, 2% for miscellaneous and 12% for refurbishment/small renovations costs: usually bathrooms, kitchen and/or floors.
Read on Part 5: renovations